Red Sea headlines: three things that really matter
TL;DR: Headlines are upbeat, but carriers remain cautious; 2025-2028 will see a wave of new tonnage, making a loose-capacity cycle hard to avoid; for exporters, the playbook is to secure core capacity, stay flexible, and treat redundancy as part of supply-chain resilience.
1) Start with the "viral" resumption news
In late November, "Maersk returning to the Red Sea" and "Suez Canal transit to resume" went viral in the industry. The Suez Canal Authority (SCA) said Maersk plans to partially resume Suez transits in early December, while CMA CGM targets a "full resumption" in December and signed a cooperation agreement with Egypt. Maersk's own tone is more cautious: no confirmed date yet, and east-west loops will only return when safety conditions allow, with crew and cargo security still the top priority.
For SCA, optimism matters - since the Red Sea crisis, widespread Cape of Good Hope diversions have slashed transits and toll income, with Egypt estimating revenue losses of several billion USD in 2024. That is why upbeat official messaging coexists with cautious carrier actions. The real question: how much does the exact timing of resumption matter for container shipping?
2) Why are carriers eager to return to the Red Sea and Suez?
From a business logic perspective, the incentives are straightforward:
- Shorter voyages: Asia-Europe via Suez is roughly 10-14 days shorter than via the Cape - time saved becomes effective capacity.
- Lower fuel and carbon costs: Cape diversions raise fuel burn, insurance, and future carbon exposure per voyage.
- Network control: The crisis forced ad-hoc network redesigns, altered port rotations, and container imbalances. Returning to the main artery reduces complexity and cost.
In short, "eager to resume" is more about restoring efficiency and cost structure than betting on geopolitical calm.
3) Does timing decide the fate of freight rates?
In the short run, the crisis "absorbed" capacity: diversions lengthened cycles and forced extra ships to maintain schedules, lifting costs and supporting higher rates. But medium-to-long-term pricing hinges on the size of the global fleet versus demand.
Multiple sources show more than 8 million TEU of newbuilds on order, with most deliveries between 2025 and 2029:
- Roughly 1.9 million TEU per year on average from 2025-2028;
- A potential peak of about 2.2 million TEU in 2027 alone;
- Scrapping lags far behind additions, making oversupply hard to digest quickly.
The Red Sea crisis temporarily turned surplus into "redundancy" to cushion geopolitical risk. Once services normalize, that redundancy reappears as surplus. Whether Suez fully reopens in 2025 or 2026, the market is on track to re-enter a loose-capacity, downward-rate cycle - the timing shifts the pace, not the direction.
4) Is overcapacity a waste? Think of it as insurance
Viewing liners as a global "bus system" clarifies why redundancy matters. No metro or bus network is built to exact demand; spare vehicles absorb peaks and disruptions. Zero redundancy means zero buffer. During the Red Sea crisis, carriers rebuilt Cape-based loops within months largely because they had ships to redeploy, trimming or skipping ports elsewhere to free up tonnage.
Redundancy is a cost, but also resilience insurance: when demand spikes, extra ships respond faster; when a corridor is blocked, a redundant network reroutes more easily. For cargo owners, that translates into more predictable delivery and lower interruption risk.
5) What should manufacturers and exporters watch?
For manufacturers and exporters (including two-wheeler and e-bike OEMs or parts shippers), three themes matter most:
1) Rates: Many carriers signaled that 2024 Q3 may mark a local high, with pressure to ease afterward. Combine base capacity under longer-term contracts with a portion left for the spot market to capture declines when they arrive.
2) Transit time: Geopolitics, port congestion, extreme weather, and alliance/rotation reshuffles mean higher volatility is here to stay. Build larger buffers for critical orders and consider sea-air or split shipments when timelines are tight.
3) Supply-chain design: Shift from "single-lane efficiency" to "multi-node resilience." Practical moves include multiple load/discharge ports and alternate loops, modest destination safety stock or e-fulfillment inventory, and closer information-sharing with core logistics partners on routing, space strategy, and booking rhythm, not just price benchmarking.
6) Bottom line: resumption is inevitable, a new cycle is too
Suez remains the optimal east-west corridor, so Red Sea resumption is only a matter of time. Yet the 2025-2028 newbuild wave makes a loose-capacity era almost certain; reopening adjusts the cadence, not the destination. Capacity redundancy is not mere waste - it is part of supply-chain resilience. The better question for shippers: in a world of volatile rates, structural surplus, and recurring geopolitical shocks, how much of your supply chain is truly controllable, adjustable, and affordable?
If you operate in cross-border manufacturing or export finished vehicles, components, or consumer goods and need to balance contract vs. spot exposure, evaluate multi-port options, or stress-test lead times, talk with Mighty Shipping. We can co-design steadier, more visible logistics plans for your next peak.