News / Panama Canal chief invites more competition among port operators

Photo: © Yanik Chauvin

In an indication that it is not happy with the present level of competition, the Panama Canal Authority (ACP) is planning to sell the rights to two ports awaiting construction, as it seeks to dilute the looming power of Cosco and MSC on the waterway.

And with half-year results showing surging volumes through its old and new locks – suggesting it is again approaching full-capacity after last year’s drought-induced shortfall – ACP administrator Ricaurte Vásquez Morales is expecting an eager array of suitors.

He said: “We need to boost container capacity and bring in more players for an equal playing field,” seemingly concerned at the potential Cosco/MSC acquisition of Hutchison-controlled Balboa and Cristobal ports.

Mr Vásquez has not been reserved in expressing his objections to the deal, warning that it could not only lead to unfair practices but could also threaten the waterway’s neutrality in an area President Trump made a focal point of his anti-China policies.

It was President Trump’s threat to seize the canal that prompted Hutchison’s decision to sell its concessions, as part of a wider $22bn deal, with Cosco’s addition a consequence of China threatening to block a sale unless the state-controlled carrier was included in MSC’s consortium.

Should a deal materialise, competition would remain unchanged from present levels as the MSC consortium would simply replace Hutchison, but Mr Vásquez is determined to increase competition.

He even suggested that ACP operate its own terminal, to reduce reliance on outside companies, but with little movement on that he seems content to expand the pool of external operators, with APM Terminals and CMA CGM expected to make offers on two new ports

One of those that will not be involved in the bidding process – which Mr Vásquez expects to be completed by the end of the year – is Cosco because ACP rules block government entities from participating in new port developments.

News of the planned developments coincided with a strong first-half performance on the canal, as box ship transits jumped 10.8% and 58.9% year on year, for panamax and neo-panamax vessels respectively, with a combined total of 2,394 sailings.

Strong growth continued into July, with panamax sailings up 3% month on month and neo-panamax transits jumped 19% on June, indicating that while still below pre-drought levels, transit numbers are heading in the right direction.