Banks writing letter of credit (L/C) business for export and import transactions with China that use publicly available Automatic Identification System (AIS) tracking signals to obtain data on vessel location and identity may be experiencing difficulties due to a significant reduction in vessel tracking information from China.

Financial institutions use vessel location and identity data to verify that a vessel is on its declared route and to identify routes that appear suspicious in order to detect fraud and comply with sanctions on countries such as Iran and North Korea.

Vanishing ships

During November, several cargo ships mysteriously disappeared from tracking systems as they entered Chinese waters. It appears tracking devices are no longer detecting vessels once they are in Chinese territory, making tracking in China's ports and coastal waters particularly problematic.

China has offered no explanation for the reduction in tracking data but the most popular reason put forward by analysts is that Chinese data providers have trimmed services to ensure they do not fall foul of new data privacy regulations introduced by Beijing that came into force on 1 November.

Shipping data platform Vessels Value says the volume of signals broadcast from Chinese waters dropped by around 90 per cent during November.

L/C concerns

Given the substantial amount of L/C business written for Chinese goods exports and natural resources imported by China, some banks that are currently reliant on publicly available AIS may well be looking at commercial alternatives.

Commercial data providers Windward and Pole Star that obtain AIS data substantially via satellite systems have reported that their information flows have not been significantly affected by the reduction in publicly available vessel tracking information from China.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.