Although Panama has taken control of two ports that were set to be sold off in a high-profile, geopolitically controversial transaction, dozens of other ocean freight hubs that were part of that proposed $22.8 billion deal could still change hands.
According to a report from The Financial Times, Mediterranean Shipping Company (MSC) and BlackRock are still in negotiations with CK Hutchison to acquire its operations at 41 ports in Europe, Southeast Asia and the Middle East. The Panama ports would not be included in this deal, the report said.
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The Hong Kong-based port operator has sought to sell its non-Chinese ports business, which includes terminals in prominent Southeast Asian gateways including Port Klang in Malaysia, Laem Chabang in Thailand and Cai Mep in Vietnam, as well as terminals at European ports like Rotterdam, Barcelona and Felixstowe.
Both parties expect the latest iteration of the transaction to close by the middle of 2027, according to FT. The report indicated that the upcoming summit between U.S. President Donald Trump and Chinese President Xi Jinping starting March 31 is likely to help the parties move closer to an agreement.
Cosco Shipping is also in talks with the wider consortium on having an unknown role in the deal. The Financial Times initially reported that China had threatened to nix the deal including the Panama ports if the state-owned ocean carrier wasn’t given a controlling stake. This time, the report suggests that Cosco’s ownership stake would vary by port and that some terminals in jurisdictions hostile to China could be carved out.
Under the initially proposed deal last March, BlackRock was expected to take a controlling stake in the Panama ports of Balboa and Cristóbal, while MSC would hold majority ownership of the rest of CK Hutchison’s portfolio.
While the transaction was held up internationally due to China’s protests, which had objected to the arrangement due to BlackRock’s American ties, domestic complaints within Panama ended up doling out the blow that prevented the deal from being finalized.
Last month, Panama’s Supreme Court ruled that CK Hutchison’s contract to operate the Panama Canal-adjacent ports was unconstitutional, thus annulling a concession that had been in place since 1997 with the Panamanian government. The deal was re-upped in 2021 but the extension came under national scrutiny over the past year amid a government audit that found contractual irregularities, alongside multiple lawsuits including one from the country’s comptroller general.
The ruling gave Trump and China hawks in the U.S. government a victory in their quest to rid the area of potential Chinese influence on the Panama Canal, as well as the greater Latin America region.
Upon seizing control of both ports, the government put Maersk’s APM Terminals in charge of managing the Port of Balboa on the Pacific side of the canal, while MSC’s Terminal Investment Limited (TIL) is now operating the Atlantic oceanside Port of Cristóbal.
The two ports handle 39 percent of all of Panama’s total container traffic and employ roughly 7,000 people.
CK Hutchison’s local subsidiary Panama Ports Company, the former operator of the Balboa and Cristóbal ports, started arbitration proceedings against Panama, accusing the country of an unlawful takeover of both ports. The firm has been backed by the Hong Kong government, which has condemned the takeover and said the Supreme Court’s ruling “disregarded facts and breached faith.”
PPC described the takeover of the two major ports as poorly coordinated and nontransparent, with the company saying none of the government’s actions were advised to or coordinated with them ahead of time.
On Thursday, Panama officials searched and removed property from the PPC office, again catching the ire of the port operator. The Hutchison subsidiary accused the authorities of entering a private storage site without notice and ignoring requests to safeguard sensitive corporate data.
In a statement, the Panamanian government said the investigation was “carried out exclusively by the Public Ministry of Panama in the exercise of its legal powers.”
The company argues its rights as an investor have been compromised, with Panama’s economy minister Felipe Chapman saying the firm is seeking $1.5 billion in damages. According to Chapman, the arbitration process could take years.
Before the raid took place, Panama President José Raúl Mulino defended the high court’s decision, saying the Hong Kong conglomerate had acted with “arrogance” and without transparency.
“That company did whatever it wanted in Panama for decades, since it came to this country,” Mulino said.
