China’s Cosco halts Panama port operations as tensions rise
China Cosco Shipping Corp. suspended its services at Panama’s Balboa port, a local media report said, after Beijing warned of a “heavy price” for the Central American country’s forced takeover of the facility from Hong Kong conglomerate CK Hutchison Holdings.
The state-owned shipping giant announced its decision to halt all of its departures and arrivals at the port in a notice to customers dated March 10, according to the report in La Prensa. While all confirmed bookings will be cancelled, cargo that has already arrived will be processed as normal, the outlet said.
China previously asked its shipping companies to consider rerouting cargo through ports outside of Panama if it didn’t result in a significant extra cost, it was reported in February. Beijing also instructed state firms to halt talks over new projects in the country.
Cosco didn’t immediately respond to a request for comment.
The Balboa port is one of two terminals along the strategic Panama Canal that have become a flashpoint in the intensifying rivalry between the US and China in Latin America. Panama’s top court voided CK Hutchison’s contract to operate those two facilities in January amid pressure from President Donald Trump, followed by a forced takeover last month.
The facilities are part of the 43-port global portfolio that CK Hutchison, founded by billionaire Li Ka-shing, had planned to sell to a consortium backed by BlackRock for more than $19 billion in cash.
The U.S. investment firm’s involvement angered China, which threatened to launch investigations into the deal, first announced last March. CK Hutchison last year invited Cosco to join the buyer group in a bid to win Beijing’s approval.
Negotiations have made little progress in recent months, with dealmakers pinning their hopes on an upcoming meeting between Trump and Chinese leader Xi Jinping to yield a political breakthrough.
To move the protracted talks forward, CK Hutchison and the consortium are considering putting the firm’s other 41 ports under different ownership structures, which may give Cosco larger stakes in ports in regions that are more friendly with China, it was reported earlier.
For now, Panama has handed interim operations of the Balboa and Cristobal terminals to APM Terminals, a division of AP Moller-Maersk, and Italian billionaire Gianluigi Aponte’s MSC Mediterranean Shipping Co. MSC unit Terminal Investment is also part of the buyer consortium.
It’s unlikely that Cosco’s latest move will significantly affect operations at the Balboa port, which relies on Maersk for about 80% of its cargo handling, La Prensa reported.