The recent ceasefire between the United States and Houthi rebels in Yemen could prompt container ships to resume routes through the Red Sea and the Suez Canal, potentially flooding the market with excess shipping capacity and driving global freight rates down.
According to data from Xeneta, a leading maritime and air freight analytics platform, global TEU-mile demand could drop by 6% if carriers shift from rounding the Cape of Good Hope back to the Suez route. This forecast is based on a modest 1% growth in global container demand for 2025 and a large-scale return of vessels to the Red Sea in the second half of the year.
Peter Sand, chief analyst at Xeneta, emphasized that the Red Sea conflict remains a critical factor for the shipping industry in 2025. “Any significant return to the region will flood the market with capacity, inevitably leading to falling freight rates. If U.S. import demand slows further, the impact could be even more severe,” he noted.
Currently, average spot rates from the Far East to Northern Europe and the Mediterranean stand at $2,100 and $3,125 per FEU, respectively — 39% and 68% above pre-crisis levels from December 1, 2023. Rates from the Far East to the U.S. East and West Coasts are $3,715 and $2,620 per FEU, respectively, up 49% and 59% from before the Red Sea crisis.
However, Sand cautions that the situation remains uncertain, requiring significant security assurances for crews, vessels, and customer cargo, which could slow the industry’s return to the Suez Canal.
