Panama has formally annulled decades-long port concessions held by a subsidiary of Hong Kong-based conglomerate CK Hutchison and transferred interim control of the strategically vital Balboa and Cristobal terminals to Danish and Swiss shipping giants, in a move widely viewed as a victory for U.S. efforts to counter China’s influence over the Panama Canal region.
The Panamanian government published the official decree Monday in the country’s gazette, formalizing a Supreme Court ruling last month that found the concessions held by Panama Ports Co. (PPC), a CK Hutchison unit, to be unconstitutional. The ports have been operated by the company for more than 25 years.
Under the interim arrangement, which will last up to 18 months while a new concession is awarded, APM Terminals — a unit of Danish shipping giant A.P. Moller-Maersk — will operate the Balboa terminal on the Pacific side of the canal. Mediterranean Shipping Co.’s port operating subsidiary, Terminal Investment, will take over the Cristobal port on the Atlantic side.
In a statement to CNBC, Maersk confirmed APM Terminals had begun temporary operations at Balboa. “One of the main tasks will be the deployment of a new terminal operating system and the training of the workforce in this new system,” the company said.
The Panamanian government formally assumed control of port facilities Monday, including cranes, vehicles, computer systems and software, under a decree aimed at ensuring uninterrupted operations during the transition.
CK Hutchison cries foul
CK Hutchison pushed back against the government’s action, with its Panama Ports subsidiary ceasing operations at both terminals Monday. The company described the executive decree as “unlawful” and said it would continue consulting legal advisors regarding the ruling and the takeover.
The Hong Kong conglomerate has already initiated arbitration proceedings against Panama and warned earlier this month that “any steps” Maersk or its subsidiary takes to operate the ports without its agreement would likely “result in legal recourse.”
Following the court-ordered takeover, shares of CK Hutchison closed 2.6% lower on Tuesday in Hong Kong, though the stock remains up approximately 15% year-to-date, according to LSEG data.
Geopolitical flashpoint
The port dispute has emerged as a significant point of tension between Washington and Beijing, with Panama caught in the middle.
The controversy escalated last year when U.S. President Donald Trump alleged that China was “running the Panama Canal,” prompting CK Hutchison to negotiate a $23 billion deal with a BlackRock-led consortium to sell its non-Chinese port assets. Beijing intervened, criticizing the sale as “kowtowing” to American pressure and stalling the transaction.
China has since warned that Panama would “pay a heavy price both politically and economically” unless it changed course. According to a Bloomberg report last week, Beijing has reportedly directed state firms to halt talks over new projects in Panama and urged shipping companies to consider rerouting cargo through other ports.
The Panamanian court ruling is seen as a major victory for the White House, which has made limiting China’s influence over the global trade artery a top priority.
