China’s monthslong campaign of detaining Panama-flagged ships has wound down after the two countries reached what Panama called a “consensus” in Beijing, even as the underlying dispute over two Panama Canal ports remains unresolved.
Chinese ports held onto just 17 Panama-flagged vessels over the first three weeks of July, a steep drop from May’s peak of 140 and roughly in line with the 21-per-month average seen before the crackdown began. Only 10% of inspections in July ended in a detention, compared with 37% when the campaign was at its worst in May.
Panama’s foreign ministry credited the shift to talks its officials held in Beijing on July 16 and 17 over renewing a bilateral maritime transport agreement, and said its ships were seeing better treatment as a result.
The detentions trace back to January, when Panama’s Supreme Court ruled, under sustained pressure from President Trump, that a nearly 30-year concession letting CK Hutchison’s Panama Ports Company run the Balboa and Cristóbal terminals was unconstitutional. Panama’s government seized both ports in February and handed temporary control to Maersk’s APM Terminals and MSC’s TIL Panama.
Sponsored · McLaren Resources Inc.
China responded by ramping up Port State Control inspections of Panama-flagged ships, and China’s state carrier COSCO pulled its own vessels from the Balboa route in a show of support for Beijing’s position.
The Federal Maritime Commission’s chair called the inspections “retaliatory and unjustified” and cautioned that Washington could open a formal probe targeting Chinese-controlled shipping lines as a result. Panama Ports Company, meanwhile, filed international arbitration seeking more than $2 billion in damages over what it calls an illegal takeover.
Read: Xi Government Signals Displeasure Over CK Hutchison’s $23 Billion Ports Sale
The pressure campaign pushed hundreds of ships out of Panama’s registry, the largest in the world, with 264 cargo ships dropping the Panamanian flag in June alone. The fight over who ultimately runs Balboa and Cristóbal, though, has not moved. The arbitration claim remains pending, and CK Hutchison‘s broader $23 billion sale of the two ports to a BlackRock and MSC-led consortium is still stalled over Beijing’s objections.
