Maritime-Executive: COSCO Cancels Container Service at Balboa in Panama

China’s state-owned shipping company COSCO Shipping Lines informed customers in a memorandum dated March 10 that it has suspended all services at the Port of Balboa, Panama, at the Pacific terminus of the Panama Canal. No reasoning was given for the suspension, which quickly contributed to speculation that it was another step in China’s retaliation against Panama after the seizure of the port terminal operations from CK Hutchison.

In a brief customer advisory obtained by Panama’s La Prensa newspaper, COSCO writes that it is suspending its services at the Port of Balboa. “There will be no departures or arrivals at the Port of Balboa. Confirmed bookings will be canceled,” it advises.

Import releases will be delivered as normal, reports COSCO. However, it also says that empties must be returned only to the Ports of Manzanillo or Colón Container Terminal; no units will be received in Balboa.

The move comes just weeks after Panama seized the operations from a subsidiary of CK Hutchison and entered into new contracts with Maersk’s APM Terminals and MSC’s Terminal Investment Ltd. (TiL) for the operations at the ports at each terminus of the Panama Canal. APM took over all the operations at Balboa, with Panama reporting that the terminals are back to normal operations. Maersk has a temporary 18-month contract with Panama, which says it will rebid the operations. 

The announcement came a day after China’s Ministry of Transport announced that it had held “talks” with Maersk and MSC in China. It said they were “regarding their international shipping operations.”

CK Hutchison and its operating subsidiary, Panama Ports Company, have threatened various legal actions against both the companies and the government of Panama. It said it will be seeking a minimum of $2 billion in damages in an international arbitration it has filed against Panama. 

When it was first reported that Panama had asked APM to temporarily operate the terminals, CK Hutchison said it had notified A.P. Moller-Maersk that any assumption by APM Terminals of operations of the two terminals without its agreement would cause damages. It said it would result in recourse against APMT.

Chinese officials have criticized Panama, and reports said they were advising other Chinese companies not to invest in the country. It said publicly that the actions against Hutchison raised concerns about investments, and it accused Panama of legal violations in not honoring its contracts.

It is unclear how much volume COSCO handled with Panama. The company did not make it clear if this was a temporary or permanent change, or if it would be changing its operational routes. COSCO Group is ranked as the fourth largest global container carrier with a capacity of over 3.7 million TEU and over 550 containerships. Other divisions are large bulk carriers, as well as a tanker operator and car carriers.