Panama gives temporary oversight of canal ports to Maersk and Mediterranean Shipping Company

Panama on Monday published in its official gazette a Supreme Court ruling canceling key port contracts held by a subsidiary of CK Hutchison 0001.HK, clearing the way for Maersk MAERSKb.COand the Mediterranean Shipping Company to take over temporarily.

The publication finalizes the legal annulment of concessions for the Balboa and Cristobal terminals near the Panama Canal, which Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison, had operated for more than two decades.

The Panama Maritime Authority (AMP) has taken possession of both ports by decree to ensure uninterrupted operations, said Alberto Aleman Zubieta, head of the technical team overseeing the transition, after the ruling became final upon publication.

On Monday afternoon, the government said it approved two temporary concession contracts with AMP, lasting up to 18 months, for the operation of the Balboa and Cristobal terminals. Maersk subsidiary APM Terminals Panama will operate the Balboa port, while TIL Panama, part of the Mediterranean Shipping Company, will run operations at Cristobal.

Panamanian President Jose Raul Mulino said the temporary contracts had been issued as "a legitimate tool that respects asset ownership."

"Let me be clear, this does not imply an expropriation of those assets, but rather their use to ensure the operation of the ports until their real value is determined for the corresponding actions. I repeat, this is not an expropriation,” Mulino said in a televised address on Monday afternoon.

Early in February, Mulino had said the government would move forward to formalize an agreement with APM Terminals Panama to manage and control the ports once the ruling became legally binding.

Mulino said the arrangement would remain in place while the state develops a new "competitive" concession framework to be awarded in the future, "with the humility not to repeat the mistakes of the past."

He said neither port operations nor employment will be affected throughout the process.

Maersk did not immediately have a comment on the matter.

"The moment the official gazette publishes the court's ruling, Panama Ports loses control of the ports," political analyst Jose Stoute said ahead of the gazette publication.

The ruling issued in late January came amid growing U.S.-China rivalry over global trade routes and marks a win for Washington.

U.S. President Donald Trump has pushed to curb Chinese influence over the Panama Canal, which carries about 5% of global maritime trade.

-Elida Moreno/Reuters