The Federal Maritime Commission (FMC) has renewed warnings over China's detention of Panama-flagged vessels, raising the prospect of remedial action against Chinese-controlled carriers operating in US trades, according to Commissioner Laura DiBella.
DiBella said China's port state control inspections against Panama-flagged ships had continued 'with no sign of abatement.' She described the detentions as retaliatory and said they appeared aimed at punishing Panama over its Supreme Court decision to invalidate the concession previously held by Hong Kong-based CK Hutchison for the Balboa and Cristóbal terminals on either side of the Panama Canal, according to Splash247.
Operational Impact and Context
Panama-flagged vessels carry a meaningful share of US trade, DiBella noted, warning that unwarranted detentions could have commercial and strategic consequences for US shipping. She added that the world could not normalise the practice, warning it would set a damaging precedent for global supply chains, Splash247 reported.
The FMC has powers to investigate whether foreign government rules or practices create unfavourable conditions for US foreign trade. DiBella said an investigation into conduct at Chinese ports could lead to remedial measures, including action affecting Chinese-controlled carriers operating in US trades.
Detention Data and Trends
Industry numbers cited in the report show Panama-flagged detentions in Chinese ports rising to 136 ships in April, after a sharp March spike in which Panama-flagged vessels accounted for around three-quarters of all China port detentions. The figures marked a steep jump from January and February, suggesting the pressure on Panama-flagged tonnage had widened beyond isolated port state control cases, according to Splash247.
| Period | Panama-flagged detentions in Chinese ports |
|---|---|
| January–February | Lower than March (exact numbers not specified) |
| March | Around 75% of all port state control detentions in China |
| April | 136 ships |
China has denied targeting Panama-flagged ships and has pushed back against US accusations, saying Washington is using the canal dispute to increase pressure on Beijing, the report noted.
Root Cause and Flag Registry Implications
The row stems from Panama's decision to take control of the Balboa and Cristóbal terminal concessions after its Supreme Court ruled the CK Hutchison-linked concession unconstitutional. Panama later appointed APM Terminals and MSC's Terminal Investment Limited as interim operators while a new process is pursued, according to Splash247.
The Panama Ship Registry has been caught in the middle of the US-China dispute. While no mass reflagging from Panama has yet occurred, Chinese leasing companies are now requiring shipowners to reflag away from Panama as a condition of newbuilding finance, with longer-term implications for the registry. The biggest beneficiaries have been Liberia and the Marshall Islands, which have attracted vessels seeking to avoid entanglement in the dispute.
Shipper and Operator Implications
Carriers operating Panama-flagged vessels on US trades face potential disruption from escalating Chinese port state control inspections and possible FMC action. Operators should monitor developments closely, as the latest FMC statement keeps pressure on Beijing and raises the risk that a port state control dispute could spill into liner regulation and carrier access in the US market, Splash247 reported. For freight forwarders and logistics managers, this means potential schedule delays, increased compliance scrutiny, and the need to reassess flag choices for chartered tonnage. Chinese leasing companies' reflagging requirements may also affect newbuilding financing terms.
Watch List
- FMC investigation into Chinese port state control practices and potential remedial measures, including action against Chinese-controlled carriers in US trades.
- Further escalation of detentions or expansion to other flags.
- Reflagging trends away from Panama to Liberia, Marshall Islands, or other registries.
- Progress of Panama's new terminal concession process at Balboa and Cristóbal.
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