China is detaining Panama-flagged vessels in greater numbers amid an escalating row over terminals on either side of the Panama Canal, in what U.S. officials have described as a retaliation.
Nearly 70 ships linked to the Central American country have been held for inspections at Chinese ports since March 8, according to a Thursday report by maritime analysis outlet Lloyd’s List.
Citing irregularities, Panama’s Supreme Court in January voided the lease concession previously awarded to a subsidiary of the Hong Kong-based conglomerate CK Hutchison for the terminals at Cristóbal and Balboa. The ruling followed pressure from U.S. President Donald Trump, who shortly after taking office railed against China’s influence in the Western Hemisphere and the canal in particular, vowing to “take it back.”
China warned that Panama would pay “a heavy price” and has responded with what appear to be retaliatory steps, including instructing state-owned enterprises to halt new investments in the country and summoning the foreign shipping firms appointed to serve as interim operators of the two ports.
Newsweek has contacted the Chinese and Panamanian foreign ministries for comment by email.
Bulk carriers and vessels aged 15 years or older made up the majority of those detained, Lloyd’s List reported, with Japanese-owned ships accounting for the largest share at 39 percent.
The U.S. Federal Maritime Commission said it was closely monitoring developments involving the Panama Canal terminals and that what it described as China’s retaliatory actions could affect global shipping conditions.
“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,” Commissioner Laura DiBella said in a statement. “These intensified inspections were carried out under informal directives and appear intended to punish Panama after the transfer of Hutchison’s port assets.”
She added that Panama-flagged vessels carry a “meaningful” share of U.S. containerized trade and that China’s actions could have significant consequences for U.S. shipping.
The development follows an announcement by Chinese state-owned shipping giant Cosco, the world’s fourth-largest by market share, that it was suspending operations at the Port of Balboa. The move came 15 days after Panama Ports Company (PPC), the CK Hutchison subsidiary, was forced to vacate the terminals.
PPC has initiated legal action over what it called an “unlawful takeover,” citing damages exceeding $2 billion.
“The State has continued to choose a path of conflict and has not coordinated regarding access to property or compensation, instead making inaccurate statements regarding PPC and its property,” the company said in a statement shared with Newsweek on Tuesday.
It added: “In a chilling signal to foreign investors, Panama is seeking to slow the arbitration, drag into the case parties that are not a part of the applicable contract, and continue its attack campaign, as PPC had warned.”
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