BlackRock and MSC are set to take over 12 ports on strategic coasts stretching from the UAE and Oman to Iraq and Egypt (Karim Jaafar/AFP)
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Step aside China’s Cosco and the UAE’s Dubai Ports World - the Middle East has a flashy new port power. It’s an alliance between the $11 trillion American asset manager BlackRock and a secretive Italian family that owns the Mediterranean Shipping Company (MSC).
Their consortium reached a $22.8bn deal in March to take over 43 ports owned by CK Hutchison, a Hong Kong-listed conglomerate owned by one of Asia's richest men, 96-year-old billionaire Li Ka-shing.
The deal grabbed headlines because it is set to give BlackRock and MSC control of two ports at either end of the Panama Canal, the strategic waterway US President Donald Trump threatened to conquer to reduce China’s influence in the western hemisphere.
But the deal's impact extends far beyond Panama.
The Trump administration is moving to reduce Beijing's influence over global supply chains, and the Middle East is being swept up in the crossfire.
BlackRock and MSC are set to take over 12 ports on strategic coasts stretching from the UAE and Oman to Iraq and Egypt.
China’s growing infrastructure footprint under the Belt and Road Initiative, or BRI, in the Middle East is well documented. For some, this deal is the first whiff of how the Trump administration might respond.
But the Hutchison-BlackRock-MSC agreement is more complex. It has taken place outside the realm of diplomats, think-tankers, foreign powers, and even the traditional investment bankers who would facilitate such a transaction. Overall, the port deal was sealed between the ultra-rich, underscoring how global corporations and industry titans are positioning themselves for a more unpredictable and nationalistic trading system.
Blackrock declined MEE's request to comment on this piece. MSC did not respond by the time of publication.
Dubai Ports World under threat
MSC, the world's largest container shipping company, will operate the ports purchased from Hutchison. One of the under-reported losers from this deal is the UAE, whose state-owned company, Dubai Port’s World, has carved out a position as the top port player in Africa and the Middle East, experts and businesspeople say.
“Externally, DP World will say this deal isn’t a threat to their business, but internally, you bet they are angry and scared,” one senior port executive in the Middle East told Middle East Eye.
") rgba(220, 220, 220, 0.5); top: -15px; left: 0px;">Analysts say the UAE has cause for concern since MSC’s decision to team up with BlackRock underscores a paradigm shift in the shipping industry: vessel owners are moving towards buying ports instead of relying on operators like DP World as geopolitical risks increase.
“Over time, MSC will send their vessels to their new assets. DP World will need to find new partners to fill the gap. Dubai is not welcoming this deal,” Peter Sand, the chief analyst at shipping platform Xeneta, told MEE.
The Middle East shipping executive said that the mega-port deal also strikes at the oil-rich Gulf monarchs’ pride because it reminds them that despite their bulky sovereign wealth funds, there are still American and European entities with as much money as them and some things they can’t afford to buy.
“The Gulf rulers love big splashy deals. It’s about pride. Saudi Arabia and the UAE will be wondering why they didn’t get invited to the table to purchase ports in their countries,” the executive said.
DP World didn't respond to MEE's request for comment.
Too many ports, not enough product
Infrastructure projects like ports act as a foundation of Gulf states' economic and geopolitical assertiveness as newfound middle powers independent of Washington, Moscow, and Beijing.
The UAE has long used DP World as a means to project power in the Red Sea.
Egypt-flagged cargo vessel Elreedy Star sailing in the Red Sea near Port Sudan in northeastern Sudan, on 6 October 2021 (Ashraf Shazly/AFP)
The Gulf states also want to use ports to diversify their economies away from energy and tap their much-vaunted status as “crossroads” between east and west for revenue streams. For example, Saudi Arabia aims to quadruple its port capacity by 2030.
'The Gulf states have not been able to replicate with shipping what they did with national airlines'
- Peter de Langen, Ports & Logistics Advisory
Peter de Langen, the owner and principal consultant of Ports & Logistics Advisory, told MEE that shipping companies like MSC have an advantage as they deploy cash reserves built up from a few bumper years of high freight rates.
“The Gulf states have so far not been able to replicate with shipping what they did with national airlines,” he told MEE.
“I can imagine state-owned terminal operators like DP World would like to take over a shipping line, but that is an expensive acquisition,” De Langen added.
Instead, the Gulf states have focused on building ports. For some, this infrastructure splurge has gone so overboard that experts say the Middle East and North Africa are oversupplied.
