Panama Canal Authority Raises Concerns Over $23 Billion MSC Port Agreement and Its Impact on Canal Neutrality

Ricaurte Vásquez Morales, the head of the Panama Canal Authority (ACP), has voiced significant worries regarding a massive $23 billion port sale involving Mediterranean Shipping Company (MSC) and BlackRock, emphasizing that this deal could jeopardize the canal’s neutrality and diminish Panama’s standing in global trade. As reported by Reuters, this transaction involves ports currently owned by CK hutchison Holdings, including two crucial terminals in Panama: balboa and Cristobal.

Morales highlighted that if this deal proceeds as planned, it could lead too an overwhelming concentration of power within one shipping entity.This situation contradicts the long-established principle of neutrality that governs operations at the canal. The neutrality agreement was established through treaties signed back in 1977 during Jimmy carter’s presidency,which ultimately facilitated the transfer of control from the U.S. to panama by December 31, 1999.

The proposed acquisition would see MSC—currently recognized as the largest ocean carrier globally—gaining substantial influence over port infrastructure across 23 countries. This raises alarms among competing shipping firms and logistics providers who fear that such dominance would skew competition unfairly in favor of MSC.

Vásquez pointed out that current dynamics within global port competition resemble a fierce battleground for transshipment capacity.He expressed concerns about potential traffic loss for the canal if existing customers of Hutchison decide to relocate their operations to othre ports under MSC’s control.

Interestingly, former U.S. President Donald Trump has previously suggested that Chinese interests are influencing operations at the Panama Canal due to CK Hutchison’s ownership stakes in local ports. He even proposed reclaiming control over it as a means to counteract perceived Chinese influence—a claim not supported by facts since China does not govern the canal itself but has shown strong opposition against this sale.

In response to these developments, China’s President Xi Jinping reportedly expressed his displeasure with Hutchison moving forward with its plans; consequently, China’s antitrust authority initiated an investigation into splitting up ownership of these ports from other assets involved in this extensive deal.

Vásquez sees an chance amid these challenges for diversification strategies within ACP’s framework. He suggested reviving plans for a terminal at Port Corozal on the pacific side—a move aimed at allowing ACP greater autonomy rather than relying heavily on external companies.

“This is an excellent moment for fresh proposals,” Vásquez shared with Financial Times readers.

Beyond concerns surrounding MSC’s acquisition efforts, ACP faces scrutiny from U.S. Federal Maritime Commission (FMC). The FMC is especially focused on how transit slots are allocated following last year’s drought-induced restrictions on ship traffic which led to increased tolls—a situation FMC Chairman Louis Sola described as their “top priority.”

To tackle future climate-related challenges effectively, ACP is collaborating with engineers from U.S Army Corps on water management improvements—including plans for a new reservoir near Indio River designed specifically to stabilize water levels critical for maintaining transit capabilities during dry spells.

Additionally, there are discussions about constructing a pipeline along the canal intended for transporting liquefied petroleum gas (LPG). This pipeline could facilitate unloading LPG or ethane cargoes on one side while reloading them onto ships heading out from another side—thus optimizing capacity usage while addressing rising demands particularly noted among Asian markets seeking liquefied natural gas (LNG).This initiative also aims at recovering lost traffic experienced during last year’s drought when many LNG clients opted for alternative routes due to limited availability and higher costs associated with transit slots through customary channels.

meanwhile, there have been requests from U.S authorities advocating free passage through canals specifically designated for American goverment vessels; however,Vásquez clarified such provisions aren’t feasible under current laws or treaty obligations—even noting that even vessels belonging to Panama must adhere strictly to toll requirements: “Free isn’t really an option here,” he remarked candidly.