Latest news with #RicaurteVásquezMorales
Yahoo
5 hours ago
- Business
- Yahoo
Panama Canal Chief Warns $23B Port Deal Poses Risks to its Neutrality
The Panama Canal Authority's lead official is the latest stakeholder to express his doubts about the sale of two ports on both sides of the waterway. Ricaurte Vásquez Morales, administrator at the Panama Canal Authority (ACP), told the Financial Times the $23 billion deal that would shift the ports into the hands of Mediterranean Shipping Company (MSC) and BlackRock could potentially put the canal's own neutrality at risk. More from Sourcing Journal Panama Canal Sees Post-Drought Spike in Container Shipping Transits Staud Said to Bring On a New Investor Panama Ports Buyers Caught Between a Rock and a Hard Place 'There is a potential risk of capacity concentration if the deal comes the way it is structured as we understand right now,' Vásquez said. 'If there is a significant level of concentration on terminal operators belonging to an integrated or one single shipping company, it will be at the expense of Panama's competitiveness in the market and inconsistent with neutrality.' The Panama Canal operates as a neutral passage for ships representing all countries. Treaties signed during the Carter administration in 1977 established its neutrality, and ensured that the then-U.S.-controlled waterway would gradually be returned to Panama by Dec. 31, 1999. President Donald Trump has made overtures challenging the canal's neutrality, with claims that he wants the U.S. to 'take back' the trade artery on the grounds that it is allegedly under Chinese control. While China does not control the canal, Washington had wider concerns about the country's influence on the waterway. The sale of the Balboa and Cristobal ports by owner Hong Kong-based CK Hutchison Holdings was considered a win for the Trump administration, since the port operator's ownership of the ports was classified as a national security risk. But that deal has been scrutinized left and right, and has yet to get approval from the Panamanian government. The Chinese government, as well as state-owned media in the country, had spoken out against the deal, with reports saying President Xi Jinping was furious that CK Hutchison went forward with the sale. Following those reports, China's antitrust regulator, the State Administration for Market Regulation (SAMR), opened a probe into the deal. That investigation has resulted in the parties deciding to amend several parts of the initial deal to try and appease both Trump and Xi, an FT report said. Hutchison, which would be selling off more than 40 non-Panama ports to MSC and BlackRock in the deal, floated the idea of potentially selling off some or all of its 10 remaining ports in China in a separate sale. The regulator had already warned Hutchison against splitting the Panama ports from the original deal altogether as a means to circumvent antitrust review. Along with government regulators, supply chain stakeholders have shown their displeasure with the potential acquisition in that it would give MSC, already the world's largest ocean carrier, a leading market share in port terminal operations. Vásquez noted that the deal has essentially pitted container shipping operators further against each other for space. 'This has become a significant battleground on transshipment capacity,' Vásquez said, noting that some at the ACP were worried the $23 billion transaction would cost it some container traffic if Hutchison's customers moved elsewhere. Vásquez added that the canal should use the ports deal as an opportunity to become a terminal operator itself by reactivating a project to build a terminal in the Port of Corozal at the Pacific end of the canal, according to FT. As Vásquez and the ACP keep an eye on the situation, the authority will itself be on the radar of the Federal Maritime Commission (FMC) in the U.S. as it plans its infrastructure projects. 'They're doing a very efficient job. What we're watching there is what's going to happen when they have a drought and they have reduced slots to go through there and then how those slots are allocated,' said FMC chairman Louis Sola, in a Monday briefing with the Port of Long Beach, calling it the agency's 'number one priority' at the canal. The U.S. Army Corps of Engineers, which helped build and maintain the canal, is currently assisting the ACP on water management practices, according to Sola. The record drought throughout the second half of 2023 prompted the ACP's decision to build a new reservoir in the Indio River watershed to mitigate impacts from future climate conditions. To diversify its business lines, Vásquez also said the authority was considering building a pipeline along the length of the canal to carry up to 1 million barrels per day of liquefied petroleum gas.