“Ports in the Red Sea have a 60 percent utilisation rate. That is low. A healthy rate of utilisation is 75 to 80 percent," the port executive told MEE.
'Shut the door on China'
In both Washington and Beijing, Hutchison’s sale is being portrayed as the latest salvo in an escalating great-power rivalry.
Trump has framed the Panama Canal component of the deal as the US “reclaiming” a strategic asset it foolishly returned to Panama in 1999, which many would call a reductionist recounting of the history of the canal.
Ironically, however, Beijing has added some heft to Trump's nationalist framing of the deal through its pushback. Chinese state-owned newspapers have accused Hutchison of treason for selling its ports.
'It looks to me like a defensive move to try to shut the door on rising Chinese ambitions'
- Peter Frankopan, author
Unlike Cosco, which has played a leading role in BRI, Hutchison is a private company.
Any move by Beijing to block the sale could be self-defeating, as it would sour business sentiment and taint the ports as pure tools of Chinese power.
Analysts and executives expect the deal to proceed despite Beijing's criticism.
But the deal is more complex than how Beijing and Washington are framing it.
US-listed BlackRock appeared to capitalise on Trump’s tough talk towards China, which may have unnerved Hutchison. In the weeks before the deal, Trump revoked special trade privileges for Hong Kong. He has also unveiled a plan to impose port fees on Chinese ships.
Peter Frankopan, an expert on trade routes at Oxford University and author of Silk Roads: A New History of the World, told MEE that BlackRock’s cobbling together of a consortium to buy the ports “fits into a tried and tested model where business interests and US government policy dovetail closely together".
But he said the deal should not be reduced to “US trying to compete with China or with the BRI.”
“It looks to me much more like a defensive move to try to shut the door on rising Chinese ambitions - which might sound similar, but I think is rather different in motivation and in practice,” Frankopan added.
The Trump administration has not connected the deal to a wider infrastructure project like the India-Middle East-Europe Economic Corridor. The Trump administration also has less authority over BlackRock and MSC than Beijing does with Cosco.
Larry Fink, BlackRock and Saudi Arabia
BlackRock is the world’s largest asset manager and has its own interests in expanding into ports, considering they are a hard asset that provide constant revenue streams. If they are well positioned, they can return a steady cash flow, and operating costs can easily be passed on to vessel owners.
BlackRock’s chief executive, Larry Fink, has cannily positioned himself as serving Trump's interest, experts say.
Fink has been targeted by conservatives for allegedly doing “woke” investing. He has earned the scorn of Tucker Carlson, a close Trump ally, who often describes Fink as the type of billionaire globalist responsible for gutting the American middle class.
'I’d much rather deal with BlackRock than a China-based company'
-US President Donald Trump
With the Hutchison deal, Fink has been able to portray BlackRock as a vehicle for US power projection.
“I’d much rather deal with BlackRock than a China-based company, and BlackRock is fine,” Trump said in a Fox News interview after the deal was announced.
This isn't the first time Fink has tried to get ahead of geo-economic trends, especially in the Middle East.
Fink cultivated a close relationship with Saudi Arabia's Crown Prince Mohammed bin Salman. He dined with the crown prince in private and opened a BlackRock office in Riyadh with an eye on gaining a slice of the public investment fund's spending as it diversifies its economy away from energy.
However, opportunities in Saudi Arabia have been slow to materialise for BlackRock.
Among Arab diplomats, Fink, a Jewish-American Democrat, is seen as an advocate for Saudi Arabia normalising ties with Israel.
US President Donald Trump and BlackRock CEO Larry Fink at the White House in Washington, DC, on 3 February 2017 (Chip Somodevilla/Getty images/AFP)
Port executives and industry analysts smirk at the way BlackRock has framed its role in the deal.
“All the news you hear in the US is how BlackRock stepped up and got Hutchison out of Panama,” the port executive told MEE.
However, Hutchison had been trying to sell its ports for two years, industry insiders say. Ka-shing, the billionaire, earned the nickname “Superman” for his uncanny ability to sell at the right time.
Ka-shing's sons, who will inherit his empire, want to shiftthe family conglomerate out of politically sensitive ports, the Middle East port executive told MEE.
“Li faced a problem. He couldn’t sell his ports to Cosco, which is really an arm of the Chinese state, because that would have been too blatant for the US and countries where the ports are located,” the executive said.
While BlackRock is getting most of the attention, it is MSC, its partner, that stands to gain the most, experts say.
