The Daily View: Reading behind the headlines
A 60% jump in traffic through the Red Sea seems like an entirely reasonable headline to be reading right now..
After all, governments have invested billions into restoring freedom of navigation via extensive and expensive naval operations. The Suez Canal is slashing its transit fees, and there hasn’t been a Houthi attack in months.
The problem is that the headlines don’t reflect reality, yet.
Speaking to Reuters last week, the head of the Aspides EU naval mission, Rear Admiral Vasileios Gryparis, said up to 37 ships per day were making the transit through the Bab el Mandeb strait, up from a low of between 20 and 23 ships daily in August 2024.
The problem with the triumphant headlines that followed was that nobody was looking at the exact timeframe Gryparis was referring to — or the kind of vessels he was counting.
A narrow look at daily passings may offer a promising uptick, but as former Nobel prize winners in economics have noted, if you torture the data long enough, it will confess to anything.
Take a longer-term look at the numbers — as we have done here at Lloyd’s List Intelligence — and it is clear that transit volumes remain stubbornly within the “new normal” range and 60% lower than pre-Houthi attack levels.
Headlines and statistics may be notoriously pliable when required, but numbers have an important story to tell — and they rely on us to give them a voice.
Unfortunately, the numbers are telling us that shipping is not returning en masse.
That is no surprise — at least to Lloyd’s List subscribers — but it doesn’t mean they won’t be returning soon.
We know of several large companies that have been testing the waters and are continuing to gradually increase operations, but the safety and security folks we are speaking to still need more time to pass before they can confidently reduce risk assessments.
Rhetoric and peace deals don’t count for much when dealing with the Houthis, who are notoriously unpredictable.
Predicting a safe passage tomorrow is not the same as having confidence that the situation could deteriorate rapidly the day after.
Meanwhile, shipping executives are in no rush to return if they don’t have to. The spectre of looming overcapacity in the wake of two quarters of massive disruption, as they readjust schedules, is on nobody’s ‘to do’ list in container shipping right now.
In other sectors, there will be a tipping point where rates win out, but the general consensus right now is that we are still several months away from that happening at scale, even if the Houthis continue to hold fire.
One significant attack would likely reset the clock on that calculation.
Of course, 40% of traffic continues to flow — and that number will likely start to edge up as rates reward those who can, and efforts like the Suez Canal discounts and reducing insurance offer opportunities.
But right now, it would be advisable to pay attention to the long-term data trends, rather than the mainstream headlines. We will let you know if anything significant happens.
Richard Meade
Editor-in-chief, Lloyd’s List
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