The US Federal Maritime Commission (FMC) is monitoring China’s alleged retaliation against Panama-flagged vessels for its effect on global shipping, FreightWaves writes.
According to published reports, China has detained more than 90 Panama-flagged ships at its ports, after Panama took control of two terminals at either end of the Panama Canal in February. The terminals had been managed by Hong Kong-based CK Hutchison (CKHH)’s Panama Ports Company (PPC) subsidiary but on 29 January, Panama’s Supreme Court ruled that PPC’s concession was unconstitutional.
The Panama Canal is a critical route for merchant and military vessels moving between the Atlantic and Pacific oceans and for US grain and soyabean exports to Asia. It has become highly politicised, with US President Donald Trump saying the USA should take back control of the canal.
“China has now imposed a surge in detentions of Panama‑flagged vessels in Chinese ports under the guise of port state control, far exceeding historical norms,” CMC chair Laura DiBella was quoted as saying in the 30 March report.
“These intensified inspections were carried out under informal directives and appear intended to punish Panama after the transfer of Hutchison’s port assets.
“Given that Panama‑flagged ships carry a meaningful share of US containerised trade, these actions could result in significant commercial and strategic consequences to US shipping.”
The FMC was “closely monitoring” the situation and its effects on global shipping conditions, DiBella added.
The FreightWaves report said that Panama was the world’s largest ship registry, with more than 4,700 bulk and container vessels accounting for about 15% of global tonnage.
In March, about 75% of all ships detained in Chinese ports – or 92 of 124 vessels – were Panama-flagged, according to Asia Pacific regional port state control organisation Tokyo MOU. The proportion was up from about 35% in January and February and ranged from one to 10 days in length.
“China’s decision to detain or otherwise impede Panama-flagged vessels engaged in lawful trade destabilises supply chains, raises costs and erodes confidence in the global trading system,” a 3 April FreightWaves report quoted US Secretary of State Marco Rubio as saying on social media.
After the Supreme Court ruling that PPC’s concession to operate the Balboa and Cristobal terminals on the Pacific and Atlantic sides of the Panama canal was unconstitutional, Panama awarded 18-month interim operating agreements to Maersk’s APM Terminals and Mediterranean Shipping Company’s Terminal Investment Limited subsidiary.
CKHH has filed for arbitration against Panama, seeking more than US$2bn in damages, according to the 30 March FreightWaves report.
