A ceasefire announced on May 6th between the US and Houthi Rebels has raised hopes for renewed use of the Red Sea trade route, but industry experts remain cautious. A quick return of container vessels to the Suez Canal is considered unlikely in the near term.

Carriers currently routing vessels via the Cape of Good Hope require two to three additional ships per service loop to accommodate longer transit times. A sudden return to the Suez route would likely release this extra capacity into the market, potentially leading to an oversupply and a sharp drop in global freight rates—something carriers are keen to avoid.

Global demand had already been slowing due to US tariff-related pressures. As a result, shipping lines are reluctant to risk further rate instability caused by this overcapacity.

Additionally, reverting to the Red Sea route would require significant fleet reallocation and operational changes. Many carriers argue that doing so would be premature, warning that the ceasefire remains fragile and that safety risks to crew and vessels still exist.

The Suez Canal Authority, which has seen a significant drop in revenue due to the crisis, is actively working to bring carriers back. A new incentive offers a 15% toll rebate for container ships over 130,000 net tonnes, automatically applied during transit.

While the ceasefire is a step forward, many industry analysts suggest that a full return to Red Sea operations may not even materialise this year.

Atlantic Pacific is closely tracking developments. For further information on the above, please do not hesitate to contact us.