Haifa's new port - a Chinese automatic machine for shipping

An aerial view of Haifa will offer a ready explanation for its reputation as a port city: a huge portion of its coastline is peppered with ships docked at its various shipping ports, and there’s seldom a shortage of ships off the coast waiting to dock and get their goods to dry land.

While Haifa Port’s origins hark back to the country’s British-ruled years, and the bay itself has a long history of imports and exports since about 1,400 BCE, there is a very young and very advanced new kid on the block: SIPG Bayport Terminal.

That unassuming name denotes the latest addition to Haifa’s coast: an 800-meter-long, 17.3-meter-deep privately owned and operated shipping port (or “terminal,” as the boat people call it). It went into action in September 2021, and was constructed by its current owner, SIPG (Shanghai International Port Group).

The first of its kind in Israel, SIPG Bayport Terminal has the capacity to process one million shipping containers annually. Perhaps the most interesting logistical facet of the new port is that, despite its enormous production capabilities, it relies on the labor of only about 100 people.

That notably low number of staff is possible thanks to the vast amount of automation technology built into the port’s DNA. From tracking containers, to reaching out to drivers, to onloading and off-loading cargo, the vast majority of work done at the terminal is done automatically.

Look, Ma, (pretty much) no hands

During a tour, I was treated to an up close view of the terminal’s lifeblood: eight autonomous 100-meter bridge cranes which prove that you can, in fact, get vertigo while looking up from the ground. These cranes are each responsible for unloading 25 shipping containers per hour, 24 hours a day, from the ships docked at the terminal. The cranes receive orders, remove specific containers based on a tightly kept schedule, and then lower them onto trucks waiting below, to be moved to the storage yard and brought to their final destinations.

Something like 90% of that work is done completely on its own, with human intervention taking place only during the last few meters (in order to avoid any potential truck driver pancake incidents as a result of a robot’s undervaluation of human life). To that end, a bay of crane operators sits in a nearby building, each manning a battle station of monitors, joysticks and tempting buttons that journalists want to touch but are scolded for touching.

“I’m not that stressed,” one crane operator told me after I explained that, if I were in his position, I would require six beers a night to unwind from the stress of moving 2-ton boxes through the air over living human beings via remote control. “It just requires a lot of experience. You need to know how to operate the controls; you need to know how to read your maps, to take extra responsibility. It’s just work that requires you to pay attention.”

These crane operators work in three shifts, so that the terminal can unload cargo constantly – all day, every day.

This is one aspect that sets apart the Haifa Bay Port from its sibling in Ashdod, built as part of the same initiative: Because it doesn’t work constantly, the Ashdod terminal won’t be viewed as very productive from a global perspective. Exporters want to know that any ship they send to be off-loaded can be processed quickly and efficiently, and taking the weekend off (as Ashdod does) is a pretty harsh mark on a shipping port’s perceived efficiency. Conversely, the Haifa Bay Port’s 24/7 activity is expected to rank it highly on the hypothetical “port leaderboards,” once it picks up momentum.

Recipe for a brand new port

So, how do you build a NIS 3.98 billion shipping terminal? If you want to do things the Israeli way, you offer a 25-year tender for ownership and wait.

At that point shipping companies like SIPG will bid for the opportunity to own and operate one of the most advanced terminals this side of the Fertile Crescent, and once a winner is decided, you present them with an 800-meter-long bathtub filled with sand, hand them a blueprint you drew up, and tell them to start building.

While such an offer is steeped in Israeli chutzpah, companies like SIPG are willing to bite. The company quickly began constructing the entire port terminal itself: asphalt, buildings, cranes, electric infrastructure, communications equipment – SIPG handled it all.

It makes a lot of sense that it would agree to the tender’s terms: access to the Middle Eastern market via Haifa has been a coveted economic asset for hundreds of years, and China’s potential for profit is staggering.

But what is the ballsiest wrinkle in the agreement? At the end of the tender’s 25 years, SIPG moves out and leaves the entire terminal to Israel to be reoffered for the next tender.

While SIPG was the only bidder on the first tender (which carried the baggage of building the whole thing from scratch), the next tender may offer more competition – and SIPG will be pretty incentivized to reclaim its hold on the terminal in 2046.

