The port of Piraeus is located on the coast of Greece, about 1,200 kilometers north of Egypt’s Suez Canal. The country has more shipping capacity than any other country, and the port, which is owned by Chinese state-owned company COSCO, is one of the busiest ports in Europe, handling more than 4 million containers each year.
Just 30 km west, the US government is supporting a bid to develop a commercial port at Elefsina. About 500 km to the north, Russian and Chinese investors have taken stakes in the port of Thessaloniki. And in the far north-east, US and NATO forces have built a logistics hub at the port of Alexandroupolis.
The struggle for ports in Greece is part of a global competition to control the maritime trade pipeline from Argentina to Thailand. In some places, such as the Panama Canal, the competition has taken a nasty turn, part of the geostrategic battle between the US and China. In other countries, many countries and companies are competing for port and logistics deals as a form of geopolitical insurance, as a commercial proposition, or both. Consultancy PwC says that overall, spending on port infrastructure will increase by more than a third to $90 billion annually by 2035.
About 80% of the world’s trade by volume is carried by sea. Governments are naturally concerned about the movement of goods. A series of crises in recent years, from the COVID-19 pandemic to the current closure of the Strait of Hormuz, have shown how easily the global trading system can be thrown into chaos. The desire to reduce reliance on particular chokepoints is natural for both commercial and geopolitical reasons. And in the long run more competition between ports will likely mean lower shipping costs.
Yet rushing to build port infrastructure is likely to result in huge inefficiencies (see chart). Many investors, including American and Chinese taxpayers, will see disappointing returns. And political pressure on shipping companies to use particular ports and sea routes in defiance of all commercial logic is bound to increase.
Like many modern geopolitical competitions, this competition is driven by concerns about China’s ambitions and its tightening grip on global supply chains. Chinese companies now operate or have a financial stake in at least 129 ports outside China (see map), and have spent at least $80 billion on port construction from Antigua to Tanzania, with many of those investments tied to bilateral trade and regional shipping agreements.
terminal cruelty
More than a third of China’s foreign ports are near maritime chokepoints, including the Strait of Malacca, the Strait of Hormuz and the Suez Canal, making them indispensable operators in strategic areas.
China’s strong hold on global ports has unsettled Western governments. MERICS, a think-tank in Berlin, found that after a terminal operating contract is signed, total trade with China increases by more than a fifth, while countries that allow Chinese companies to run all of their terminals at one of their ports have seen exports to the rest of the world fall by 19%. Operating ports allowed Chinese companies to prioritize their cargo and ships and expedite customs and logistics.
If the global trading system were running smoothly, China’s dominance of sea lanes would be less worrisome. But the recent closure of the Strait of Hormuz has increased the potential for congestion at ports due to rerouting of shipping networks, punitive charges for cargo sitting idle and sharp increases in freight rates. Container ships in the Indian subcontinent are facing particularly bad congestion, while waiting times at the Panama Canal have increased due to rising volumes of energy exports to Asia, according to Clarksons, a research firm. A US maritime official says no one has come up with a good strategy to deal with the chaos at ports.
Non-Chinese shipping companies are rapidly strengthening their networks. Since 2021, such companies have announced acquisitions worth approximately $140 billion in various parts of the maritime supply chain. German shipping company Hapag-Lloyd signed a deal in January to acquire 50% of a container-terminal operator in Brazil; Recently it increased its stake in JM Baxi Ports, an Indian company, and announced plans to acquire ZIM, an Israeli shipping line.
In January, US investment firm Stonepeak formed a $10 billion joint venture, United Ports, with CMA-CGM. And in February APM Terminals, a subsidiary of shipping giant AP Moller-Maersk, and Eurogate, a container-handling firm, announced plans to invest €1bn ($1.2bn) to expand a terminal in the North Sea.
Governments are also paving the way for their country’s companies to secure sea routes and berths. India is in the midst of a massive port-building effort that is expected to continue until 2047; In October Saudi Arabia signed a $450 million deal for the Jeddah Islamic Port. Singapore is building a $20 billion automated port and shipping hub. Dubai ports company DP World has signed agreements to invest and expand its position at ports in Dar es Salaam and Callao in Peru.
Many investments are taking place with Chinese investments without directly threatening China’s interests. But America has adopted a more opposing stance.
