China COSCO Shipping Group Suspends Port Operations, Panama Government Gets Anxious: Hopes for Restoration

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【Text/Observer Network Wang Yi】 After the Panamanian government forcibly took control of two ports at the Panama Canal, COSCO Shipping Group reportedly suspended its operations at the Balboa port. On March 13, local time, the Panamanian government stated that it hopes COSCO Shipping will reconsider this decision and resume operations at the port.

According to a report by Reuters UK on the 13th, Jose Ramon Icaza, Panama Canal Authority Minister, told the media during an event that COSCO Shipping’s suspension of use at the Balboa port “caught us somewhat off guard.” He pointed out that COSCO Shipping’s freight volume accounts for about 4% of the port’s total cargo.

“All cargo is important, and COSCO Shipping’s cargo is certainly important to Panama,” Icaza said. “We obviously hope they will reconsider their decision not to use the Balboa port.”

Data shows that by 2025, Panama Canal revenue will account for more than 7% of the country’s GDP. A paper published in the journal Transport Business and Management Research in December last year stated that over 20% of Panama’s fiscal revenue in the last fiscal year came from canal operation dividends.

A few days before Icaza made these remarks, Panama’s La Prensa reported that COSCO Shipping issued a notice to clients on the 10th, stating it would immediately suspend shipping services at the Balboa port.

The notice indicated that COSCO Shipping would cease all inbound and outbound port operations, and all confirmed bookings would be canceled. Imported goods already released will still be delivered, but empty containers must be returned to the Manta and Colon terminals in Colón Province, Panama.

Lloyd’s List reported that COSCO Shipping also issued an internal directive marked as “urgent,” requiring the cessation of accepting cargo destined for the Balboa port.

COSCO Shipping’s vessels COSCO Shipping Group

COSCO Shipping has not responded to the reports, and it is currently unclear whether the suspension is temporary or long-term.

The Balboa port is located on the Pacific side of the Panama Canal and, together with the Cristóbal port on the Atlantic side, is one of the two most critical ports for the canal. Disputes over the operation rights of these two ports have become a geopolitical focus over the past year.

A subsidiary of Hong Kong Changjiang and Hutchison Industries, Panama Port Company, obtained a 25-year concession for these two ports in 1997. After the expiration in 2010, the contract was automatically renewed for another 25 years.

However, under pressure from U.S. President Trump, the Panamanian Supreme Court in January this year declared the contract authorizing Panama Port Company to operate the Panama port terminals invalid, citing “unconstitutionality.” CK Hutchison strongly opposed this and stated it would take all appropriate legal measures to protect its rights.

On February 4, local time, containers were stacked at Panama Port Company. IC Photo

The relevant ruling took effect on February 23. On that day, the Panamanian government forcibly entered the Balboa and Cristóbal ports, taking over administrative and operational control of the two container terminals, and barred company representatives from entering. On the 26th, the Panamanian government suddenly searched the Panama Port Company’s offices, seizing documents and materials.

Before the February 26 search, Panamanian President Laurentino Cortizo boldly stated that he did not know what actions the Chinese government might take after losing port operation rights, but if any situation arose, Panama would respond.

He said, “If you ask my personal opinion, I don’t think anything will happen… What has Panama gained from its relationship with China? Of course, China is an extremely important country in the world.”

In response, Chinese Foreign Ministry spokesperson Mao Ning stated on the 27th that China’s position on the Panama port issue is clear and that China will firmly safeguard the legitimate rights and interests of Chinese enterprises.

Previously, Bloomberg reported that China had asked its shipping companies to explore alternative routes bypassing the Panama Canal and instructed some state-owned enterprises to suspend new infrastructure projects in Panama. The report indicated that these measures could impact potential investments worth billions of dollars.

Wang Jiangyu, Professor of Law at City University of Hong Kong Law School and Director of the China Law and Comparative Law Research Center, told Observer Network earlier that condemning Panama morally and accusing it of unconstitutional rulings and undermining judicial independence is clearly not enough. “We must hit hard, hit where it hurts, even if we can’t deliver a ‘one-hit kill,’ the necessary measures must be implemented.”

This article is an exclusive report by Observer Network. Unauthorized reproduction is prohibited.