Hutchison pushed out as Maersk, MSC assume interim operations at Panama Canal ports

Temporary concession arrangements

Part of Danish shipping and logistics group AP Moller-Maersk, APM Terminals Panama assumes temporary control of the Port of Balboa under an 18-month contract valued at US$26.1M. MSC’s terminal-operating arm, TIL, is taking over the Cristóbal terminal on a similarly timed contract worth US$15.8M.

In a statement on 24 February, APM Terminals confirmed it has begun temporary operations at Balboa.

“During this initial stabilisation phase, our responsibility is to ensure that Panama maintains the continuity and reliability of its logistics hub, while safeguarding cargo and protecting the safety of all the workforce,” APM Terminals Panama chief executive Marliz Bermudez said.

Key tasks during the so-called stabilisation phase include the deployment of a new terminal operating system and training the workforce, while ensuring labour and operational continuity, customer service, system migration, and asset diagnostics and audit. 

Notably, under the initial plan, APM Terminals was set to ‘temporarily’ operate both terminals and confirmed this in a statement issued in late January.

TIL, meanwhile, has been approached for comment but has not responded to the recent developments.

CK Hutchison reacts

On 24 February, CK Huthison said its subsidiary Panama Ports Company (PPC) had been forced to cease terminal operations. The company reported that Panama “made direct physical entry into the terminals at Balboa and Cristóbal and took over administrative and operational control of PPC’s terminals, also excluding representatives of PPC from the terminals.”

CKHH added: Government representatives arrived without invitation, informed PPC that the concession no longer exists, instructed PPC employees to be transferred out of PPC, prohibited communication with PPC, and demanded compliance with government instructions “under threat of criminal prosecution”.

The company reiterated its view that the ruling and the takeover of the terminals are unlawful, and said it will continue to consult legal advisors and pursue all available recourse, including national and international legal proceedings against the Republic of Panama and involved third parties. 

CKHH has also notified Maersk that it could face legal action if its subsidiary assumed operations at the terminals.

Geopolitical background

The Panama Canal has long been a focal point in US-China maritime competition. Shortly after returning to the White House, President Donald Trump vowed that the US would “take back the Canal,” criticising China’s influence over operations. There was considerable speculation that his comments were directed at Hong Kong-based CKHH.

Following these remarks, CKHH announced a US$22.8Bn transaction, in which a consortium led by BlackRock’s Global Infrastructure Partners and MSC’s TIL unit would acquire CKHH’s 90% stake in PPC, along with a global portfolio of more than 40 ports in 23 countries.

The deal drew strong criticism from Chinese authorities, who described it as “an act of hegemony by the US” and promoted COSCO Shipping’s involvement in the transaction.

Following the Supreme Court ruling, Bloomberg reported that China instructed state firms to halt discussions on new projects in Panama and urged shipping companies to consider rerouting cargo through alternative ports. The Hong Kong government also expressed disapproval of the ruling.

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