Red Sea Crisis Persists: Carriers Maintain Cape Routing Despite Ceasefire
Despite a Gaza ceasefire and Houthi announcements to halt attacks on Israeli-linked shipping, major carriers continue to avoid the Suez Canal route. Transit time and cost impacts have become embedded in supply chain planning.
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What Happened
The Red Sea shipping crisis has transitioned from a short-term disruption to a sustained operational reality in early 2026. Despite positive security developments, the maritime industry remains highly cautious.
Recent developments:
- Hamas-Israel ceasefire effective October 10, 2025
- Houthi announcement (November 2025) to halt attacks on Israeli-linked shipping
- Despite these, major carriers maintain Cape of Good Hope routing
Embedded costs and impacts:
- Transit time extension: 10-14 days added to Asia-Europe voyages (28-32 days becomes 38-42 days)
- Fuel cost impact: ~$1 million additional per large container ship voyage
- Per-TEU cost increase: $200-$400 for the longer route
- Freight rates: Remain 25-35% above pre-crisis benchmarks
- War risk insurance: Suez transit premiums reached $150,000-$500,000 per voyage (vs. $10,000-$20,000 pre-crisis)
Recent developments:
- Hamas-Israel ceasefire effective October 10, 2025
- Houthi announcement (November 2025) to halt attacks on Israeli-linked shipping
- Despite these, major carriers maintain Cape of Good Hope routing
Embedded costs and impacts:
- Transit time extension: 10-14 days added to Asia-Europe voyages (28-32 days becomes 38-42 days)
- Fuel cost impact: ~$1 million additional per large container ship voyage
- Per-TEU cost increase: $200-$400 for the longer route
- Freight rates: Remain 25-35% above pre-crisis benchmarks
- War risk insurance: Suez transit premiums reached $150,000-$500,000 per voyage (vs. $10,000-$20,000 pre-crisis)
Why It Matters
The industry's caution reflects hard-learned lessons. Attacks expanded beyond Israeli-linked vessels to include ships connected to the US, UK, and European nations. Several vessels carrying Russian cargo were also attacked, undermining any assurances of safe passage.
A premature return to Suez routing could trigger severe disruption if security deteriorates—port congestion in Europe from suddenly redirected traffic and container shortages in Asia. The consensus is that 18-24 months of stability after full normalization is needed before large-scale route changes.
The aggregate impact on global trade is estimated at $15-20 billion annually, fundamentally altering cost structures for Asia-Europe commerce.
A premature return to Suez routing could trigger severe disruption if security deteriorates—port congestion in Europe from suddenly redirected traffic and container shortages in Asia. The consensus is that 18-24 months of stability after full normalization is needed before large-scale route changes.
The aggregate impact on global trade is estimated at $15-20 billion annually, fundamentally altering cost structures for Asia-Europe commerce.
What It Affects
Costs: Premium routing costs now built into baseline pricing; unlikely to reverse quickly even if security improves.
Timelines: 10-14 day extensions require adjusted inventory strategies and longer planning horizons.
Capacity: Longer transits absorb effective capacity, partially offsetting fleet oversupply.
Risk: Any security incident could trigger immediate insurance premium spikes and further rate volatility.
Timelines: 10-14 day extensions require adjusted inventory strategies and longer planning horizons.
Capacity: Longer transits absorb effective capacity, partially offsetting fleet oversupply.
Risk: Any security incident could trigger immediate insurance premium spikes and further rate volatility.
What to Watch Next
- Carrier announcements regarding route evaluations (CMA CGM has discussed selective Suez use)
- War risk insurance premium movements as security indicator
- Port congestion in Europe that might signal route changes
- Container availability in Asia if routes shorten suddenly
- War risk insurance premium movements as security indicator
- Port congestion in Europe that might signal route changes
- Container availability in Asia if routes shorten suddenly