NextFin News - Maersk and Hapag-Lloyd are moving four more Asia-Europe container services back through the Suez Canal this month, the clearest signal yet that the shipping industry is testing a return to the Red Sea nearly three years after Houthi attacks forced a mass diversion - and they are doing it while fighting between Houthi forces and Saudi-backed troops has seized Yemen's Red Sea coast and displaced more than 100,000 people.
The Gemini Cooperation partners said on September 14 that their AE5, AE11, AE12 and ME2 services will transition to the trans-Suez route, joining the AE15 and AE19 services already operating through the canal. The first westbound sailings begin September 19, with the Antonia Maersk departing Malaysia's Tanjung Pelepas on the AE11, followed by the Marchen Maersk on the AE5 on September 21 and the Cornelia Maersk on the ME2 on September 24. The timing of the first AE12 sailing will be announced later, the company said.
The expansion is a calculated bet on two conflicting realities. On one side, the economics of the Cape of Good Hope detour have become unbearable: the longer route adds more than 3,000 nautical miles and roughly 10 days of sailing on the Asia-Northwest Europe run, and it absorbs an estimated 6% of global container fleet capacity at a time when a record order book is about to flood the market with new ships. On the other side, the security picture that closed the route in late 2023 is not repaired - it has worsened. Iran-aligned Houthi forces now control the vast majority of Yemen's Red Sea coastline, including the Bab el-Mandeb Strait, and have launched attacks on Saudi military targets even as the humanitarian toll mounts. The United Nations said more than 100,000 people have been displaced inside Yemen by the fighting along the western coast.
The market's verdict on the trade-off was immediate and negative. When Maersk and Hapag-Lloyd first tested the Suez return in July, their shares fell 5.8% and 2.7% respectively by 1251 GMT, and in February the Danish carrier warned that a reopened Red Sea, combined with vessel overcapacity, could halve its 2026 earnings. The central question is whether the carriers are reading a genuine, durable improvement in the risk environment - or whether they are being forced back into one of the world's most dangerous shipping lanes by competitive and financial pressure they can no longer absorb.
Why Carriers Are Going Back: The Capacity Trap
The return is less about confidence in the Red Sea than about arithmetic. Every week a container ship spends steaming around southern Africa instead of through Suez is a week that vessel is not earning revenue, and the industry is staring at the largest newbuilding wave in its history. The container shipping order book stood at 32% of installed fleet capacity as of November 2025, according to Clarksons data - a supply overhang that will hit regardless of what happens in Yemen.
Resuming the Suez route releases that trapped capacity twice over. It shortens each voyage, which means the same ship can complete more round trips per year, and it frees vessels that had been tied up simply maintaining weekly frequency on the longer routing. Research from ING estimates the detour currently absorbs around 6% of global fleet capacity; a full return would effectively add that capacity back into a market that is already oversupplied. For Maersk and Hapag-Lloyd specifically, the pressure is compounded by competitive positioning. Container consultancy Linerlytica noted that Maersk is on track to fall behind CMA CGM as the world's second-largest container carrier by July 2027, while Hapag-Lloyd could be overtaken by Ocean Network Express in February 2028. Staying on the Cape route means ceding market share to rivals that kept more capacity working.
The carriers frame the decision differently. In its statement, Maersk said the Red Sea and Suez route is the fastest, most sustainable and most efficient way to serve customers moving cargo between Asia and Europe, and that the safety of crews, vessels and cargo remains the highest priority. It stressed that any further changes to the Gemini network would remain dependent on continued stability in the Red Sea and the absence of any escalation in regional conflicts. That conditional language is doing a lot of work: the return is presented as an operational optimization, but it is reversible at short notice if the security situation deteriorates.
The route through the Suez and the Red Sea is the fastest, most sustainable and most efficient way to serve customers with transport between Asia and Europe.
This is not the first attempt. Maersk made its first transit through the Suez Canal in December 2025 with the Maersk Sebarok on the MECL1 service connecting the Middle East and the U.S. East Coast, following a preliminary announcement by the Suez Canal Authority in November 2025. CMA CGM, which continued some services under naval escort throughout the crisis, has returned three services: the INDAMEX connecting India and Pakistan with the U.S. East Coast, which cuts round-trip transit time by two weeks to 77 days and frees up two ships, plus the backhaul legs of the MEX and FAL1 services, each freeing one ship. The pattern is consistent - carriers are not storming back; they are testing the water with lower-risk services first, starting on backhaul legs with less cargo and lower reliability, exactly as ING predicted they would.
The Rate Math: Why Investors Sold the News
Investors understand the mechanics better than the headlines suggest. A shorter route is operationally efficient for shippers, but it is bearish for freight rates, which is where liner profits live. When the Gemini partners first announced the Suez return on July 6, Maersk shares dropped 5.8% and Hapag-Lloyd fell 2.7% by 1251 GMT. The sell-through was not about security - it was about the earnings model.