“The move by carriers to own their own terminals is becoming a critical power play in the shipping industry. These ports are profitable. By owning vessels and ports, owners are building synergies. The ports are strategic for MSC because they will allow it to use their own assets for logistics and port calls,” Sand told MEE.
Gianluigi Aponte: A long boat to Capri
MSC was founded by Neapolitan sea captain, Gianluigi Aponte. In a cutthroat industry where business still revolves around inter-marriages and family ties, MSC is known as one of the most close-knit and secretive shipping companies. The family rarely gives interviews or discloses its profits.
The 84-year-old Aponte was born into a Neapolitan family that claims to have been in the seafaring trade since the 17th century. Aponte's father died of malaria after seeking his fortune as a hotelier in Somalia.
Aponte became a captain who ferried the glitterati and jet-set from Naples to Capri. On one of those runs, he met his Swiss-Israeli wife. The two started their business with one vessel in 1970 and built it into the biggest container shipping company in the world.
Aponte rarely appears in public but has earned the loyalty of his tens of thousands of employees, to whom he sends personalised invitations to ship-naming ceremonies, according to workers' accounts.
Aponte’s son, Diego, and daughter, Alexa, work at MSC. Diego ran the talks with BlackRock, the executive told MEE.
MSC is known in the shipping industry for identifying the trend early on to transition its fleet to massive container vessels, where products can be packed to the brim on vessels bigger than three football fields at rock-bottom prices.
Gianluigi Aponte, founder of Mediterranean Shipping Company, at Matignon Palace, in Paris, France, on 20 January 2020 (Thomas Samson/AFP)
But MSC has also come under the crosshairs of US drug agents. MSC vessels have been caught up in cocaine smuggling. US and European authorities claimed previously that MSC crews were infiltrated by the Balkan mafia.
In a 2019 drug bust, US agents discovered $1bn worth of cocaine on an MSC vessel in Philadelphia. MSC denied knowingly engaging in drug trafficking.
By taking Hutchison out of the global port game alongside BlackRock, MSC has earned goodwill in Washington. This comes at a time when its top rival family, the French-Lebanese Saades, who own CME shipping, are beating a path to Trump's door.
In a visit to the White House in March, Rodolphe Saade pledged to invest $20bn in the US maritime sector. Trump wants to bring back the US ship-making industry to counter China's dominance in the trade.
Industry insiders say the Apontes are scrambling with everyone else to preserve their business interests as Trump rips up the neoliberal trading world they profited from.
Langen told MEE, “You can’t think of MSC like Cosco, a state-owned company. Whose interests does MSC serve besides the Aponte family? Does it serve the interest of Switzerland or Italy or the US? As I see it, ultimately none of these."
Taking over Oman and Iraq's gateway ports
Ports have several uses for shipping companies.
They can be used as stops along the way for maintenance and repair; for trans-shipment in which goods are unloaded and re-exported; and as the final destination or origin port.
MSC is already using Saudi Arabia’s King Abdullah Port as a trans-shipment hub.
'Whose interest does MSC serve besides the Aponte family... Switzerland or Italy or the US? As I see it, ultimately none of these'
- Peter de Langen, Ports & Logistics Advisory
That has helped Saudi Arabia boast that it is increasing port capacity, but ports make much more money on containers that are handled at the final origin or destination, as opposed to cheaper trans-shipment.
The ports MSC and BlackRock are acquiring on Egypt’s Mediterranean coast will allow for cheaper repair and maintenance services compared to Europe, where wages are higher and the EU imposes costly environmental regulations, experts said.
“With this acquisition, MSC gains access to many hubs. It's not Egyptian imports that matter here, but the strategic location of those assets that allow MSC to move around the Mediterranean,” Sand said.
The deal includes ports in lesser-known Emirates like Ajman and Ras al-Khaimah, too.
It will also cement MSC and BlackRock’s control of strategic gateways for Middle Eastern countries.
Hutchison’s port of Sohar in Oman accounts for 80 percent of the country’s maritime cargo. The deal also includes a port in Iraq's Basra, its only outlet to the sea.
MSC and BlackRock may be moving into Middle Eastern ports at a time when they are set to get a lot busier, ironically because of Trump’s trade war with China.
China's exports to the Gulf have been on the rise for years. Experts say that Chinese manufacturers locked out of the US market are set to unload more of their cheaper products on the Middle East as American consumption is reduced by tariffs.
So, as Trump looks to redraw the global order, BlackRock and MSC are positioning themselves to profit.
