More ships may return to the Red Sea if the Houthis hold their fire

A month-long costly disruption to global shipping may soon end after Yemen’s Houthi rebels signaled they have halted attacks on commercial vessels in the Red Sea.

But it may take some time to get back to normal. The airline said it would return to the Red Sea once it was convinced its ships would not be attacked. This may take time as the Houthis have pledged to renew their attacks if the Israel-Hamas ceasefire breaks down or if the Houthis are targeted by Israel or the United States and its allies.

Even as freighters return to the Red Sea, the waterway that separates the Indian Ocean from the Suez Canal, shipping companies may take time to fully recover, some analysts say.

The Houthis’ attack on the shipment began in late 2023 shortly after the start of the war between Hamas and Israel. The Houthis announced late last week that the group would halt its offensive.

To avoid Houthi drones and missiles, most shipping companies have stopped passing through the Red Sea and the Suez Canal. Instead, ships sailed around the southern tip of Africa to reach Europe from Asia. This route is about 3,500 kilometers long and takes 10 days longer than the Suez route, resulting in higher fuel prices.

“The situation in the Suez Canal remains stable and the security situation is unclear,” MSC, a major Swiss shipping company, said in a statement, adding that it would continue to use the route. he is taller now.

Danish shipping giant Maersk says it will start sailing through the Red Sea when it is safe to do so. “It is too early to speculate on the timing, but these developments are a necessary step in the right direction,” the company said in an email.

Analysts say such caution is understandable.

“They don’t want to go through the process of turning all the services over to Suez to prove that it’s not safe in the end, they have to change everything back,” said Greg Miller, senior maritime magazine for Lloyd’s List, trade publication. .

Ship capsizing is one of the biggest problems in shipping in recent times. Before the Houthi attack, the Suez Canal handled 10 percent of world trade and more than a fifth of shipping, according to the United Nations.

The Houthis have carried out about 130 attacks on commercial ships, according to the Armed Forces and Action Data, a crisis monitoring organization.

Some commercial ships continued to use the Red Sea, but most stayed away. A French shipping company, CMA CGM, ships most of its ships around the Cape of Good Hope in Africa, but the company also operates a weekly service through the Red Sea and the Suez Canal. As a result, analysts say, CMA CGM could be the first container line to return in earnest.

“CMA CGM is closely monitoring the ongoing developments in the region and hopes for a return to stability and security for all,” the company said in a statement.

As it took more time to travel around Africa, the shipping lines added more ships and trips so that, after the initial adjustment, customers still received their goods on time. Fortunately, the companies ordered a lot of new ships in 2021 and 2022, when profits increased during the epidemic period. Due to the high demand for these new ships, shipping rates have risen.

Today, shipping companies may face overloaded ships because each one can complete the journey faster. This may lower the price of goods. The average value of a container shipment is down 30 percent from last year’s high, according to Freightos, a digital marketplace for shipping, but still more than 200 percent -hundreds more than before the start of the attack.

Some analysts say there could be congestion in some places as companies move ships from long routes to shorter routes.

“You’re going to have too many ships at sea at one time,” said Salvatore Mercogliano, a maritime historian and associate professor at Campbell University in North Carolina. “And they’d rather come in and tie up and sit there, so what you’re going to see is congestion at the docks.”

But some said the industry would be fine.

“Going back to the Suez route, we’ve had time to plan the changes to the shipping line, so any transition disruption should be theoretically limited and manageable,” said Mr. Miller. in Lloyd’s List.

More ships passing through the Suez Canal will provide relief to companies that have faced delays and rising shipping rates for five years. In addition to the Houthi attack, shipping has been disrupted due to the spread of the pandemic, reduced crossings in the Panama Canal and labor disruptions at ports in the east and gulf coasts of the United States.

There may be other challenges ahead. Mr Mercogliano said President Trump’s threat of tariffs could prompt US companies to import more foreign parts and goods ahead of the new duties, hitting ports with containers and keeping shipping rates down. “There’s a lot of change going on right now,” he said.