The Houthis have seen enough.
The tenuous ceasefire in Gaza has led Yemen-based militias to announce a pause in attacks on merchant ships in the Red Sea, raising hopes of a return of large-scale container shipping to the Suez Canal trade route for the first time since 2023.
The rebels, who control 40% of Yemen, announced their intentions this week in a letter to Hamas, the Palestinian ruling body in Gaza.
Expectations were further raised at a recent shipping summit hosted by Egypt’s Suez Canal officials. Tolls on waterways have fallen by as much as 60% as ship operators divert the region’s largest container ships and oil tankers to longer, more expensive voyages around Africa’s Cape of Good Hope.
While peace talks in Gaza appear to have accomplished what two years of U.S. military attacks against the Houthis failed to, analysts warn that the return of global container shipping depends on assurances that satisfy carriers — and their insurers.
“The details are fuzzy and you cannot base the safety of crews, ships and cargo on the words of the Houthi militia,” said Peter Sand, chief analyst at maritime data platform Xeneta. “Carriers need much more assurance than that and, perhaps more importantly, so do insurance companies.”
Sand said risk tolerance varies among carriers. French company CMA CGM, for example, fueled conspiracy theories in the maritime community when it continued to operate scheduled commercial services in the Red Sea despite continued Houthi violence. The liner tested tolerances again this month as the high-capacity ships CMA CGM Zheng He and CMA CGM Benjamin Franklin transited the region, the largest ships to use the route since 2023.
“Transits could start to increase if the risk is perceived to be less, but we are unlikely to see an imminent return to 2023 levels,” Sand said.
Xeneta estimates that longer routes around Africa currently absorb around 2 million twenty-foot equivalent units (TEUs) of global container shipping capacity, increasing transportation demand on the global fleet.
A full return to the Red Sea – a key trade route linking Asia with Europe, the Mediterranean and North America – would ease strain on the maritime supply chain and could cause freight rates to plummet unless carriers take drastic measures such as idling, scrapping, slow sailing and blank sailings.
“Carriers now face a dilemma: follow through and accept remaining security risks, or stay around Cape Town and risk losing market share,” wrote Luuk de Gruijter, senior investment director at APM Terminals, in a post on LinkedIn. “If more carriers follow and the Red Sea fully reopens, Asia-Europe trade capacity will likely increase and freight rates may fall. Insurers will also be watching closely, with premiums remaining high until several safe transits confirm stability.”
