China Reports it Held “Talks” with Maersk and MSC in Beijing
China’s Ministry of Transport issued a one-sentence notice reporting it had held “talks” with both Maersk and MSC Mediterranean Shipping Company. While no details were announced, it quickly raised speculation that Chinese officials were reacting to the two companies' assumption of the port terminal operations in Panama after the government annulled CK Hutchison’s concession and seized the operations in Balboa and Cristobal.
In the unusual statement, the Ministry of Transport announced it had “held separate talks with relevant officials from Maersk Group and Mediterranean Shipping Company regarding their international shipping operations.” It said the meeting had taken place on March 9 while offering no further details.
Chinese officials in both Beijing and Hong Kong, where Hutchison is based, have spoken out strongly against the court ruling and Panama’s actions against Hutchison. They have reportedly warned other companies about doing business in Panama while publicly saying it would defend Chinese companies’ rights and legal positions. It contends Panama’s actions raise doubt about investing in the country.
CK Hutchison and its operating company for the two ports, Panama Ports Company, have alleged that the seizure was the completion of a campaign by the government of Panama against the company. They asserted misstatements and distorted facts as the campaign progressed against the Panama Ports Company.
After the Supreme Court’s decision was first announced, Hutchison said it would take legal action and threatened both APM Terminals, the Maersk terminal operator, and any other companies that interfered with its operations. It said it could pursue legal charges and claims for damages against APM if it took over the operations.
Panama decided to split the operations, giving one port to APM and the other to MSC’s Terminal Investment Limited (TiL). Each company was given an 18-month temporary contract, while Panama said it will re-bid the concessions. Further, Panama took control of all the equipment and material at the ports to continue the operations. Panama has reported that both ports were back to full operations in a matter of days.
Last week, Hutchison announced that it had filed grievances against Panama and was seeking talks to resolve the situation. Panama Ports has filed an international arbitration, saying it would seek at least $2 billion in damages while also demanding the return of papers and other information seized by Panama after taking control of the operations.
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Speculation is centered on China taking further actions as a form of revenge against the two shipping companies. Reports are raising the possibility that China will launch retaliatory actions against the two companies to punish them for their involvement with Panama.
Media reports have also highlighted that BlackRock and MSC are believed to be pushing to complete the planned acquisition of CK Hutchison’s international portfolio of terminals. The companies had agreed to the deals a year ago, but they became stuck in the geopolitical issues between the United States and China. Late last year, it was speculated that the negotiations were at an impasse. The new speculation is that the companies were pursuing a move to carve up the portfolio, permitting COSCO to take the lead on ports viewed as critical to China. It is unclear if China’s dissatisfaction over the outcome in Panama has increased the opposition to the sale of the portfolio of terminal operations, even if COSCO could have a leading position.