Posted on March 26, 2025
A sale by Hong Kong-based CK Hutchison of its overseas ports, including two in Panama, to a BlackRock consortium continues to stir debate as to its eventual outcome. China has expressed unhappiness, suggesting the deal would hurt national interest, while CK Hutchison has said the transaction is purely commercial. In a two-part special, we speak to insiders on how the trifecta of geopolitics, the domestic politics of Panama and changes in the port business influenced CK Hutchison. This second part looks at the evolving port business. The first article can be found here.
Li Ka-shing’s CK Hutchison Holdings has maintained a pointed silence since Beijing showed its wrath over the Hong Kong-based firm’s decision to sell its Panama ports, but analysts said the operations have been plagued by so many issues leaving the company caught between a rock and a hard place.
An exit was a matter of time given the factors at play, they said.
While the geopolitical tensions between the United States and China were made worse by US President Donald Trump’s demand to free the Panama Canal from what he saw as Chinese control probably mattered, there were also the Panamanian authorities and their domestic politics to wrestle with.
But another overlooked yet critical aspect of the deal was how the nature of the port business was itself changing into becoming a vertically integrated system, analysts said.
These factors combined made the sale the best outcome for the company, though not necessarily for the Li family’s political relationship with Beijing, and whether they will bend to the pressure and reverse the sale remains an open question.
Willy Lin Sun-mo, chairman of the Hong Kong Shippers’ Council, noted the trend of shipping lines becoming more vertically integrated, a move that could affect the future profitability of port operators such as CK Hutchison.
“Globally, shipping lines have invested in ports in different parts of the world to serve the needs of their own fleets and their vertical business model,” he said.
“Shipping liners engage in ports. They also engage in logistic service, air cargo freight, 3PL service and the whole supply chain.”
Lin noted that many shipping lines now subleased and operated ports from local governments, a model that is different from the one that CK Hutchison had adopted, in which a port company acquired a land parcel to build ports and provided services to many shipping liners.
He stood by his comments despite a rise in CK Hutchison’s port business revenue last year, which rose by 11 per cent to HK$45.2 billion (US$5.8 billion), driven by a 6 per cent increase in throughput with growth across all segments.
In a statement in the company’s 2024 annual results released last Thursday, CK Hutchison chairman Victor Li Tzar-kuoi attributed the risks not only to geopolitics.
“Looking ahead to 2025, there may be headwinds with supply chain disruptions anticipated in the early part of the year due to shipping lines transitioning into their new alliances, as well as ongoing geopolitical risk impacting global trade,” Li said.
“The operating environment for the group’s businesses is expected to be both volatile and unpredictable.”
From a business perspective, CK Hutchison may have felt the price was right after operating the ports for so many years, Stewart Leung of the Real Estate Developers Association says.
On March 4, just a day before the Chinese People’s Political Consultative Conference opened its annual session, CK Hutchison announced a surprise deal to sell its overseas port assets, including operations at each end of the Panama Canal, to a consortium led by US investment firm BlackRock for US$23 billion.
This deal will make the consortium a top player in the global port industry. The deal will generate US$19 billion in cash for CK Hutchison. The sale will have to be finalised by both sides on an exclusive basis within 145 days.
Rickey Chan Chi-po, managing director of local property agency Dorbo Realty, told the Post he was asked by a contact within Li Ka-shing’s CK Hutchison to publish a column on March 12 to defend the company’s case for selling the ports.
Chan said he was given material to write a column on BossMind, a business and property news website, and he agreed for his byline to be used.
In gist, the article said the sale was a commercial decision and that the central government and Hong Kong authorities had initially not voiced any objection to it. It also pointed out that the Aponte Italian shipping family, which owns market leader MSC Mediterranean Shipping Company, was the key buyer.
The column stated “the crucial figure” was Diego Aponte, group president of MSC, and chairman of the Terminal Investment Limited (TiL), a company he built that is now one of the world’s largest terminal operators and the consortium partner of BlackRock in the port deal.
It is understood that the intent was to show the Americans were not the key players in the deal but the Italians. Chan declined to reveal which CK Hutchison executive had given him the material for the column.
