Container lines are not expected to immediately return to Suez Canal transits after the Houthis say they will stop attacks on shipping, according to a leading maritime market intelligence service, Drewry.
Drewry said this citing this year as highly unpredictable and the range of possible outcomes in the container shipping world has spread even wider over the past few days.
Since the Houthis started the campaign of terror on commercial shipping in November 2023 over 100 vessels have been attacked, two ships have been sunk, four seafarers killed and the 25 crew of the car carrier, Galaxy Leader taken hostage.
Transits of the Suez Canal have plummeted as the majority of shipping lines opted to re-route via the Cape of Good Hope rather than pay the Houthis for safe passage or arrange a Naval escort from a supporting government.
Carriers will also be wary that they could be at risk if the Houthis deem their voyages to have any connection with Israel, no matter how tenuous or even false, said Drewry.
Drewry expects the major carriers are about to start phasing in new East-West networks as part of a big change in alliance structures. They will not want to disrupt the operational transition only to then have to redraw them again should events take an unwanted darker turn.
In Drewry’s view, most carriers will wait to see how things develop and will need to be convinced that the threat of attack has been eliminated before they consider a return to trans-Suez transits which would take months rather than weeks.
A return to the Suez Canal will quickly see carriers forced to address the underlying overcapacity that exists in the market, but which was masked to a large degree by the Red Se diversions, by adding distance and time to voyages, Drewry noted.
Once carriers deem Suez to be a safe option – here insurance costs will be an important metric – as Drewry expects to see lines set to work to cut capacity aggressively
Drewry does not think the market is drifting away from carriers and that freight rates are likely to decrease when the Suez Canal reopens fully, it has to be remembered that carriers do have the power to manage capacity in a variety of ways.
