The Head of the Panama Canal Authority has voiced concerns that a proposed $23 billion global ports transaction, which includes two Panamanian terminals, could compromise the canal’s longstanding commitment to neutrality.
The deal in question involves the sale of 43 ports by Hong Kong-based CK Hutchison to a consortium spearheaded by subsidiaries of Mediterranean Shipping Company (MSC) and BlackRock, as reported by the Financial Times.
This move has prompted apprehension among MSC’s competitors, who fear that greater control over global port infrastructure could offer the Swiss-Italian shipping giant an unfair commercial advantage.
Ricaurte Vásquez, Administrator of the Panama Canal Authority, noted that such a concentration of ownership could put certain shipping lines at a disadvantage and challenge the canal’s neutral stance between nations. He stated: “There is a potential risk of capacity concentration if the deal comes the way it is structured as we understand right now.
“If there is a significant level of concentration on terminal operators belonging to an integrated or one single shipping company, it will be at the expense of Panama’s competitiveness in the market and inconsistent with neutrality.”
These remarks follow repeated warnings from US President Donald Trump, who has threatened to “take back” the canal, reported the Financial Times. Originally completed by American engineers, the canal was gradually transferred to Panamanian control between 1977 and 1999 under a treaty that enshrined its permanent neutrality.
President Trump has also raised concerns regarding Chinese influence, as CK Hutchison currently operates two of the five ports adjacent to the canal, calling this a US national security issue.
The ongoing deal has placed Panama at the centre of US-China trade tensions, with the consortium seeking approval from Chinese antitrust authorities, according to the Financial Times. The move has also intensified competition for logistics routes among major industry players.
READ: CK Hutchison delays Panama port sale to BlackRock
In April, AP Møller-Maersk announced the acquisition of the railway running parallel to the canal. Vásquez remarked, “this has become a significant battleground on trans-shipment capacity”.
The Authority is also evaluating the potential impact on container throughput should Hutchison’s customers opt to relocate. Rather than wait for the outcome, Vásquez suggested the Canal Authority could revisit plans to build a terminal at the Port of Corozal on the Pacific side.
“Instead of feeling sorry about the situation… this is a great opportunity to put a proposal on the table,” Vásquez said.
In response to a severe drought in 2023, the Authority is exploring ways to diversify both water sources and business lines. One proposal under consideration is the construction of a pipeline along the canal to transport up to 1 million barrels per day of liquefied petroleum gas (LPG), freeing up canal capacity for other cargoes such as liquefied natural gas (LNG).
Vásquez also addressed a US request for free passage of government vessels through the canal, clarifying that “free is not an option as presented. Let’s discuss it. But the treaty is law in Panama, and its rule of law in the States, so no one can force anyone to break the law”.
Earlier this month, the Panama Canal Authority carried out scheduled maintenance on a chamber of the Pedro Miguel Locks as part of its ongoing infrastructure programme.
