After months of relative calm in the Red Sea, two deadly Houthi attacks this week — the first since December — have shattered any optimism among global ocean carriers that normal shipping routes through the Suez Canal might soon resume.
For the past 18 months, ongoing Houthi threats have forced vessels to reroute around southern Africa, tying up an estimated 10% of global container capacity. That extended detour has increased transit times but helped carriers offset excess vessel supply by keeping more ships in motion.
Recently, signs of easing tensions — including a U.S.-Houthi agreement and a long lull in attacks — had some in the industry cautiously eyeing a gradual return to Red Sea transit. But the latest missile strikes, including one that killed three mariners, abruptly ended those hopes.
“The dynamic in the Red Sea has changed materially,” analysts at Jefferies wrote on July 8, referring to the renewed violence. “Expectations that Suez transits would resume have vanished.”
Despite months of silence, the Houthis’ capacity to strike remains intact. Military setbacks for Iran and its allied proxy groups elsewhere, such as in Syria, may have fueled a mistaken impression that Houthi capabilities had weakened. But according to Jack Kennedy of S&P Global Market Intelligence, the Yemeni militia remains one of the region’s most dangerous and determined actors.
“The latest Houthi attacks demonstrate that, unlike Iran or its other proxies, they remain undeterred by threats from the U.S. or Israel,” Kennedy told the Journal of Commerce. He added that attacks are likely to persist as long as Israeli operations in Gaza continue — the central motivation behind the Houthis’ campaign against commercial shipping.
Although ongoing U.S. and Israeli airstrikes have degraded some of the Houthis’ arsenal, Kennedy said the group has maintained its missile capabilities through weapons seizures and internal manufacturing.
As a result, major carriers are expected to continue avoiding the Suez Canal well into 2025, possibly even 2026.
“There’s not much chance of a reversal back to Suez routing in the short to medium term,” said shipping analyst Lars Jensen in a LinkedIn post.
Kennedy echoed the sentiment: “We expect Houthi attack activity to continue through 2025 at least.”
Though the rerouting adds cost and complexity, it has incidentally provided some relief for carriers navigating a post-pandemic market correction. The longer voyages around Africa are helping absorb excess vessel capacity that would otherwise weigh down rates and profits.
Drewry recently forecast a steep drop in ocean carrier profits — from over $50 billion in 2024 to $20 billion in 2025 — but those losses could be worse without the impact of continued Red Sea disruptions.
Maersk in May reaffirmed that a return to the Suez was off the table for 2025, even as former President Trump claimed the Houthis had “capitulated.”
Instead, the latest attacks show the Houthis weren’t finished — only waiting. The result: the Suez remains largely closed to container traffic, with the industry bracing for another long chapter of disruption.
Source: joc.com