Laura DiBella, Chair of the U.S. Federal Maritime Commission (FMC), expressed concern on Thursday regarding an increase in the seizure of Panamanian-flagged ships by Chinese authorities. This follows the Panama Supreme Court’s decision to invalidate a contract that had given Hong Kong-based CK Hutchison control over the two main ports of the Panama Canal.
In her statement, DiBella highlighted that these retaliatory actions from China are affecting global shipping conditions. She pointed out that the FMC has the authority to investigate whether foreign regulations are creating unfair conditions for U.S. shipping in international trade.
“China is escalating the seizure of Panamanian-flagged vessels in its ports in the name of port control, and this is significantly beyond historical levels,” DiBella remarked. “These inspections appear to be driven by unofficial directives, seemingly aimed at punishing Panama following the transfer of Hutchison’s port assets.”
She went on to note that since Panamanian-flagged vessels make up a considerable portion of the U.S. container trade, these actions could have substantial commercial and strategic consequences for U.S. shipping.
For over 20 years, CK Hutchison, through its subsidiary Panama Ports Company (PPC), has been managing two critical ports located at both ends of the Panama Canal. One is in Balboa and the other in Cristobal, handling nearly 40 percent of the canal’s traffic. These operations were originally established through a contract signed with the Panamanian government in 1997, granting PPC a 25-year lease that was automatically renewed in 2021 for another 25 years.
In July 2025, Panama’s Comptroller General Anel Flores filed a lawsuit regarding the contract and its renewal, citing an investigation that revealed PPC had caused the country approximately $1.2 billion in economic damages. Prior to this, Panama’s Attorney General Luis Carlos Gómez determined that the contract included various violations regarding Panama’s rights and conferred undue advantages to Chinese-affiliated companies.
In late January, the Supreme Court of Panama ruled the controversial contract void. U.S. Secretary of State Marco Rubio expressed that the U.S. is “encouraged” by this judicial decision against Chinese-linked companies.
This ruling took effect in February, leading the government of conservative President José Raúl Mulino to assume control over the major ports from PPC. They also began the process of establishing new leases for the facilities. Shortly thereafter, investigators from the Panama Public Prosecutor’s Office conducted a raid on PPC’s offices as part of a probe into allegations of withheld management information from local authorities.
As of now, to maintain the regular functioning of the Panama Canal during this transition, the Port of Balboa is being temporarily managed by APM Terminals, a subsidiary of Maersk, while TIL Panama, a subsidiary of the Mediterranean Shipping Company (MSC), is temporarily managing the Port of Cristobal.
The Chinese government has repeatedly criticized the Supreme Court’s decision to invalidate PPC’s contracts. In February, a spokesperson for China’s Ministry of Foreign Affairs stated that China would “resolutely protect the company’s lawful rights and interests.”
DiBella noted that C.K. Hutchison is escalating its legal actions against Panama’s government over this ruling, initiating arbitration proceedings seeking more than $2 billion in damages. DiBella also highlighted that China’s Ministry of Transportation has summoned representatives from Maersk and MSC for high-level discussions while COSCO, China’s national carrier, has suspended its service in Balboa and redirected its operations.
This statement from the FMC chair follows remarks earlier this month by Trump administration officials to Breitbart News, indicating that the Chinese regime had threatened to seize Panamanian-flagged ships, a retaliatory measure that could disrupt global trade.
A major shipping company reportedly sent an email to the consulate general, which was then forwarded to the Panamanian consulate in Greece. An official relayed that the China Maritime Safety Administration (MSA) “recommended the seizure of the Panamanian-flagged ship at a Chinese port for political reasons.”
