U.S. President Donald Trump announced Tuesday that Yemen’s Houthi militants have agreed to cease their 18-month campaign of missile and drone attacks on commercial vessels in the Red Sea. If confirmed, this could pave the way for major ocean carriers to resume using the Suez Canal, potentially creating vessel overcapacity in an already strained container shipping market.
Though not part of a formal agreement, Trump said the Houthis’ pledge signals an end to the assaults that began in late 2023. The group claimed the attacks were acts of solidarity with Gaza during the Israel-Hamas conflict. However, the Houthis have not publicly confirmed any such agreement with the U.S., and American airstrikes on Houthi positions in Yemen have intensified in recent months.
“They’ve told us they don’t want to fight anymore. They’ve given us their word,” Trump said during remarks at the White House. “We’ll respect that and end the bombings. They’ve effectively surrendered—but more importantly, we’ll take them at their word that the attacks on ships will stop.”
If shipping through the Suez Canal resumes, Maersk estimates that 1 to 2 million twenty-foot equivalent units (TEUs) of capacity could re-enter the global supply chain. Since the start of the attacks, around 10% of the world’s container capacity has been tied up on longer voyages around the Cape of Good Hope, according to shipping industry group BIMCO.
The container shipping industry is already contending with a looming glut, with more than 7 million TEUs of new capacity on order—equivalent to 25% of the current global fleet—according to data from Sea-web, part of S&P Global. The imbalance between supply and demand is expected to persist over the next two years.
An earlier declaration in January of a ceasefire in Gaza and a pledge from the Houthis not to target merchant ships failed to restore carrier confidence in the region. While some smaller Asian carriers and France’s CMA CGM have continued Red Sea transits, most shipping lines have avoided the route due to crew safety concerns and rising insurance costs.
Despite Trump’s announcement, the Houthis stated Wednesday that it was the U.S. that “backed down,” not them, and warned they would continue to target Israeli interests. Israeli carrier Zim Integrated Shipping Services has been a specific target of past Houthi attacks.
A lasting end to hostilities would benefit Gulf-based carriers and restore a critical east-west shipping corridor, reducing reliance on feeder vessels and costly overland routes.
Source: joc.com