Why the shipping industry is not rushing to the Red Sea

When President Trump ordered a military strike against Yemen's Hooty militia last weekend, he said militia attacks on commercial transport in the Red Sea had hurt global trade.

“These ruthless attacks cost the US and the world economy billions of dollars, and at the same time risk innocent lives,” he said in the True Society.

However, it could take months for the transport companies to return to the Red Sea and the Suez Canal, and could require more than airstrikes on the Houchys. For more than a year, marine carriers have overwhelmingly avoided the Red Sea, sending ships around the southern tip of Africa, and from Asia to Europe.

The shipping industry has largely adapted to the chaos, even profiting from a surge in shipping rates after Houthis began attacking commercial vessels in support of Hamas in the war with Israel in late 2023.

Shipping executives say they are not planning to return to the Red Sea until there is a widespread Middle East peace agreement that includes intermittent defeats of Iran-backed militias.

“It's either a complete deterioration of their capabilities or a kind of transaction,” said Vincent Clerc, chief executive of Maersk, a Copenhagen-based shipping line, in February.

After the US attacked this week, Maersk said he wasn't ready to go back. “We will prioritize crew safety and supply chain certainty and predictability, and will continue to sail through Africa until safe passage through the region is considered more permanent,” the spokesperson said in a statement.

Another large delivery line, MSC said, “to ensure the safety of our crew members and ensure consistency and predictability of our customers' services.”

It is not clear how long it will take for the US to decisively subdues Houthis, or whether that goal is achievable. Lt. Gen. Alexus G. Glinkywich, operations director for co-staff, said the latest attack had a “a much broader set of targets” than the strikes during the Biden administration. He also questioned Houthis' ability.

However, Middle Eastern experts said Houthis showed they could resist much greater forces and act independently of Iranian users.

“We are pleased to announce that Jack Kennedy, head of the Middle East and North African countries of S&P Global Market Intelligence,” said:

Houthis reduced its attack on commercial transport when Israel and Hamas agreed to a ceasefire in January, and there were no attacks on commercial ships since December, according to data from the Armed Conflict Location and Event Data Project, a crisis watchdog organization.

However, the large transport lines have not yet returned to the Red Sea in a major way.

In February, nearly 200 container ships passed through the Babelmandev Strait. This was an opening south of the Red Sea, where Houthis focused on the attack. This increased from 144 in February 2024, but increased to over 500 before the Houthi attack began.

With the exception of French company CMA CGM, the largest vessel transport line with the largest vessels is far from the Red Sea, but even its presence was light. The company did not respond to requests for comment.

The ship has not returned partially as management fears that if the Red Sea becomes dangerous again, they may have to make expensive and sudden changes to the operation.

Detours around Africa have strengthened the profits of the transport lines due to its inconvenience and additional costs.

Businesses had ordered hundreds of new cargo ships as they washed away cash from the global trade boom during the pandemic. Typically, large numbers of ships push down the shipping rate. However, this time it didn't happen as the ship was forced to use the African route. Last month, Maersk predicted that if the Red Sea opened instead of midway through at the end of the year, it would likely be profitable.

That said, data from digital shipping market Freightos shows that shipments from Asia to Northern Europe have fallen to their lowest levels recently since 2023.

Prices are falling as fewer items are shipped early in the year, according to Rico Luman, senior economist in transportation, logistics and automobiles at ING Research. He also said that a sudden explosion of imports into the US, ahead of Trump's tariffs, appears to have almost finished. And companies may not have ordered many products as they expect consumer demand to soften in the coming months.