The U.S. Federal Maritime Commission has accused China of increasingly detaining vessels flying the Panamanian flag. The move follows Panama’s decision to terminate concessions held by Hong Kong–based CK Hutchison for two key ports along the Panama Canal. According to the commission, the detentions are being carried out under the pretext of port state control inspections and far exceed historical norms.
Panama’s Supreme Court ruled in late January that the concessions granted to Panama Ports Company for the Balboa and Cristobal terminals were unconstitutional. The decision came after an audit by the country’s comptroller identified irregularities in a 25-year extension granted in 2021. Panama subsequently transferred interim control of the ports to U.S. subsidiaries of Maersk APM Terminals and to Terminal Investment Limited, a unit of Mediterranean Shipping Company, under 18-month agreements.
The U.S. authority views the intensified inspections by China as a response to the reassignment of port operations. It warned that the actions could have significant commercial and strategic implications, as Panama-flagged vessels account for a substantial share of U.S. containerized trade. Interference with such vessels is seen as inconsistent with the commission’s mandate to ensure an efficient and competitive global transportation system.
Representatives of Maersk and MSC have also been summoned to Beijing for high-level talks, though no details of the discussions have been disclosed. China’s government rejected the allegations and accused Washington of making unfounded claims while attempting to assert control over the Panama Canal.
CK Hutchison has condemned Panama’s actions as unlawful and initiated international arbitration proceedings seeking more than $2 billion in damages. The company maintains that both the court ruling and the subsequent takeover of the terminals are illegal.
The Panama Canal handles about 5 percent of global maritime trade. CK Hutchison is planning a $23 billion sale of its global port portfolio, including the Panama assets, to a consortium led by BlackRock and Mediterranean Shipping Company.
Source: ZeroHedge