Maersk to resume using Suez Canal route that could bring down freight rates

Shipping companies are weighing a return to the critical Asia-Europe trade corridor after vessels were rerouted around Africa in late 2023 after attacks in the Red Sea by the Houthis

Maersk said on Thursday that one of its services will resume using the Red Sea and Suez Canal this month, marking a key step towards ending two years of global trade disruption due to attacks on ‍ships by Yemeni Houthi rebels.

The Danish shipping group's share price ​fell more than 5 per cent on the news, reflecting the likelihood of lower freight rates as vessels gradually return to the shorter Suez route.

Shipping companies are weighing a return to the critical Asia-Europe trade corridor after vessels were rerouted around Africa in late 2023 after attacks in the Red Sea the Houthis said was to show solidarity with Palestinians in Gaza.

Maersk said its weekly service connecting the Middle East and India with the US east coast, known as MECL, will be first it its staggered return to the Suez route, starting on January 26 with ​a sailing departing Oman's port of Salalah.

"This decision follows a continued stabilisation of conditions in and around the Red Sea, including the Suez corridor, as well as improved stability and reliability in the region," it said in a statement.

Maersk said on Monday that one of its vessels had tested the route as a ceasefire in Gaza raised hopes for normal traffic and one vessel also made a voyage through Suez in December.

"Maersk has generally been the most risk-averse out of the major carriers regarding a return to the Red Sea, so this is a turning point," said Peter Sand, chief analyst at pricing platform Xeneta, calling the development "highly significant".

While risk and security remain top of mind for ocean shipping customers, most would welcome a return to faster transit times via the Red Sea and Suez, said Mads Drejer, global chief commercial officer at Danish freight forwarder Scan Global Logistics, which books space on ships on behalf of clients.

Maersk takes gradual approach

Maersk said it would make a gradual return to the Suez route, adding the aim was to offer customers "the most efficient transit times". The route could cut a week off transit routes, it said. This should in theory help bring down costs.

"The return to the Suez Canal should ease freight rates," Germany's chemical industry association VCI said in a ‌statement, calling Maersk's move a positive sign, though adding it would ​also likely increase imports from China.

The Suez Canal is the fastest route linking Europe and Asia and, until the Houthi attacks, had accounted for about 10 per cent of global seaborne trade, according to Clarksons Research.

"Maersk has contingency plans in place should the security situation deteriorate, which may necessitate reverting individual MECL sailings or the wider structural change of the MECL service back to the Cape of Good Hope route," it said.

France's CMA CGM ‍previously said it sends vessels through Suez and the Red Sea when security allows.

German shipping company Hapag-Lloyd will not adjust its operations in the Red Sea for now, a spokesperson said, but added that the company was closely monitoring the situation and Maersk's move ‍changed the ‌situation.

The ceasefire in ​the Gaza, in place since October last year, has renewed hope of normalising Red Sea traffic.

The ceasefire ‍has ended major combat in Gaza over the past three months, but both sides have accused the other of regular violations. More than ‍440 ‍Palestinians and three Israeli soldiers have ‌been killed since the truce took effect.