Ocean carriers remain unwilling to restore services through the Red Sea and Suez Canal until a “full and permanent” ceasefire is established between Israel and Hamas, according to Inchcape Shipping Services.
The ongoing instability in the region suggests that vessel diversions around southern Africa will continue for the foreseeable future, Chris Greenwood, vice president of survey and inspection at Inchcape, stated on Wednesday.
“There is no clear timeline for when a ceasefire will be solid enough for container lines to regain confidence in transiting the Red Sea,” Greenwood explained during a webinar hosted by security risk management firm Ambrey.
Despite assurances from Houthi militants—who support Hamas—that attacks will now be limited to ships linked to Israel, Greenwood remains skeptical.
“A full and permanent ceasefire in Gaza is the key to reopening the Red Sea for container traffic,” he said. “However, the situation remains highly unstable with various geopolitical factors at play.”
He added, “The threat landscape is unpredictable, and our clients still lack confidence in rerouting ships through the Red Sea.”
For the past 15 months, Houthi militant attacks near the Bab al-Mandab Strait—the key passage between Yemen and Djibouti—have forced most carriers to detour around southern Africa. These diversions have extended Asia-Europe transit times by up to two weeks, kept shipping rates elevated, and increased TEU miles by 17% in 2024.
A return to the Red Sea will depend on both Israel and Hamas adhering to the terms of a ceasefire, each shipping company’s individual risk assessment, and insurance companies’ willingness to underwrite voyages through the area.
Since the Red Sea attacks began in November 2023, insurance rates for one-way transits have surged from 0.05% to 1% of a vessel’s value, Greenwood noted. For a $100 million ship, that translates to a $1 million insurance cost per passage.
“Protection and indemnity insurers are taking a wait-and-see approach,” Greenwood said. “Underwriters, especially lead insurers, will likely require significant security improvements before reducing premiums.”
While many ocean carriers have not commented on insurance challenges, executives have emphasized that voyages will only resume when the route is deemed safe. Maersk CEO Vincent Clerc reaffirmed during the company’s 2024 earnings call that a return to the Red Sea hinges on guaranteed safe passage for seafarers, vessels, and cargo.
“You have to assess whether the Houthis are either no longer capable or no longer motivated to launch attacks,” Clerc stated.
Despite widespread caution, some carriers are beginning to operate through the region. CMA CGM recently announced a new service from India to Red Sea ports, using vessels operated by Saudi-based Folk Maritime and Oman-based Asyad Shipping.
Meanwhile, Kawa Shipping has launched a China-Europe Express service through the Red Sea and Suez Canal, signaling that the Chinese carrier does not anticipate threats from Houthi militants.
Source: www.joc.com