The Chinese Ministry of Transportation on Tuesday summoned representatives of shipping giants Maersk and Mediterranean Shipping Company (MSC) to discuss how “international shipping operations” have been disrupted by the Iran war and the Panama Canal legal dispute.
Such a summons from the authoritarian regime in Beijing is almost always meant as a warning.
The Panama Canal dispute began in February, when the country’s highest court invalidated the long-term contracts for two ports signed with Hong Kong-based CK Hutchison in 1997 as unconstitutional.
The two ports, Balboa and Cristobal, are located at opposite ends of the Panama Canal trade route and handle up to 40 percent of canal traffic. President Donald Trump singled out the ports when complaining about China’s growing influence over the Panama Canal.
CK Hutchison and its Panama Ports Company (PPC) subsidiary filed lawsuits against the Panamanian government and demanded international arbitration, with support from Beijing. Panama, meanwhile, transferred control of the ports to companies called APM Terminals and Terminal Investment — which happen to be subsidiaries of Maersk and MSC, respectively.
Although the Chinese Ministry of Transportation did not explicitly say that the port dispute was the reason it hauled in Maersk and MSC for consultations, and the companies have thus far refused to discuss the meeting, most shipping industry observers believe China essentially warned the companies not to interfere with the flow of Chinese goods through the Panama Canal — most especially Chinese energy shipments, soybeans, and minerals.
Haitong Futures analyst Xu Yi told the South China Morning Post (SCMP) that Beijing is worried about “geopolitical friction” that could drive up China’s costs for shipping through the Panama Canal.
The Financial Times (FT) said China also warned the shipping giants that it would not accept massive increases in transport costs due to the Iran war. Maersk, MSC, and other major companies warned last week that costs for all freight, not just oil and gas, were increasing worldwide due to Iran’s disruption of transit through the Strait of Hormuz.