Maersk and MSC Must Leave the Balboa and Cristóbal Ports: Demand from China
Financial Times notes that if they withdraw, the management of Balboa and Cristóbal would fall to US firms, an even worse outcome in Beijing’s eyes.
Chinese authorities demanded that European shipping companies Maersk and MSC “immediately” leave the Panama Canal ports whose management was temporarily entrusted to them by the Central American country after canceling the concession to Hong Kong-based CK Hutchison, the Financial Times (FT) reported on Wednesday.
According to the British newspaper, which cites anonymous sources, officials from the National Development and Reform Commission (NDRC, China’s main economic planning body) summoned senior executives last month from the Danish company, whose subsidiary APM Terminals will operate the port of Balboa (Pacific) for 18 months, and from the Swiss company, parent of TIL (Cristóbal, Atlantic).
Both shipping companies explained that these provisional concessions are necessary for trade to continue flowing through the Canal, while one of the sources cited by the FT pointed out that, in the event of withdrawal, the management of the Balboa and Cristóbal would probably fall to American firms, an even worse outcome in the eyes of Beijing. The information indicates that Maersk CEO Vincent Clerc attended a meeting with NDRC leaders in Beijing on March 20, while MSC Chairman Diego Aponte has been communicating with them through written correspondence.
The CNDR reportedly urged them “not to participate in illegal activities that harm the interests of Chinese companies ,” as well as to “respect business ethics and international laws ,” which the FT interprets as a sign that Beijing is increasingly willing to use its influence over foreign companies on issues it considers crucial to the security of its supply chains.
Tensions Continue
The article adds that on the same day that the Chinese economic planner conveyed this demand to Maersk and MSC, the Asian country’s Ministry of Transport also demanded that they protect supply chains from disruptions caused by the war in Iran. At the end of January, the Panamanian Supreme Court withdrew the concession that Panama Ports Company (PPC), a subsidiary of CK Hutchison, had held since 1997 over the ports of Balboa and Cristóbal, temporarily handing it over to APM Terminals and TIL for up to 18 months while a new concession is tendered.
The Supreme Court’s final decision came amid US threats to Panama to retake the Canal over China’s alleged influence on the waterway, while Beijing prevented CK Hutchison from selling to a consortium led by US asset manager BlackRock unless the deal included, according to some reports, a majority stake for China’s state-owned shipping company Cosco.
In response, PPC announced international arbitration proceedings valued at more than $2 billion, arguing that Panama carried out an “illegal takeover” of the ports. Meanwhile, Beijing, which threatened the Central American country with “paying a heavy price” if they did not reverse the ruling, has increased controls against Panamanian ships in Chinese docks. This week, Chinese authorities approved a series of rules that will allow them to retaliate against measures taken outside their territory that affect their interests.
