The Panama Canal’s terminal management is a tangled web of geo-political influence and economic necessities. Can it be untangled? Or is the future to be entwined by influences that lie thousands of miles away?
A Fiery Reminder
On April 6th an explosion and fire in La Boca near the Bridge of the Americas near the Pacific entrance to the Panama Canal served as a vivid reminder of the importance of the 40-mile interoceanic transportation corridor to international trade and Panama itself. The cause of the conflagration was sourced to a tank truck carrying fuel that caught fire and exploded. The blaze caused no disruption to Canal traffic.
With the Strait of Hormuz effectively held hostage by the war between Israel/US and Iran, Suez Canal traffic is effectively strangled. By default, the Panama Canal is the world’s most irreplaceable manmade waterway: particularly for energy products. And the transit of export energy products to foreign markets (such as China) through the canal — especially LNG carriers — might have been a partial, if not major motivation behind the Trump Administration’s push to end CK Hutchinson’s bookending canal concessions at the ports of Balboa and Cristobal. But it is the Panama Canal’s reach into North American markets that anoints the waterway as a true difference maker to the region’s supply chain.
Canal’s Uncommon Reach
Take for instance the Port of New York/New Jersey, the largest East Coast port, over 2,000 nautical miles (NM) away from the Panama Canal.
Beth Rooney, Port Director for the Port Authority of New York/New Jersey, when talking about the raising of the height of the Bayonne Bridge (completed in 2019) to accommodate the transit of larger Panamax container ships said, “We knew that with the timing of the completion of the Panama Canal expansion, the timing of the completion of our 50-foot deepening project, and the raising of the Bayonne Bridge...the Port would be ready for larger ships.”
And the Port of New York/New Jersey wasn’t alone as ports along the American East Coast also readied themselves for the “big ships”.
Up and down the US East Coast 13,000-14,000 TEU ships have become the workhorse class, which wouldn’t have happened without the widening of the canal.
The importance of the widening is clear in the canal’s transit numbers. In FY 2025, the Panama Canal handled 2,646 container ship transits out of a total of 13,404 vessels using the canal. Of the containership total transiting the canal, 1,793 boxships used the “Neo-Panamax” locks — the new widened locks that opened in 2016. Only 853 used the conventional locks.
A Tangled Web is Weaved
In 2025 the Trump Administration turned up the heat on Panama to remove the Hong Kong-based CK Hutchinson’s Panama Canal terminal operations in Balboa and Cristóbal, alleging Hutchinson’s ties to China threatened US security — specifically strategic access to the Panama Canal.
There was a certain irony in the claims, as Hong Kong billionaire Li Ka-shing, founder of the CK Hutchinson, has never been considered to be a supporter of the Chinese Communist Party (CCP) nor has the group’s terminal operations demonstrated any bias in two decades of operation.
Nonetheless, Trump Administration pressure triggered CK Hutchinson to look to sell not only the two Panama Canal terminals, but their entire port terminal group.
In March 2025, a BlackRock-led consortium agreed to acquire the shares of the CK Hutchinson’s Hutchinson Ports Holding and Hutchinson Port Group Holdings for $22.8 billion. The deal would include a 90% stake in Balboa and Cristobal terminals, as part of the 43-port portfolio spread over 23 countries. Importantly, the BlackRock consortium also included Mediterranean Shipping Company (MSC) and Terminal Investment Limited (TIL), MSC’s terminal arm.
The Chinese and Hong Kong governments protested the proposed Hutchinson port portfolio acquisition. Ironically stating that the deal threatened China’s security. China, in turn offered up their own acquisition plan, which was rejected by Panama and the Trump Administration.
The duel of plans ended abruptly on January 30, 2026, when Panama’s Supreme Court invalidated CK Hutchinson’s concessions. The Supreme Court ruled that the law that established the concession in the first place was unconstitutional, thus both the original concession in 1997 and the extension in 2021, were invalid.
The move prompted CK Hutchinson to launch a $2 billion international arbitration claim against Panama. And China, backing Hong Kong-based CK Hutchinson, said Panama acted in “bad faith” and suggested they had caved in to US “bullying”.
In response, China began a bullying campaign of its own in which Chinese State firms were directed to halt new project discussions with Panama. And China ratcheted up the pressure with intensified inspections and detentions of Panamanian flag vessels. This tactic was for Panama, the world’s second-largest ship registry and a major revenue generator for the country, a particularly effective form of retaliation — although thus far there hasn’t been any major deletions from the registry. While China’s pressure on Panama may have backfired as other Latin American countries have taken an unfavorable view of Beijing’s strategy.
In the meantime, Panama awarded temporary contracts to run Pacific-facing Balboa and Gulf-facing Christobal to Maersk (and its APM terminal subsidiary) and with a curious twist, to MSC (and its terminal arm TIL) which were previously party to the BlackRock deal.
However, without too much fanfare the two canal terminals have been effectively functioning as before the imbroglios.
However, in a March meeting, China’s National Development and Reform Commission (NDRC) ordered Maersk and MSC to cease operations in Balboa and Christobal.
Untangling the web: The Panama Canal’s Future
Panama should be able to determine the terminal operator of their choice, as the nation’s Supreme Court instructed. But the tug-of-war between the US and China has ensnared Panama in the middle. And the success of the Panama Canal has raised the stakes for all parties. Can Panama extricate itself? Is there a path to the future that doesn’t wind through Beijing or Washington? And the two “interim” terminal operators might be the first steps forward.
