Shipping companies continue to divert from Suez Canal despite cautious optimism

Egypt Today

27-01-2025

Cairo – January 27, 2025: Despite a recent pledge from the Yemeni Houthis to ease hostilities against vessels in the Gulf of Aden and Red Sea, major shipping companies have made it clear that they are not in a hurry to resume routes through the Suez Canal.
In separate statements over the weekend, Maersk, the Danish shipping giant, and the logistics division of Abu Dhabi National Oil Company (ADNOC) acknowledged the Houthis' pledge as a positive development but stated the risk to their vessels remains too high, and will continue rerouting cargoes around Africa.
Maersk emphasized that the safety of its crew, vessels, and cargo was their top priority, confirming that they would continue to use the Cape of Good Hope route until safe passage through the region could be ensured for the long term.
Abdulkareem Al Masabi, CEO of ADNOC Logistics & Services, expressed caution, stating it was too early to declare the situation resolved, citing the fragile nature of the ceasefire.
French shipping company CMA CGM also confirmed it would avoid the Suez Canal, despite the ceasefire, viewing the situation in Gaza as a fragile but positive sign for global shipping and logistics.
However, DP World's deputy CEO, Yuvraj Narayan, mentioned that ships not connected to Israel could return to the Red Sea in as little as two weeks, which could lead to a significant drop in freight prices, potentially by 20-25% over two to three months.
The ongoing conflict in Gaza, which began in late 2023 after Hamas's attacks, has led to numerous assaults on ships passing through the Bab-el-Mandeb Strait by the Houthis. However, with the US-brokered ceasefire in place, the Houthis have pledged to limit their attacks to vessels with Israeli ties, provided the terms of the truce are respected.
Egypt is 'cautiously optimistic' about the ceasefire, explained Minister of Investment and Foreign Trade Hassan El Khatib last week, noting plans to engage with shipping companies about returning to the Suez Canal.
Since the conflict began, Suez Canal revenues have dropped by 60-70 percent, but El Khatib acknowledged that a full return to the canal would not happen immediately.