Insight Focus
Renewed security threats are delaying a full return to the Red Sea. Carriers favour a gradual Suez return to avoid congestion at major European ports, where a sudden shift could overwhelm terminals. A phased approach would help stabilise networks and limit rate volatility, while the Cape route remains the main alternative.
The prospect of a quick and large-scale return of ocean carriers to the Red Sea and the Suez Canal appears to be fading, as renewed threats from Yemen’s Iran-aligned Houthi group, combined with the movement of a US aircraft carrier into the region, are turning the area into a “red zone” once again.
This development, however, does not directly conflict with the sentiment of most container shipping companies, as the majority seem to favour a more gradual return to the major gateway rather than a sudden, hasty one.
Such a gradual reintroduction of the Red Sea into container lines’ port rotations could help stabilise service networks, mitigate freight rate volatility, and reduce the risk of widespread port and yard/depot congestion, particularly in Europe.
European Ports Under Congestion Alert
At this point, it is worth highlighting the first major “hot spot” related to ocean carriers’ return to the Red Sea. A rapid shift from the Cape of Good Hope route back to the Suez Canal could result in a large number of vessels arriving almost simultaneously, creating significant congestion risks at several European ports.
Europe’s mega ports, such as Rotterdam, Antwerp and Hamburg, could face intense container flows leading to serious congestion issues, while even ports outside the top three hubs could encounter operational challenges.
Source: Port of Rotterdam, Port of Antwerp Bruges, Port of Hamburg
Greece’s port of Piraeus, for example, could experience severe container congestion, as it would suddenly once again become the first major European port of call for vessels arriving via the Suez Canal, linking Asia and Africa with Europe.
Port of Piraues
Shippers and Carriers’ Plans in Danger
Container lines’ service networks represent another issue that requires careful and specific handling. Any changes should be slow and gradual, as shippers have planned their supply chains with specific rotations and transit times in mind. A rapid shift could lead to bottlenecks and operational chaos, with shippers receiving cargo out of schedule (earlier does not always mean better), thereby creating additional challenges across the shipping and inland transportation markets.
A phased return would also allow carriers to better manage their vessel fleets during the transition between the two networks. By gradually reintroducing the Red Sea route, carriers can adjust capacity deployment step by step, monitor real demand levels, and fine-tune vessel allocations accordingly. This controlled approach reduces the risk of overcapacity or service gaps and provides greater visibility for both carriers and shippers as network conditions evolve.
More Pressure on Rate Volatility
Freight rate volatility is another critical concern. Rapid changes to service networks could exacerbate abnormal rate fluctuations and increase uncertainty in the global shipping market. In an already highly unstable shipping environment, all industry stakeholders require greater predictability and operational security. This cannot be achieved through a sudden return to the Red Sea, but rather through measured and well-calibrated moves.
Source: Drewry
This issue is particularly critical at a time when freight rates are already under pressure from multiple factors, including softening demand in key consumer markets, excess vessel capacity, geopolitical uncertainty and ongoing cost inflation across fuel, insurance and port operations. In such a fragile pricing environment, abrupt network changes could amplify volatility, making rate planning more difficult for both carriers and cargo owners.
Red Sea Route Under Review
At the time of writing, the Red Sea route has not been “abandoned,” as it was a year ago, but it is certainly not the primary choice for carriers. Instead, it remains an option under consideration, with decisions being taken step by step while closely monitoring day-to-day developments.
It is evident that the Houthis’ renewed threats of attacks, along with the ongoing war-like climate among the parties involved, do not support a full return to the Red Sea. As a result, the “Plan B” route via the Cape of Good Hope is likely to remain at the forefront for several more months.
