Panama, the U.S., and China: ports as a geopolitical linchpin
Panama’s takeover of the Balboa and Cristóbal seaports operations marks a geopolitical inflection point in which the ports—more than the Canal itself—have become a strategic lever in U.S.-China competition. Following last week’s Supreme Court ruling that declared unconstitutional the legal framework supporting PPC’s (Panama Ports Company's) concession, the government moved to implement a legally enforceable takeover while preserving operational continuity through an 18-month transition and a subsequent re-tendering process. Temporary management was assigned to TiL-MSC for Cristóbal (Caribbean) and A.P. Moller-Maersk/APM Terminals for Balboa (Pacific). Crucially, these are state-owned ports concessioned by the government of Panama (not assets of the Panama Canal Authority), and their transfer back to Panama predates the Canal handover—yet their proximity to the Canal made them politically central to the narrative of Chinese influence in Panama and to its strategic positioning vis-à-vis Washington.
In economic terms, the immediate objective is stability, but the medium-term effects are more complex and potentially far-reaching. The transition preserves logistics activity that is systemically relevant—container transshipment accounts for roughly 3% of GDP, employs around 4,000 workers, and Balboa plus Cristóbal together handle about 37% of Panama’s TEU volume—while likely improving fiscal revenues, with official estimates pointing to as much as US$300 million during the transition period and few job losses. At the same time, replacing PPC with Maersk/APM and MSC/TiL introduces a more vertically integrated shipping-port model whose competitive and commercial effects remain uncertain, especially alongside the ACP’s plans for new ports. The broader strategic risks now center on legal certainty, the fragility of special state contracts, possible Chinese retaliation or litigation, and whether the United States will consider European operators an acceptable end-state once the final tender approaches.
The side effects of the Court’s decision on the contract renewal are already becoming visible. Today, February 25, a lawsuit was announced against the concession contract of Manzanillo Terminal, the largest on a stand-alone basis, with 2.6 million containers per year (concessioned to the U.S. company Stevedoring together with Panama’s Motta family). Manzanillo Terminal’s contract was renewed in 2013 to extend the concession through 2033.
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