In addition to tensions in the Strait of Hormuz involving Iran and\nthe US, maritime frictions are also occurring between China and (once\nagain) the US. As widely reported, the friction between these two\nsuperpowers began with the revocation of CK Hutchison\u2019s concession for\nthe Balboa and Cristobal terminals located in the Panama Canal.<\/p>\n
That policy was taken by Panama\u2019s Supreme Court at the end of\nJanuary, which unilaterally cancelled the legal framework supporting the\nhistoric 1997 concession of the port operator owned by Hong Kong\nconglomerate Li Ka-shing.<\/p>\n
Although Panama is a sovereign nation separate from the US, even\ngrandmothers know that the country has historically been the \u201cbackyard\u201d\nof Uncle Sam\u2019s nation. That\u2019s why China is extremely defiant towards\nthat decision by Panama\u2019s highest court.<\/p>\n
In retaliation for that country\u2019s policy, China aggressively detained\ndozens of Panamanian-flagged cargo ships. The US Federal Maritime\nCommission (FMC) stated that it is closely monitoring the surge in ship\ndetentions.<\/p>\n
Following the controversial decision, the Panamanian government\nimmediately appointed two subsidiaries of US and European giants, namely\nMaersk APM Terminals and Terminal Investment Limited owned by\nMediterranean Shipping Company, as temporary port operators under an\n18-month agreement.<\/p>\n
It is reasonable for the US to respond harshly to China\u2019s actions\nbecause Panamanian-flagged ships carry a very significant portion of US\ncontainerised trade. Thus, these actions could result in significant\ncommercial and strategic consequences for US shipping. The existing\ntensions are believed to directly affect the nerve centre of the US\neconomy.<\/p>\n
On the other side, China\u2019s Ministry of Transport has reportedly\nsummoned representatives of Maersk and MSC to Beijing for high-level\nnegotiations. CK Hutchison, which has operated those ports for nearly 30\nyears, has strongly responded to the illegal seizure of assets and\nimmediately launched an international arbitration lawsuit demanding\ncompensation of more than US$2 billion.<\/p>\n
The turmoil above began when CK Hutchison divested shares in several\nport networks owned or operated by its subsidiary, Hutchison Ports,\naround the world. The latter is mentioned as holding shares in the\nJakarta International Container Terminal (JICT) and TPK Koja.<\/p>\n
CK Hutchison\u2019s move to divest shares in container terminals or ports\nin various corners of the globe amounts to around 43 terminals\/ports. Is\nHutchison Ports planning to \u201cretire\u201d from the port business?\nNo.\u00a0Hutchison Ports will not retire from the port business. At least, it\nis retaining its share ownership in several terminals or ports in\nSingapore, Hong Kong, Shenzhen, and southern China.<\/p>\n
The shares to be divested are spread across terminals\/ports in\nRotterdam, the UK, Spain, etc. (all 43 ports located in 23 countries,\nincluding Indonesia). So far, a US investment firm, BlackRock, and\nTerminal International Limited (TiL), a subsidiary of international\nshipping operator MSC, have purchased shares in the aforementioned\nHutchison Ports ports worth US$22.8 billion.<\/p>\n
Not only that, their consortium also acquired 90 per cent of shares\nin Panama Ports Company, which operates the Port of Balboa and Port of\nCristobal located right at the entrance to the Panama Canal.<\/p>\n
With the reduction in Hutchison Ports\u2019 stake in the global port\nlandscape, a reconfiguration has occurred in the \u201cstandings\u201d of the\ninternational port league. Here\u2019s what that means. Until now, the\nplayers in this business consisted of relatively independent companies\nfrom shipping lines.<\/p>\n
Names like PSA, DP World, Hutchison Ports itself, and others are\ncompanies with these characteristics. They are then connected to other\ninvestors (generally from banking or financial institutions). Of course,\nthere is also involvement from shipping companies, but usually only as\nminority shareholders.<\/p>\n
Now, the landscape is changing with the entry of shipping companies,\nthrough their terminal subsidiaries\u2014in this case, TiL\u2014into port\/terminal\nmanagement with larger shareholdings. But note that it has not yet been\nrevealed how large the shares of TiL and BlackRock respectively are in\nthe ex-Hutchison Ports ports that have been acquired.<\/p>\n
As a subsidiary of Mediterranean Shipping Company (MSC),\nheadquartered in Switzerland, TiL has served the \u201cmother\u201d container ship\nfleet in Singapore, Ningbo, Busan, Los Angeles, Long Beach, Rotterdam,\nAntwerp, New York\/New Jersey, and Valencia.<\/p>\n
This list of port calls will grow longer with the inclusion of\nterminals previously managed by Hutch, the nickname for the company\nowned by Hong Kong tycoon Li Ka-shing among port businesspeople.<\/p>\n
Reconfiguration naturally triggers changes in business practices. One\nof them is that business will become increasingly concentrated (read:\nmonopolistic) to shipping companies from upstream to downstream.<\/p>\n
Usually, shipping fleets dock at terminals or ports managed by third\nparties. Now, these facilities are operated by \u201csiblings\u201d themselves.\nThere is indeed a business calculation to it, but being siblings means\nit can be more flexible.<\/p>\n
However, for shipping lines that are not siblings, this new\nrelationship model could spell trouble. They might not get service\nwindows because the available slots are prioritised for the group\u2019s own\nfleet. In the case of TiL, for example, the MSC fleet will receive\npriority for berthing and services compared to, say, Yang Ming, COSCO,\nor others.<\/p>\n
For Indonesia, the current situation clearly could create ripples in\nits port business. If BlackRock and TiL take control of JICT and TPK\nKoja, how\u2026<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/us-china-maritime-dispute-1776617501", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }