Cosco Shipping Designated a Chinese Military Asset by US Department of Defense

Abstract

Cosco Shipping has been designated as a Chinese military company by the Pentagon, in another sign of intensifying tension between China and the U.S. The U.S. Department of Defense published its annual listing of companies linked to China’s People’s Liberation Army on Tuesday, adding state-owned Cosco and two of its subsidiaries to the Federal Register. Tim Hinckley, a former chief commercial officer at fulfillment solution provider Radial who now heads up his own supply chain consultancy, Hinckley Associates, posted on LinkedIn that the Cosco blacklisting raises national security concerns and could lead U.S. companies to shift away from engaging with the shipping giant. According to data from S&P Global Market Intelligence’s Port Import/Export Reporting Service (PIERS), Cosco moved 39.68 million TEUs to and from the U.S. in 2024, with the majority of cargo originating from China, Vietnam, Thailand and Malaysia.

Cosco Shipping has been designated as a Chinese military company by the Pentagon, in another sign of intensifying tension between China and the U.S.

The U.S. Department of Defense published its annual listing of companies linked to China’s People’s Liberation Army on Tuesday, adding state-owned Cosco and two of its subsidiaries to the Federal Register.

Air cargo company China Cargo Airlines Co., Ltd., container manufacturer China International Marine Containers, two top shipbuilders China State Shipbuilding Corp. (CSSC) and China Shipbuilding Trading Co. (CSTC), offshore oil explorer China National Offshore Oil Corporation and tech giant Tencent were among 133 Chinese entities also labeled as military companies.

Cosco transports military goods for the PLA, and CSSC is the builder of vessels of China’s Navy. Reports have tied Cosco to participating in military drills to prepare for a Chinese invasion of Taiwan.

With the blacklisting, U.S. military operations would not be able to ship cargo with Cosco.

Although it is not listed, Cosco-owned Orient Overseas Container Line (OOCL) would fall under this purview.

The blacklist does not carry specific penalties, so the shipping giant can still operate in the U.S. and stop at American ports. However, the designation discourages U.S. firms and other Western companies from doing business with the carrier and its subsidiaries.

“Whether that will be the case is highly doubtful,” said Lars Jensen, CEO of container shipping consultancy Vespucci Maritime in a LinkedIn post, who noted “they were similarly blacklisted in 2019-2020 without anyone noticing any difference in the market.”

However, even without any direct penalties, the uncertainty of a returning Trump administration that has constantly touted tougher-on-China rhetoric and threatened to levy new tariffs on Chinese goods could sway how businesses want to work with Cosco going ahead.

Tim Hinckley, a former chief commercial officer at fulfillment solution provider Radial who now heads up his own supply chain consultancy, Hinckley Associates, posted on LinkedIn that the Cosco blacklisting raises national security concerns and could lead U.S. companies to shift away from engaging with the shipping giant.

“As ocean carrier contracting season begins, U.S. businesses may seek alternatives, driving volume toward competing carriers and potentially increasing freight rates,” Hinckley said. “This shift could result in higher supply chain costs, ultimately driving up prices for U.S. consumers.”

Cosco is the fourth-largest ocean carrier in the world, according to Alphaliner, responsible for 10.7 percent of all container movement worldwide, with more than 3.3 million total 20-foot equivalent units (TEUs) of capacity.

According to data from S&P Global Market Intelligence’s Port Import/Export Reporting Service (PIERS), Cosco moved 39.68 million TEUs to and from the U.S. in 2024, with the majority of cargo originating from China, Vietnam, Thailand and Malaysia.

Data from Veson Nautical’s VesselsValue platform indicates that 153 ships beneficially owned by the Chinese shipping titan’s portfolio of companies have called in the U.S. in the last 12 months.

As of Dec. 1, 2024, Cosco and OOCL own and operate 534 container vessels, the company said.

The container shipping firm responded to the designation Tuesday by saying it and its subsidiaries have always adhered to local laws and regulations, and maintained strict compliance with regulations in all international operations.

Alongside Cosco Shipping, its North American subsidiary and Hong Kong-based financial branch were tacked on the DoD’s list. Cosco Shipping North America has joint venture container terminals at the ports of Los Angeles, Long Beach and Seattle.

“The above three companies are not ‘Chinese military companies,’ and we will communicate with relevant U.S. parties to clarify the facts,” Cosco said in a statement. “The inclusion of the above three companies in the list does not mean that they have been included in any sanctions or export control list, and will not affect the business and global operations of Cosco Shipping Group.”

The Trump administration first sanctioned the ocean carrier in 2019, after its tankers had been caught carrying Iranian crude oil. Those penalties were lifted in 2020.

Even ahead of President-elect’s Donald Trump’s November election, the hawkishness against China had been building in Washington as national security concerns mounted over the overreliance on the country’s technologies at U.S. ports. Additionally, the maritime industry drew further attention to China’s widening shipbuilding gap with the U.S.

In March, five U.S. unions formed an alliance filing a trade complaint to challenge China’s shipbuilding industry, which moved the U.S. Trade Representative (USTR) to probe the country’s maritime, logistics and shipbuilding sectors a month later.

While Chinese shipyards produce over 1,000 oceangoing vessels a year, the U.S. produces fewer than 10, according to data from Clarksons Research cited by the unions’ petition to the USTR. Chinese shipbuilders accounted for almost 60 percent of the worldwide orderbook in the first quarter of last year, according to shipbroker BRS.

Four U.S. lawmakers introduced bipartisan legislation last month to bolster the U.S. shipbuilding industry, reduce reliance on foreign vessels and ultimately place more China-to-U.S. cargo on American vessels.

If the bill is passed in Congress, it would require that within 15 years, 10 percent of all cargo imported into the U.S. from China must be imported on U.S.-flagged vessels that are also and built in the U.S. and staffed by American crews.