Take its fight for control of the Panama Canal. Following his election in 2024, Donald Trump said the operation of two ports on the canal by CK Hutchison, a Hong Kong conglomerate, posed a threat to US interests. During his inaugural address last year, Mr Trump threatened to “take back” control of the canal, which the US built in the early 20th century and which handles about 40% of America’s cargo, equivalent to about 5% of global maritime trade annually, or $270 billion.
BlackRock, a US asset manager, and Mediterranean Shipping Co (MSC), the largest ocean-going carrier, stepped in to buy Hutchison’s non-Chinese ports, including its two Panama Canal terminals, in a $23 billion deal that angered bigwigs in Beijing. Panamanian authorities handed temporary operation of the terminals to Maersk and MSC in February after the country’s top court ruled CK Hutchison’s contracts were unconstitutional. China retaliated by detaining dozens of Panama-flagged ships, and asked Maersk and MSC to cease operations at the Panama port. Hutchison has sued Panama for billions; The long-term management of the port is in question.
means of production sea
Elsewhere, the US Federal Maritime Commission (FMC) is increasing its efforts to protect the country’s shipping. “If U.S. Cargo has interest in that area and there is risk, we can take action,” says FMC President Laura DiBella. “We have some serious challenges, including sanctions, tariffs and fines,” she says. Ms. DiBella says the US should “pay more attention to our backyard” and the FMC is tracking “anti-competitive” behavior at ports. Authorities are keeping a close eye on ports in Latin America, including Puerto de Chanque in Peru.
Even at ports that are not owned or operated by China, Chinese companies are deeply embedded in port supply chains. Shanghai Zhenhua Heavy Industries, a Chinese state-backed firm, makes more than 70% of ship-to-shore cranes, large and mostly automated machines that unload and stack containers. Chinese companies also make 95% of the shipping containers used to transport goods.
China’s reach extends beyond physical infrastructure. LOGINK, a Chinese government-run logistics-management software, is used in at least 24 countries and 86 ports (the US banned its use in 2023). LOGINK shares data with CargoSmart, another shipping-management software firm owned by COSCO, and in return gives it access to the whereabouts of 90% of the world’s container ships. It also has a tie-up with Cainiao, a logistics provider with hundreds of warehouses around the world.
And Chinese companies will continue to expand overseas in response to the growth of competitors. “Intense international geopolitical competition has deeply affected our industry,” COSCO Chairman Zhu Tao said in March. “Expanding our port footprint remains an important response.” The company plans to invest further in Piraeus and Abu Dhabi. China Merchants Port, another major Chinese company, is in the process of acquiring Brazilian port operator Vast Infrastructure. Chinese companies are also building industrial parks and manufacturing facilities close to their existing ports in Africa and Europe.
All this manipulation has led to a fragmentation of Chinese- and Western-owned port networks. This would generate some long-term benefits for all shippers: ports can no longer behave as monopolies and charge whatever they want; They have to provide better service to shippers at better rates. Operators will need to reinvest in expensive services such as port dredging to allow larger ships to enter, and maintain better maintenance so they are not replaced. “There’s always an unhappy customer at a big port,” says one executive. Having another port nearby will give them options.
But at least some builders (and the taxpayers who finance them) will stand to lose. India’s ambitious plans are in jeopardy as the country is landlocked by major ports in Singapore and Salalah (in Oman). And its own ports risk destroying each other, explains one terminal executive.
“Every port, every country wants to be a logistics hub and they can’t all be that,” says an executive at a European maritime firm. Since the expansion of the Moroccan port of Tanger Med across the Strait of Gibraltar in 2019, the nearby port of Algeciras in Spain has struggled to grow volumes.
The duplicate network of ports will also come with high fixed costs. This puts ships at risk of more debt-laden operations, potentially inefficient sea routes, and some risk of ending up on the wrong side of one or another country’s geopolitical interests. In times of disruption, such as now, consumers may face higher prices and delays despite an overall increase in shipping capacity.
Still, port duplication isn’t bad at all. The ports under development in Greece serve different, if slightly overlapping, markets. And there is some room for inefficiencies in ports. Historically ports have commanded hefty operating margins of over 40% on average, and this margin has increased over the past decade. As countries and companies begin to compete more for volume, their returns will diminish. This is probably not the prize they were looking for when they started the port war.
