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The head of the operator of the Panama Canal has warned that a $23bn global ports deal that includes two facilities in the Central American country could put the waterway’s neutrality mandate at risk.
The planned sale of 43 ports by Hong Kong’s CK Hutchison to a consortium led by subsidiaries of the Mediterranean Shipping Company and BlackRock has raised fears among MSC’s rivals that the Swiss-Italian group’s control of a swath of the world’s port infrastructure would give it an unfair advantage.
Ricaurte Vásquez, Panama Canal Authority administrator, said the concentration of ownership could disadvantage some shipping companies and upset the canal’s principle of neutrality between nations.
“There is a potential risk of capacity concentration if the deal comes the way it is structured as we understand right now,” he said. “If there is a significant level of concentration on terminal operators belonging to an integrated or one single shipping company, it will be at the expense of Panama’s competitiveness in the market and inconsistent with neutrality.”
The comments come after repeated threats by US President Donald Trump to “take back” the canal, which was finished by American engineers more than a century ago but gradually handed back to Panama between 1977 and 1999 under a treaty that guaranteed its permanent neutrality.
Trump has warned that Chinese influence in the canal — which includes Hutchison’s control of two of the five ports adjacent to it — poses a US national security risk.
That has put tiny Panama in the middle of the US-China trade war, with a global consortium of investors launching a deal to buy the ports, in a move rejected by Chinese regulators. The consortium behind the deal has held talks with the Chinese antitrust regulator as it seeks ways to ensure its approval.
It has also accelerated a race for logistics routes between big groups in the sector. AP Møller-Maersk revealed in April that it had bought the railway that runs alongside the canal.
“This has become a significant battleground on trans-shipment capacity,” Vásquez said.
He also said canal authorities were worried the ports deal would cost it some container traffic if Hutchison’s customers moved elsewhere.
Rather than wait for the deal, he said the canal should see this as an opportunity to become a terminal operator itself by reactivating a project to build a terminal in the Port of Corozal at the Pacific end of the canal.
“Instead of feeling sorry about the situation . . . this is a great opportunity to put a proposal on the table.”
A record drought that disrupted operations in 2023 gave fresh impetus to a plan by the canal authority to diversify its water sources and business lines, which was further boosted last year by a Panama Supreme Court ruling that returned to it areas near the canal.
Vásquez said the authority was considering building a pipeline along the length of the canal to carry up to 1mn barrels per day of liquefied petroleum gas — a cargo that has been exported from the US in increasing volumes amid strong demand from China and other Asian countries.
Under a proposal being considered by the canal’s board, tankers could offload LPG and ethane products at the Caribbean Sea entrance to the canal and transport them by pipeline to the Pacific, where they could be picked up by waiting tankers.
This would free up capacity on the canal for shipment of other products, including liquefied natural gas, a trade that is expected to increase sharply in coming years following a boom in terminal construction along the Gulf of Mexico. The canal lost many LNG customers as a result of the drought restrictions and its subsequent increase in transit fees.
The canal must also deal with persistent pressures from the Trump administration. Vásquez said a US request to allow its government ships to pass through the canal for free was not possible under current rules, highlighting that even Panamanian navy vessels had to pay.
“Free is not an option as presented,” he said. “Let’s discuss it. But the treaty is law in Panama, and it’s rule of law in the States, so no one can force anyone to break the law.”
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