“In the face of the rapidly changing political and economic environment, investors should be flexible in adjusting their investment projects to reduce risks,” the column said.
“The sale of the port business by CK Hutchison cannot only avoid policy risks, but also strengthen the group’s cash flow to cope with the rapid changes in the market and make appropriate arrangements.
“CK Hutchison retains port assets on the mainland and in Hong Kong, including Yantian Port in Shenzhen and Hongkong International Terminals, as it valued the maritime prospects of Hong Kong and the mainland.”
BossMind did not reply to the Post’s inquiries.
Lin said the timing by the Li family to sell the ports took all by surprise.
But if observers had studied the company, they would have noted its acumen in having foresight predicting future profitability and changing competitive landscapes. By way of comparison, he cited how the Lis sold their telecoms company in the United Kingdom in 1999 at the height of the business’ success.
The deal involved Hutchison Whampoa’s sale of a 44.81 per cent stake in telecoms company Orange in the UK, which yielded an exceptional profit before expenses of about HK$113 billion for Hutchison. “The telecoms business is [now] difficult with keen competition and slim profits,” Lin added.
Stewart Leung Chi-kin, the chairman of the executive committee of the Real Estate Developers Association of Hong Kong, said Beijing’s perspective contrasted with the standpoint of developers or businesses.
From a business perspective, CK Hutchison might have felt the price was right after operating the ports for so many years, he said.
“I think I’ve made enough money, and I’ll sell it to someone else,” said Leung, who is the chairman of Wheelock Properties.
From the country’s perspective, China would question whether CK Hutchison should sell ports at such an important canal to the US, instead of those close to China or a neutral figure, Leung added.
“In the past, CK Hutchison handled this kind of problem very well … CK Hutchison must have its own reasons for deciding what to do,” Leung added. “I believe that it can find a way that does not offend our country, without losing the deal. I believe that it will come up with a way to get the best of both worlds.”
US President Donald Trump has demanded that the Panama Canal be freed from what he saw as Chinese control.
CK Hutchison, which handled 39 per cent of the containers that passed through Panamanian docks in 2024, according to the Panama Maritime Authority (AMP), is selling the ports when the business is still good.
Data from the AMP shows the five ports there handled 9.4 million units of 20-foot-long containers in 2024, up 14.2 per cent from 2023, reversing a two-year decline.
According to AMP data, CK Hutchison’s Balboa and Cristobal ports showed respective increases of 13.7 per cent and 24.6 per cent in such container handling in 2024, benefiting from the Panama Canal draught restrictions that forced many liners to unload and load cargo on both sides of the waterway.
By the end of the 2024 financial year, the canal reported US$3.45 billion in net profit, which saw a 131 per cent increase over five years, according to the Panama Canal Authority.
According to CK Hutchison’s 2024 annual results, its ports and related services division accounted for 22 per cent of the earnings before interest and taxes at HK$13.12 billion, up by 24 per cent from the previous year.
This was primarily driven by a 13 per cent uplift in storage income and the favourable performance of a shipping line associated company and effective cost controls.
But Lin, also an honorary chairman of Hong Kong Exporters’ Association and board member of the city’s Maritime and Port Board, attributed the sale to a change in the global ports business model.
It was inevitable that Chinese shipping lines might face higher port and logistics costs as a result of this acquisition, but Lin said some of them already had their own ports and even engaged in the whole supply chain, and so were likely to be unaffected by the sale.
There might also be schedule and port calling changes, which could affect the efficiency of the liners and also their business collaboration with the shippers and importers.
The profitability of port operators such as CK Hutchison was increasingly affected by the trend of shipping lines becoming more vertically integrated, Lin said, adding the global port industry was also evolving with trends such as increased automation and a focus on sustainability.
Shifts in global politics were also having a noticeable impact on shipping routes and port activities worldwide, he said.
“CK Hutchison is a global company not only in the hands of one person. Its team is big and strong,” Lin added. “I believe that this is obviously a decision they did not take lightly.”
The Panama Canal, completed in 1914 by the US after a failed French effort, revolutionised global trade by providing a short-cut between the Atlantic and Pacific Oceans, bypassing a transit around South America. The canal significantly reduced travel time and costs for ships, leading to increased maritime traffic and economic growth.
