Control of world’s port terminals major concern with geopolitics omnipresent

Appearing before a French parliamentary commission recently, Rodolphe Saadé, head of one of the world’s leading ocean shipping lines, France’s CMA CGM, told MPs that the control of the world’s port terminals had become a major concern with geopolitics omnipresent.

Regretting that France too often remained a spectator in the clash between major powers, he drew attention to a silent but decisive battle being waged with the active support of the US and China.

He said it was essential that France and Europe fully appreciated the scale of this challenge by ensuring strict enforcement of competition rules if the Continent’s shipping companies were to continue to have fair access to global markets.

Panama Canal and Trump’s Claims

While the US has a history of running the rule over foreign port ownership, it has been given fresh impetus under Donald Trump’s leadership. In a bid to strengthen national security, his administration has stepped up the targeting of China's growing influence in global ports with the aim of bringing more strategic terminals under Western control.

The White House justifies such actions by arguing that the US has become far too dependent on foreign ships and ports which would represent a strategic risk in the event of military conflict.

The options the Trump administration is considering include supporting private US or Western firms to buy Chinese stakes in ports.

In March came an announcement that a group of investors headed by U.S. private equity giant BlackRock, in association with Switzerland-based shipping line, MSC, had put in a bid estimated $22.8 billion to acquire 43 ports, in 23 countries from Hong Kong-based CK Hutchison. 14 are in Europe.

The number includes two ports near the Panama Canal which President Trump alleges are under Chinese control.

Ports were as critical to future infrastructure of the global economy as data centers and power grids, BlackRock’s chairman Laurence Fink observed.

'China Threat Theory'

However, unsurprisingly, the proposed sale has not gone down well in Beijing, who argue that acquiring shareholdings in foreign ports is simply a case of China conducting normal co-operation with other countries within the framework of international law.

Its moves to re-negotiate the terms of the deal focus on state-owned shipping and ports giant COSCO seeking a 20% to 30% stake in the BlackRock-led consortium.

In a paper published last month (August), the Development Research Center of the State Council, an official Chinese think-tank, said it was the US’ “intention to attack China's international influence by exaggerating the 'China threat theory' and use this as an excuse to force allies to take sides in supply chain arrangements."

According to a report published last year by the Council of Foreign Relations, a US think-tank, as of August 2024, China had investments in 129 port projects worldwide through various companies.

Panama aside, the US also has Chinese interests in the Greek port of Piraeus, near Athens, in its sights - a strategic hub on the trade route linking Europe, Africa. COSCO, via its CS Ports subsidiary, has a 67% stake in the company running the port.

Spain is under Washington’s watchful eye too where the national government has sought to forge closer trade links with China, raising fears that the latter could get increased access to its ports.

Europe Changes Its Tack

Gaining a significant foothold in ports in Europe has formed part of Xi Jinping’s Belt and Road Initiative (BRI), launched in 2013 to open up new global trade routes and enhance China’s international presence by contracting and investing in a network of transport infrastructure.

Certainly, Europe has traditionally been rather obliging when it comes to foreign investment, including that from China. Moreover, some EU officials have been keen to point out that Chinese port expansion in Europe has brought mutual commercial benefits, funding infrastructure development and the strengthening of trade ties.

As things currently stand, COSCO, via CS Ports and another state-owned group, China Merchants (CS) Ports, along with Hutchison, have interests in around 30 port terminals across the European Union (EU), including as many as 20 in its 15 largest ports.

They have a financial foothold in all of the continent’s major container hubs, including Rotterdam, Antwerp and Hamburg, in the northern range and, in the Mediterranean, in addition to Piraeus, Genoa, Marseille and Valencia.

However, Europe’s ‘accommodating’ position with regard to China’s shareholdings in its ports has changed in recent years and the largely unchecked expansion of COSCO and China Merchants is now subject to far greater scrutiny and control as the EU seeks more economic autonomy and tighter security.

Indeed, one research paper commissioned by the European Commission’s Directorate-General for Internal Policies has suggested that not only should Chinese investment in critical infrastructures be reviewed (and potentially blocked) at a European level, but that ports using Chinese software should be identified as well as the data being transmitted.

It was also suggested that all EU members should put in place laws, ‘…to retake control of ports/terminals and other maritime infrastructures ownership and/or considered contingency plans in case that is required in a scenario of conflict (kinetic or otherwise) with China, in co-ordination with EU and other Member States.’

In addition, in March this year, the European Commission published its White Paper for European Defence Readiness 2030 - to the backdrop of the war in Ukraine and the threat of Russian military aggression to the continent as a whole - which raised concern about Chinese influence over critical infrastructure, including in the port sector.

Within this context, Transport commissioner Apostolos Tzitzikostas, has warned that Europe's ports must now "reconsider security... and examine foreign presence more carefully" - a statement that, while not specifically referring to China, left no doubt as the identity of the perceived threat.

Exaggerating the Risks?

But what if the risks from China’s capitalistic presence in Europe’s ports have been grossly exaggerated and the benefits largely ignored?

In the case of CS Ports taking a stake in Hamburg, for example: this was often caricatured as ‘China buying Hamburg’s port.’ In fact, it was neither a control acquisition nor an infrastructure sale.

The reworked deal, cleared by Berlin in May 2023, capped CS Ports’ share in the northern German port’s Tollerort container terminal at 24.9%, explicitly below governance and veto thresholds. The listed operator, HHLA, under public sector ownership, retained operational and IT control and the terminal remained open to all customers.

Then there is Piraeus: it may be one of the most controversial investments by China’s state-owned operators, given that it concerned a majority stake, but it has also turned out to be one of the most successful with volumes tripling since CS Ports became a shareholder in 2016.

Today, Piraeus is arguably far better-equipped and more state-of-the art than it would have been if it had stayed under state ownership What’s more, the Greek economy is enjoying greater international connectivity than it otherwise would have done had a (Chinese) shipping line not invested in its main port.

Critical Mass

While the EU’s refined monitoring of foreign direct investment will shape future investments by Chinese players in Europe’s ports it could be argued that such a mechanism is redundant to a degree as they have already attained critical mass and are now an integral part of the sector. And new opportunities for stake-holdings and long-term concessions are likely to be relatively limited.

As to ousting China from its investments, President Trump and officials in some quarters of the EU appear ready to take up such a challenge but how this could be done would be entering uncharted territory with significant implications for international law.

Additional trade tensions with China would undoubtedly result, leading to retaliatory action that would do little for the smooth-running of global supply chains.