Yahoo
26-02-2025
- Business
- Yahoo
Panama Canal Board Approves Plans for New Reservoir to Combat Drought
The Panama Canal Authority (ACP) board of directors approved plans to build a new reservoir in the Indio River watershed in an effort to mitigate impacts from future drought conditions. Construction on the project, which includes a dam, is slated to begin in 2027 and take four years to complete. The reservoir plan's estimated cost is $1.2 billion, with an additional $400 million tacked on as investments in neighboring communities. More from Sourcing Journal Proposed USTR Port Fees on Chinese Ships 'A Sledgehammer With All Sorts of Adverse Consequences' Panama Canal Shipments Show No Evidence of Preferential Vessel Treatment Uncertainty Over Israel-Hamas Ceasefire Puts Red Sea Return in Peril The new lake will be created to guarantee water supply for over 50 percent of the country's population, nearby communities and the canal operations. When Panama experienced a drought throughout much of 2023 and early 2024, the authority was forced to restrict the number of vessels that could sail through the waterway. The ACP also implemented draft restrictions that required some ships to reduce capacity to travel the canal. As a result, vessel backlogs occurred from the summer through the remainder of 2023. At one point in August that year, as many as 161 ships were queued up awaiting their turn. The ACP put the restrictions in place as Lake Gatún, the artificial lake that feeds the canal's lock system and helps float the vessels, endured low water levels throughout the drought. By building the new reservoir, the canal can supplement Gatún's main supply of water. Ricaurte Vásquez Morales has previously said the reservoir would provide capacity for an additional 11 to 13 daily transits, which would better stabilize vessel movement in the event of another drought. According to Vásquez, the project 'would provide a little more certainty to maintain 36 transits per day, a higher level of reliability for the route.' Monthly transits through the Panama Canal in January 2024 bottomed out at 189 after the series of restrictions, plummeting from 283 a year prior, according to the authority. The ACP began easing its daily restrictions at the nadir of traffic, when projections for Lake Gatún's water levels began improving. But even today, with the transit restrictions no longer in place, traffic hasn't yet bounced back to pre-drought levels. Between September 2024 and January 2025, ship capacity transiting through the Panama Canal was 10 percent lower than the 2019-22 average by deadweight tonnage, according to the Baltic and International Maritime Council (BIMCO). Transit fees, trade pattern changes and 'the establishment of a new normal' are all potential factors preventing a full return, Filipe Gouveia, shipping analysis manager at BIMCO, said in a Thursday statement. Building out the reservoir will still have some hurdles, namely since communities living in villages near the Indio River basin will have to leave the area. According to preliminary data from the ACP, there are 538 households on the construction site, comprising 1,714 people: 53 percent are men and 47 percent are women. In total, 12,000 people are said to live near the river's banks. Under the authority's Resettlement and Livelihood Restoration Plan, relocating families and property owners will receive compensation. The canal operator began conducting a census of the impacted population in August 2024, which is set to be completed by April 30. The aim is to allow the Panama Canal to better identify resident families and develop compensation processes. Following the ACP board's approval of the reservoir, the canal's teams have held a series of meetings with residents via house visits and community gatherings. However, the residents aren't falling in line with the project's plans. On Tuesday, residents of Rio Indio, alongside the Coordinadora Campesina por la Vida (CCV) and other social organizations, held a rally to protest the construction effort. CCV president Digna Benítez accuses the ACP of disseminating false information about the alleged acceptance of the project among the riverside population. She says that, by and large, residents reject the 'exploitation' of that reservoir, due to its serious socioeconomic, political, legal and environmental implications. The Indio River reservoir isn't the only upcoming project in Panama designed to alleviate some of the concerns about the canal's efficiency amid other adverse climate conditions. Late last year, the ACP unveiled it also has plans to develop a new land bridge that would substantially expand container movement for cargo carried on ultra-large ships too big to transit the trade artery. Instead, with a bridge in place, companies would have a new option to transport goods from one ocean to the other via rail or truck. While the Panama Canal facilitates the transportation of 8.3 million containers per year, the ACP wants to make room to move at least 5 million more containers annually by 2045. The authority expects that project to cost between $1.2 billion and $1.4 billion. The Panama Canal has drawn plenty of attention after the U.S. presidential election, amid President Donald Trump's repeated threats to 'take back' the waterway over concerns of Chinese influence. While Trump has lofted baseless claims that China operates the canal, his allies in Washington, including Secretary of State Marco Rubio, view two ports adjacent to the waterway as a national security issue. The ports of Cristóbal and Balboa are both operated by a subsidiary of Hong Kong-owned CK Hutchison, which Rubio has stressed is a 'legitimate concern' due to potential Chinese government oversight of the gateways.
