FMC Chair: China May Be Weaponizing Panama-Flag Inspections

FMC Raises Alarm Over Detentions of Panama-Flagged Vessels

According to a report by The Maritime Executive, Federal Maritime Commission Chair Laura DiBella has issued a personal statement renewing her concerns that China is using port state control inspections as a political weapon against ships flagged in Panama. DiBella stated that China’s “weaponization of port state control inspections” falls squarely within the FMC’s regulatory mandate to investigate.

The controversy began earlier this year, when reports surfaced of a sharp rise in detentions of Panama-flagged ships calling at Chinese ports. Panama urged Beijing to act responsibly, and other governments voiced support for Panama’s position.

A Dispute Rooted in Port Concessions

DiBella first flagged the surge in detentions back in March, linking it to informal directives that appeared to target Panama in retaliation for the Panamanian Supreme Court’s decision to void CK Hutchison’s long-standing concession to run terminals at the Panama Canal. That concession, in place since 1997, was cancelled and the properties seized, triggering multi-million-dollar arbitration claims from CK Hutchison and a diplomatic backlash from Beijing.

China also summoned Maersk and Mediterranean Shipping Company for consultations after their terminal operators stepped in to take over the Panama port assets from CK Hutchison. Beijing has accused Washington of stirring up the dispute as part of broader geopolitical rivalry, while former President Trump has repeated claims that China is seeking control over the Panama Canal.

The Legal and Commercial Stakes

DiBella argues that the statutes the FMC administers give it authority to examine whether a foreign government’s regulations or practices create conditions that disadvantage shipping engaged in U.S. foreign trade — and that the Commission has remedial tools available if it finds that to be the case. She warned that Panama-flagged vessels carry a significant share of U.S. trade, and that retaliatory, unjustified detentions could carry real commercial and strategic costs for U.S. shipping interests. She also cautioned that allowing such detentions to become normalized would set a damaging precedent for the global supply chain.

For its part, China has denied deliberately targeting Panama-flagged tonnage, while acknowledging an increase in inspections. Beijing attributed the rise to incidents involving fishing vessels rather than political retaliation.

Detentions Ease, But Flag-Switching Accelerates

A new analysis from Lloyd’s Intelligence suggests the wave of detentions has already peaked and declined sharply. However, the report identifies a delayed ripple effect: roughly three months after the surge began, a notable number of vessels started leaving the Panama registry altogether. Chinese owners were reportedly the largest group re-flagging their ships, primarily shifting registration to the Bahamas and the Marshall Islands.

What This Means for Owners and Managers

For ship owners, managers, and charterers, this episode is a reminder that port state control can become entangled with geopolitics in ways that go beyond routine safety and compliance checks. When inspection intensity in a given jurisdiction appears to track political disputes rather than vessel condition, operators face a harder question: is a detention risk driven by genuine deficiencies, or by the flag on the stern?

The flag-switching trend identified by Lloyd’s Intelligence is a practical signal that owners are already hedging against this uncertainty by moving tonnage to registries perceived as lower-risk in the current environment. That decision carries its own costs and administrative burden, and it does not eliminate the underlying exposure if similar disputes flare up elsewhere.

Regardless of flag, this situation underlines the value of maintaining clean, well-documented vessel condition records, current class certificates, and independent survey reports. Ships that can quickly demonstrate genuine seaworthiness and regulatory compliance are better positioned to contest detentions that may be more political than technical in nature, and to minimize delay and cost when inspections intensify in any port of call.

Reviewed by Ibrahim Halil Ceylan, Marine Surveyor at Apeks Marine.