On Monday, February 23rd, Panamanian President José Raul Mulino ordered the temporary takeover of two ports operated by a subsidiary of Hong Kong-based CK Hutchison Holdings Limited, commonly known as CK Hutchison.
This move came after Panama’s Supreme Court declared the concession rights held by CK Hutchison invalid. CK Hutchison is owned by Hong Kong tycoon Li Ka-shing.
President Mulino stated that the management and operation rights of these two CK Hutchison ports located on the strategic Panama Canal will be returned to the Panama Maritime Authority to “ensure uninterrupted, safe, and efficient port operations.”
Mulino emphasized that the takeover is limited to the movable equipment within the ports. He mentioned that unless the equipment is sold to new owners, the assets including the cranes will be returned to CK Hutchison once the “decisive reason for the takeover disappears.”
According to La Prensa, a local newspaper, APM Terminals, a subsidiary of the Maersk Group, will temporarily operate one of the ports, while a local subsidiary of the Mediterranean Shipping Company (MSC) based in Switzerland will operate the other port until new contracts are signed under a new bidding process.
In January, Panama’s Supreme Court rejected CK Hutchison’s concession rights to operate these ports, which was seen as a significant blow to Beijing. U.S. Secretary of State Marc Rubio praised this decision.
The Panama Canal connects the Atlantic and Pacific Oceans, allowing ships to bypass South America and save about 13,000 kilometers of travel distance, reducing up to 18 days of sailing time and significant fuel costs. Approximately 5% of global maritime trade goes through this crucial strategic waterway, with the United States being its largest user.
Aside from its commercial value, the canal also serves as a vital passage for the U.S. Navy to swiftly transfer warships and military supplies between the two oceans in times of conflict. Controlling this passage in times of war or conflict ensures the stability of the supply chain.