News / China reprisal puts Panama-registered box ships on course for new flags

More than 100 containerships have reflagged from Panama to other registries in response to China’s perceived hostility during vessel inspections.

Anecdotal evidence suggests that this year more Panama-flagged ships, across all vessel segments, are being detained or more thoroughly inspected in Chinese ports.

This happened after Panama’s courts nullified CK Hutchison’s port concessions at Balboa and Cristobal in January and reassigned them to APMT and TiL, the terminal operating arms of Maersk and MSC. It appeared that Panama had bowed to US pressure to reduce Chinese influence over the Panama Canal.

According to Linerlytica, the detention of Panama-flagged containerships has risen by more than 700% since March, and Chinese owners account for 56 of the 101 box ships that have switched from the Panama flag.

The analyst said: “The exodus has reduced the total number of Panama-flagged containerships by 12%, with the remaining 731 also at risk.”

According to SeaSearcher, many of the ships reflagged to the Marshall Islands, Bahamas, and Liberia. Reflagging a ship takes between one and four weeks, depending on the efficiency of the shipowner’s paperwork, the de-registration process and getting a green light from the new registry.

However, yesterday, China’s foreign ministry spokesperson, Lin Jian, claimed Panama-flagged ships had had the highest number of serious maritime accidents in Chinese waters this year.

He said data from “China’s competent authorities” showed Panama-flagged ships accounted for nearly 20% of foreign vessel port calls in China between January and July, but were responsible for nearly half of maritime accidents and deaths and missing persons during the same period.

He did not disclose where the data came from, but the Maritime Safety Administration, an agency under the Ministry of Transport, usually prepares maritime safety statistics in China.

In the wake of China’s increased scrutiny of Panama-flagged ships, Chinese finance lessors have reportedly told customers newbuildings must be flagged in other domiciles.

The US Federal Maritime Commission claims the Chinese actions are retaliation for the Panama court’s decision, and could raise the spectre of tit-for-tat action against Chinese-owned ships in US ports.