Panama has canceled a long-running China-linked port concession and handed interim control of two Panama Canal terminals to global shipping giants Maersk and MSC.
Panama formally annulled key port contracts held by a subsidiary of Hong Kong-based CK Hutchison Holdings on Monday, transferring temporary operations of the Balboa and Cristobal terminals near the Panama Canal to units of A.P. Moller-Maersk and Mediterranean Shipping Company.
The move, published in Panama’s official gazette, formalized a January Supreme Court ruling that found the concessions held by Panama Ports Company, a CK Hutchison subsidiary, unconstitutional, according to reports by CNBC. The concessions had been in place for more than two decades.
Under the interim arrangement, APM Terminals, a Maersk unit, will operate the Balboa port on the Pacific side of the canal, while MSC’s Terminal Investment arm will manage the Cristobal terminal on the Atlantic side.
Panama’s government said the temporary concessions would last up to 18 months while a new, competitive framework for the ports is developed.
Panamanian authorities took possession of the facilities, including equipment and systems, by executive decree to ensure uninterrupted operations, officials said, according to Reuters.
President Jose Raul Mulino said in a televised address that the measure “does not imply an expropriation” but rather ensures continued operation while the state determines next steps.
CK Hutchison reportedly described the ruling and takeover as “unlawful” in a filing to the Hong Kong Stock Exchange and said it is consulting legal advisers regarding potential national and international action.
The company also alleged that Panamanian authorities threatened its employees with criminal prosecution if they refused to leave the terminals, per Reuters.
The dispute has become a geopolitical flashpoint between Washington and Beijing.
The court’s ruling was viewed as a significant victory for the United States, which has sought to curb Chinese influence over the strategic waterway, CNBC reported.
In March 2025, President Donald Trump ordered the Pentagon to prepare contingency plans to “reclaim” the Panama Canal if necessary, including by using force, according to prior reporting by The Dallas Express.
At the time, U.S. officials told NBC News that options ranged from expanding security partnerships with Panama to deploying U.S. troops to secure the canal.
The canal handles roughly 5% of global maritime trade, according to Reuters.