Security concerns are mounting as Chinese companies appear likely to win key equipment orders for Incheon’s smart port project, raising fears of leaks of national logistics data and corporate secrets. The federal government of the United States has already warned in 2024 about cybersecurity vulnerabilities in Chinese-made cranes and moved to build its own production system, while South Korea’s key port infrastructure could end up dominated by Chinese equipment.
According to materials Incheon Port Authority submitted on the 24th to the office of Democratic Party of Korea lawmaker Seo Sam-seok, a total of 95 automated units will be installed at the container terminal in Phase 1-2 of Incheon New Port. These include nine container cranes that lift containers from ships and place them on carriers, 32 yard cranes with arm-like structures operated remotely, and 54 automated guided vehicles.
Only three Chinese companies took part in the bidding for cargo-handling equipment such as container cranes and yard cranes. Whichever company is selected, Chinese-made equipment will be deployed. Among them, state-owned ZPMC is expected to win the bid. The company holds about 70 percent of the global market. However, the United States Congress pointed out in 2024 that the company’s equipment included communications devices such as wireless modems that were not requested by the buyer.
In the competition for automated guided vehicles, four Chinese companies, including ZPMC and Westwell, as well as Hyundai Rotem Company, entered the race. Westwell is reportedly the leading candidate to win that contract as well. Chinese equipment is said to be 15 to 20 percent cheaper than domestic products. As local firms have struggled to compete on price and have not been able to produce at full capacity, they are now also seen as lagging in technology.
Domestic companies reportedly withdrew because the delivery deadline set by the buyer, 24 months, was too short. Since Korean firms typically need more than 30 months, only Chinese companies capable of responding quickly entered the bidding. Even as the project was delayed for about a year, the delivery requirement remained unchanged. Analysts say domestic companies could have participated if the bidding standards had been designed more realistically.
The operating structure of Incheon’s smart port also played a role. The operator is Incheon Global Container Terminal (IGCT), led by Hanjin Logistics Corporation. Incheon Port Authority said the cargo-handling equipment was ordered directly by IGCT, leaving the authority with no room to intervene.
An Incheon Port Authority official said, “The authority built the terminal and selected the upper-level operator, but the equipment orders are handled by a private company.” By contrast, all equipment at the smart port projects ordered directly by the authority will be domestically produced. A total of 98 Korean-made units have been installed at the container terminal in Phase 2-5 of Busan New Port. BPA leased the terminal to a private operator only after completing the equipment procurement.
Yul-Seong Kim, a professor at Korea Maritime & Ocean University (KMOU), said, “The core of remote cargo handling is cameras and sensors, and that is directly tied to security.” He added, “In particular, CCTV, video, and sensor data could be leaked outside through Chinese-made equipment.”
He also stressed, “When port authorities push ahead with smart port projects, the government needs to provide guidelines on localization standards.” The Ministry of Oceans and Fisheries (MOF) said it will continue to pursue R&D to strengthen the competitiveness of domestic port equipment such as cranes. Since last year, MOF has been investing 31 billion won in a key R&D project to enhance the competitiveness of the smart port technology industry. The Korea Marine Equipment Industry Association added, “Given that China is not a formal member of the World Trade Organization (WTO) Government Procurement Agreement (GPA), we should also consider restricting bids by using relevant rules.”
[Shin Yoo-kyung / Kang Min-woo / Park Seung-ju]
This article has been translated by GripLabs Mingo AI.
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