THE number of vessels leaving the Panama registry has surged dramatically over the past two months, as ships flying the flag continue to set new records for port state control detentions in China.
Reflagging numbers rose to more than 80 in April before jumping to 150 in May. By comparison, the monthly average for the first three months of this year was below 40, while the 2025 full-year average stood at 55, according to Lloyd’s List Intelligence data for cargo ships above 10,000 dwt — a segment in which Panama registers approximately 5,000 vessels.
The previous surge in reflagging, which averaged about 65 vessels per month in the 3Q25, came as the Panamanian registry moved to purge shadow fleet* tonnage under pressure from the US and its Western allies. Yet even that peak was below the levels seen in the past two months.
The exodus came amid intensifying Chinese inspections of ships sailing under the Panamanian flag. Detentions began climbing sharply from March 8, following a dispute over port concessions between the two countries.
After a record 92 detentions in March, the numbers reached new highs of 135 in April and 139 in May. The two-month total of 274 surpassed the 251 such detentions recorded for all of last year, Tokyo MOU port state control data shows.
The regulatory pressure soon prompted shipowners and their financiers to consider contingency plans, as some alternative registries of comparable standing reported increased enquiries from owners of Panama-flagged vessels.
However, owners’ willingness to reflag did not become apparent until April 13, when the weekly number of reflaggings reached a new high of more than 20 — the highest since last January at least — before jumping to about 40 in the week starting May 11, Lloyd’s List Intelligence data shows.
Of the 220 ships reflagged since April 8, 54 opted for the Marshall Islands. The Bahamas took the second largest share, with 32 vessels, followed by Liberia, which received 27 vessels de-flagged from Panama, according to Lloyd’s List Intelligence data.
Another 10 ships moved to Hong Kong, a semi-autonomous Chinese territory, while only one chose China.
Panama currently ranks as the world’s second largest ship registry, behind Liberia and ahead of the Marshall Islands.
The reflagging surge coincides with a geopolitical tug-of-war between the US and China over operational control of ports, which observers say has complicated the Central American country’s diplomatic balancing act.
Following repeated US pressure to curb Chinese influence in the waterway, Panama voided contracts for two key Panama Canal ports operated by a subsidiary of Hong Kong’s CK Hutchison and transferred temporary concessions to Maersk and MSC in late February.
In response, China condemned the annulment as “utterly absurd”, accusing Panama of “bowing to hegemony” without naming the US.
The pressure from Beijing appears to be taking a tangible toll on Panama’s ship registry business — an important source of government revenue. This may push Panama to adopt some conciliatory measures, although any significant climbdown appears unlikely given the geopolitical sensitivity surrounding the port dispute.
On May 28, Panama’s President José Raúl Mulino denied that US pressure had played a role in the country’s annulment of port concessions with CK Hutchison, defending the decision as “genuinely Panamanian” during a weekly briefing.
The remarks came days after Chinese Foreign Minister Wang Yi told his Panamanian counterpart Javier Martínez-Acha Vásquez at an in-person meeting in New York that China-Panama relations should not be “subject to third-party interference”.
Panama “stands ready” to resolve differences with China through “constructive dialogue” and “turn a new page” in bilateral relations, Martínez-Acha said at the meeting, according to the Chinese readout.