“We want to operate at this terminal for a long time,” said the company’s CEO, Miao Qiang. As we sat in his simple, classy office at the terminal headquarters, he explained to me that, seeing as they built the thing, it’s in SIPG’s best interest to stick around.

“This is our first port we’ve invested in outside of China, so we would like to [win the next tender] – but that’s not something we can decide,” he said; it’s only something they can bid well on and hope for.

“This is our first port we’ve invested in outside of China, so we would like to [win the next tender] – but that’s not something we can decide.”

Miao Qiang

At present, SIPG’s focus is on returning its huge initial investment. “We hope we can get our investment back as soon as possible, but for a port – especially a container port – it takes a lot of time,” said Qiang.

He explained that because the terminal is so young, its initial profits for the first few years of operation are expected to be pretty low.

“We can get our investment back after 10, 15 years, maybe more,” he said.

That’s a pretty steep estimate, but 10 solid years of profit doesn’t sound too bad at all.

Some concerns

At Cyber Week 2022 last week, a tall man named Adam Meyers presented a keynote on cyber-threat tracking. Meyers serves as the head of intelligence at CrowdStrike, an industry-leading cyber-threat intelligence company based in the US, which tracks, classifies and reports on cyber threats from dozens of nefarious entities and actors.

During his presentation, Meyers made a passing mention of the new port terminal, and how it could be a foothold for cyber espionage. After his presentation, I hunted Meyers down through the crowd of conference attendees and asked to hear more about CrowdStrike’s position on the terminal.

Something important to stress is that during my tour of the terminal, I was assured that the bay port is not associated with the Chinese government; it’s merely operated by a Shanghai-based company.

However, as far as CrowdStrike is concerned, that distinction is hazy at best.

“It’s all connected,” said Meyers. “If you start to look up the chain of who owns who, you find state-owned enterprises with Chinese Communist Party members on the board and investing in them. Chinese business is tied to the Chinese government in an inextricable way.”

To that end, Meyers continued, they’re interested in a variety of projects and deals that they can use both to grow their influence from a strategic perspective and to increase their economic power.

“Here in Israel, they’re building a port in Haifa, they’re involved in the Tel Aviv subway project. All of that comes with bringing Chinese technology; it comes with them having people in the country; it comes with them having more access. And with that often comes cyber espionage.”

It’s not unheard of for Chinese espionage to take place in situations like this. In 2018, news broke of China building the African Union’s headquarters and simultaneously planting Huawei cameras to peek in at the activities taking place there. At the time, French news site Le Monde reported that for five years, data had been transferred nightly from computers in the Chinese-built building to Chinese servers.

It follows that having access to the information from the port’s databases could supply the Chinese government with some very useful intelligence, assuming SIPG is collaborating with the Chinese state.

“Long term, knowing what’s coming in and going out of that port is important for them in terms of having a negotiating strategy when they come back and talk to the Israeli government,” he said. “They want to send ships; they want influence and control in this region, in this country and in that port, so that they can start to drive the narrative.”

So, in the event that the Shanghai-operated bay port is, in fact, in cahoots with the Chinese government, how should Israel stay wary?

“Going into everything [with both] eyes open is critical. Keeping that level of visibility gives you the ability to prevent them from having leverage against you,” said Meyers. 

“To be fair, I think China is doing what’s in China’s interest,” Meyers concluded. “They’re not necessarily doing what’s in Israel’s interest, though. Israel needs to do what’s in Israel’s interest.”

Wrapping up, shipping out

Meyers makes a convincing argument, but that doesn’t mean he’s right. There is no concrete evidence of the Chinese government conducting espionage via this port. What is concrete is the economic value the bay port serves to both the Chinese and Israeli economies.

Backing up Meyer’s claims have been a series of warnings in recent years from the US government against Israeli collaboration with the Chinese on critical infrastructure construction, as it could lead to intelligence breaches. Such warnings influenced Israel’s decision not to move forward with the China Railway Construction Company in the construction of the Tel Aviv Light Rail’s Green and Purple lines.

Even in a situation where the Chinese government is trying to get one over on Israel via cyber espionage, the latter’s industry-leading cybersecurity technology might well be up for the challenge – and at the end of the day, Israel now has an impressive and technologically-advanced port in the North.