China has intensified the detention of vessels registered under the Panama flag, escalating tensions in an ongoing dispute regarding the management of significant ports associated with the Panama Canal.
The US Federal Maritime Commission (FMC) is closely observing this increase, which seems to correlate with a legal decision made in Panama impacting HK- based CK Hutchison.
In January, Panama's Supreme Court annulled the legal foundation of a 1997 agreement that permitted CK Hutchison’s Panama Ports Company to run the Balboa and Cristobal terminals situated on either side of the canal.
Subsequent to the court's verdict, Panama has appointed operators connected to the United States, including Maersk’s APM Terminals and Mediterranean Shipping Company’s Terminal Investment Limited, under provisional arrangements lasting 18 months.
This decision followed mounting pressure from the US aimed at diminishing Chinese influence in the area, pivotal for approximately 5% of worldwide maritime trade.
Data from Lloyd’s List Intelligence indicates that the number of Panama- registered ships detained in China has dramatically exceeded historical averages, with nearly 70 incidents documented since March 8.
Commissioner Laura DiBella remarked that the inspections seem to be a form of retaliation.
These heightened inspections have been conducted under informal directives and appear to be punitive measures against Panama post the transfer of Hutchison’s port assets, DiBella noted in her statement.
She cautioned about potential broader implications for international commerce and interests of the United States.
"Since Panama-flagged vessels represent a significant portion of US containerized trade, these actions could lead to considerable commercial and strategic repercussions for US shipping," she explained.
The FMC emphasized its authority to investigate foreign government actions that could be detrimental to US trade.
In another related development, China's transportation authorities have summoned major shipping companies Maersk and Mediterranean Shipping Company for high-level talks in Beijing.
CK Hutchison, which has managed the ports for nearly thirty years, has rejected the Panama court's decision, alleging that authorities unlawfully seized its assets.
The company has initiated international arbitration against Panama, claiming over $2 billion in damages.
This dispute has further complicated CK Hutchison’s ongoing efforts to sell a majority stake in its global ports business for $23 billion to a consortium led by BlackRock and Mediterranean Shipping Company, heightening uncertainty within the global shipping sector.
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