Does a return to Suez even matter?
THE Houthis have stopped their campaign of terror on commercial shipping, or so they say.
Red Sea voyages have been creeping upwards since Major General Yusuf al-Madani, chief of the general staff of the Yemeni Armed Forces (affiliated with the Houthis), told Hamas’ military wing it would “reinstate a ban on Israeli navigation” if aggression against Gaza resumed.
Many read that as the attacks having stopped. Transits through the Bab el Mandeb hit an 18-month high in October.
But a proper return will only be signalled when the big lines return to the chokepoint. We may be closer to that than we have been since this sorry saga began.
Maersk said it is “keen” on a full return and Israeli container line Zim said it was planning a return “as soon as we can”.
CMA CGM sent one of its biggest vessels, CMA CGM Benjamin Franklin (IMO: 9706891), through the Red Sea earlier this month, though it has never really left the region thanks to French naval escorts.
To give a sneak preview of our Outlook Forum being held next month, one of the questions we have asked the industry is when they expect shipping to return to the Red Sea.
There’s still time to respond before the event on December 11, of course, but the majority think the answer is in 2026. The second half is marginally more popular as it stands.
Cue Armageddon in the container markets then? For months we’ve heard that diversions around the Cape of Good Hope are holding the market together, absorbing tonnage that is hitting the water at quite the rate.
There’s no doubt that there is some truth to this. Wouldn’t it therefore suit container lines to drag the return out for as long as possible?
As one line told Lloyd’s List earlier this month, holding onto Red Sea diversions simply to mop up a bit of extra capacity is akin to treating a gunshot wound with a band-aid.
The orderbook is at an all-time high. An average of nearly 2m teu is expected to enter the market each year until the end of 2027.
Demand is also faltering. Volume gains made earlier this year when Trump and China were going punch for punch have since been eroded.
So why wait? Maybe it is best just to get it over with. Rates are expected to fall by up to 25% globally in 2026 even in the absence of a Red Sea return. Might as well take all of the pain upfront, rather than drag the suffering out.
There is even a school of thought that it’s best to return when demand is softer to lessen the anticipated congestion at European ports that many foresee when the migration north takes flight.
The counter is to employ the “something might turn up” strategy seemingly doomed administrations roll out when approaching election time. A turkey will always look to delay a vote for Christmas as long as possible given half the chance despite its inevitability.
The container market has though been rescued by miracles before.
However, while a string of disruptive events has allowed the market to defy gravity, the sheer weight of the orderbook looks to finally be catching up.
Barring another black swan event, the chickens are coming home to roost, whether carriers return to the Red Sea or not.
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