Suez authority eyes swift return to canal, but it's 'safety first' for carriers
Container lines will not restart Suez Canal crossings until May at the earliest, believes Yang ...
Houthi communiques have confirmed that the group will cease attacks on most vessels in the Red Sea, continuing to target ships owned by Israeli companies or flying the Israeli flag.
The development defies what many expected from a group which, according to some estimates, has managed to extort more than $2bn in pay-offs from shipping lines since it began the attacks.
A statement received today by The Loadstar said: “With the commencement of the implementation of the ceasefire agreement and cessation of aggression on the Gaza Strip… the Humanitarian Operations Coordination Center announces… stopping sanctions on vessels… except for vessels wholly owned by Israeli individuals or entities and/or sailing under the Israeli flag.”
But the group added that “in the event of any aggression against the republic of Yemen” by the US, the UK, or Israel, it would resume attacks on US/UK vessels.
The development sets the stage for Red Sea transits to resume, leaving the shipping industry to figure out how to manage the resulting, according to Drewry estimates, tonnage oversupply of 25%.
Xeneta chief analyst Peter Sand expects a period of “chaos” as schedules are changed, similar to that which was seen at the beginning of the Red Sea crisis, with teu-mile demand, even accounting for an expected volume growth this year, potentially down 11% compared with 2024.
“Ships will not be where they are supposed to be, and will arrive at ports much earlier (or later) than scheduled,” he writes in an analysis. “If large numbers of ships arrive at ports at the same time, it will cause massive delays and congestion that ripple across ocean supply chains.”
Mr Sand also anticipates freight rates will collapse.
“Combined with record deliveries of new ships, the market will be flooded with capacity, with carriers needing to remove around 1.8m teu to retain the status quo. Scrapping of ships will increase and carriers have got much better at capacity management in recent years, but it is unlikely this will be enough to prevent freight rates from collapsing.”
Some shipping lines seem reluctant to return to the Suez routes. Last week, Maersk and Hapag-Lloyd made it clear they would not be rushing back to the Red Sea.
“We might see some ships resume Red Sea transits in the coming weeks,” Jakob Larsen, chief safety & security officer at BIMCO, told Bloomberg. “But it will require fairly strong indications of ceasefire stability before shipping in general resumes transits to pre-conflict levels.
“The container lines will probably take a little longer.”
Last week, one insurance expert told The Loadstar cargo insurers, too, would take some time to adjust to any resumption of Red Sea transits.
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