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Following the start of a ceasefire deal between Israel and Hamas that started on Monday, the Houthis swiftly issued a statement saying it will stop attacks on all non-Israeli-linked commercial shipping. However, Drewry said on Monday not to expect Suez Canal transits to be resumed immediately.
“This is clearly a positive development, but we should not expect to see container lines rush to return to the Suez Canal,” said Drewry. In its view, most carriers will wait to see how things develop and will need to be utterly convinced that the threat of attack has been eliminated before they consider a return to trans Suez transits. This timeline would take months rather than weeks.
There is also the fact that carriers have done rather well during the diversions. Re-routing has sopped up a lot of capacity–Drewry estimates that it has reduced effective capacity by around 9%-which has helped carriers once again post some very strong quarterly profits in the past 12 months. A return to the Suez Canal will very quickly see carriers forced to address the underlying overcapacity that exists in the market.
Once carriers deem Suez to be a safe option–for which insurance costs will be an important metric–it should not be expected to see lines set to work to cut capacity in an aggressive fashion. It will come in the form of far greater scrapping (barely 85,000 TEUs of the 31-million-TEU fleet was scrapped last year), heavier use of blank sailings and even longer-term idling (at present only 2.6% of container ships have been anchored).
