Seatrade-Maritime: China’s detentions of Panama-flagged vessels – the FMC’s next big investigation?

Published by Seatrade-Maritime

In a year that the US is celebrating its 250th Anniversary, with all of the hoopla that accompanies such important events, another important milestone has been overshadowed – the Federal Maritime Commission (FMC) will be celebrating the 65th Anniversary of its founding, in mid-August.

The FMC under new leadership since earlier this year with new Chair Laura DiBella, has seen a more activist posture towards foreign regimes meddling with liner shipping that serves ports in the States.

Law firm Holland & Knight (H&K) discussed the FMC in a recent blog and looked at the agency’s efforts geopolitical outreach efforts. In a piece written by recently onboarded Washington, D.C. veteran lawyer Lucy Marvin, who had previously worked at the FMC during the Biden administration, she looks at the agency’s actions concerning Chinese detentions of Panama-flagged vessels in US/ Asia trades. Marvin writes, “In such instances, Chair DiBella noted that the Commission is empowered to implement remedial measures, ‘including measures affecting Chinese-controlled carriers operating in US trade.”

The specific measures she could be referring to include restricting China’s access to US ports, limiting a specific amount or type of cargo that China-owned vessels are legally permitted to carry, imposing substantial fees and suspending a carrier’s ocean tariffs, and making it illegal for them to load or unload commercial cargo in US waters.” Referring to legislation from 1984 which was updated in 2022, Marvin continues: “These are just some of the tools granted by statute to the Commission to address conditions unfavorable to shipping in the foreign commerce of the United States under the Shipping Act.”

This new more vocal iteration of the historically mundane and sometimes wearisome agency, during its first 60 years, took a sea change in June, 2022, with authority granted to it under the Ocean Shipping Reform Act (OSRA 2022), legislation friendly to cargo interests who felt victimized by actions of carriers during the post-Covid market burst in 2021. Subsequently, FMC activity on matters related to demurrage and detention became regular occurrences.

In June, 2026 testimony before a House of Representatives committee in discussions of the 2027 Federal budget, Commission Chair DiBella recast the FMC’s role beyond just regulation of carriers, into the much broader realm of supply chains. She explained in her remarks: “The FMC’s unique role is to protect the American consumer, promote competition in the country’s ocean supply chain, and mitigate any inflationary impacts resulting from disruptions to the supply chain.”

In the same June, 2026 House committee hearing, DiBella referred to Panama’s revocation of concession agreements, earlier in 2026, for CK Hutchinson (based in Hong Kong) to operate terminals at both ends of the Panama Canal. DiBella said: “China has now imposed a surge in detentions of Panama‑flagged vessels in Chinese ports under the guise of port state control, far exceeding historical norms. These intensified inspections were carried out under informal directives and appear intended to punish Panama after the transfer of Hutchison’s port assets. Given that Panama‑flagged ships carry a meaningful share of U.S. containerized trade, these actions could result in significant commercial and strategic consequences to U.S. shipping.”

H&K’s Marvin, comments that: “Given the Commission’s recent willingness to increase its exercise of investigative authorities, Chair DiBella’s statement implies that these concerns over China’s practices could prompt the next big investigation opened by the FMC.”

The lawyer adds that: “The focus on supply chain impact for the US is evident, and my understanding of the mood on Capitol Hill is that this issue will gain further traction after Labor Day. Even with the midterm elections, the issue cannot be avoided as the Chinese port tax on vessels issue will also being coming to a head in November 2026.”