The evidence that rates are already rolling over is concrete. The Drewry World Container Index rose 1% to $4,339 per 40-foot container in its September 10 assessment, but that headline masks a split market: rates from Shanghai to Genoa fell 8% to $5,080 per 40-foot container and Shanghai to Rotterdam declined 5% to $4,425, while the transpacific ran the other way, with Shanghai to New York up 10% to $8,706 and Shanghai to Los Angeles up 6% to $6,244. The Asia-Europe leg - the one the Suez return directly affects - is already softening. Contract data tells the same story. Xeneta reported that average long-term rates entering validity in the three months to January 21 between the Far East and the Mediterranean were down 25% from end-2025 levels at $2,308 per FEU, while rates into North Europe fell 10% to $2,010 per FEU. The premium that Mediterranean routes commanded over North Europe during the crisis - $1,160 per FEU at its mid-October peak - has collapsed to $300 per FEU on new 2026 contracts, as the Red Sea risk premium evaporates from forward pricing.
The most important number for investors is the one Maersk itself put on the table. In February, the company said falling freight rates driven by overcapacity and the gradual resumption of shorter Red Sea routes could halve earnings in 2026. It guided underlying EBITDA to a range of $4.5 billion to $7 billion, down from $9.53 billion logged in 2025, and projected container volume growth of just 2% to 4%, a slowdown from 5% in 2025. "New ships are coming in, and at the same time, shipping through the Red Sea is likely to reopen, which will free up ship capacity," CEO Vincent Clerc said at the time. "All of this will put pressure on freight rates this year." The September expansion does not change that thesis - it accelerates it.
There is a second-order effect that the market has not fully priced. A partial return creates a two-tier market that punishes carriers still on the Cape route. If Maersk and Hapag-Lloyd can offer shorter transit times on six services while competitors remain on the longer routing, they gain a service-quality advantage that lets them defend rates on those lanes even as the overall market softens. But that advantage is self-liquidating: the moment more carriers follow, the capacity release becomes industry-wide and rates fall for everyone. This is why Judah Levine, head of research at Freightos, cautioned last month that "the vast majority of container traffic continues to divert away from the Red Sea" - the return is real but narrow, and its rate impact depends entirely on whether it stays that way.
Cyclical Relief or Structural Shift: The Real Call
The temptation is to read the Suez return as the end of the Red Sea crisis. That would be a mistake. The correct framing is narrower: this is a cyclical normalization of a cyclical disruption, not a structural resolution of the underlying risk.
The disruption itself was cyclical from the start. It was caused by a specific security shock - Houthi attacks on merchant shipping beginning in late 2023 - and it propagated through a mechanical channel: ships took a longer route, which absorbed capacity, which lifted rates. Cyclical disruptions revert when the shock fades or when the economic pressure to absorb the shock becomes too great. Suez transits illustrate the pattern. Container transits through the canal fell to 120 in November 2025 from 583 in October 2023, shortly before the escalation. The September expansion moves the needle back toward the pre-crisis baseline, but it does not restore it. Offered capacity through the Red Sea remains well below historical levels, and schedules are not yet fully predictable. This is a partial mean reversion, not a regime restoration.
The structural question is different, and the answer is uncomfortable for the bull case on shipping rates. Even if the Red Sea never reopens, the rate spike was always going to be temporary, because the supply response was already locked in. The 32% order book relative to the installed fleet is a structural fact that no routing decision can change. New vessels will enter service in 2026 and 2027 regardless of what happens at Bab el-Mandeb. Maersk's own volume forecast - 2% to 4% growth in 2026, down from 5% in 2025 - confirms that demand will not absorb the new tonnage. In that sense, the Red Sea detour did not create a new rate regime; it delayed the arrival of the overcapacity that was already coming.
There is a third force at work that is genuinely structural, and it cuts against the carriers. The crisis taught shippers a lesson they will not unlearn: routing diversity has value. Analysis of 2026 contract negotiations shows shippers balancing the opportunity to secure lower long-term rates against the need to maintain supply-chain resilience and reliability. Some cargo will stay on the Cape route even after the Red Sea is safe, because shippers are now willing to pay for optionality. That is a structural change in buyer behavior - a small but permanent bid for redundancy that did not exist before 2024. It will not offset the rate pressure, but it will put a floor under how far the Cape diversion can unwind.
The verdict: the rate impact of the Red Sea reopening is cyclical and already in motion; the supply overhang is structural and unavoidable; and a modest structural premium for routing resilience will survive on the margins. Carriers are not returning to a normal market - they are returning to an oversupplied one, and the difference matters for earnings.
The Counter-Thesis: The Security Risk Is Not Priced In
The strongest argument against this entire analysis is that it treats the security situation as a secondary concern when it is actually the dominant variable. The bear case is simple: the carriers are being pushed back into the Red Sea by financial necessity, not pulled by genuine security improvement, and the route can close again as quickly as it opened.
The facts support the concern. Houthi forces have expanded their position along Yemen's Red Sea coast and around the Bab el-Mandeb Strait, the chokepoint that connects the Red Sea with the Gulf of Aden. The International Organization for Migration said more than 85,000 people have been displaced since the beginning of September alone, and the UN put the total above 100,000. Houthi fighters have attacked Saudi military targets after seizing Yemen's Red Sea coast, and the Yemeni government has described the rebels' advance as a new front in the wider regional conflict. Meanwhile, Iran continues to restrict shipping through the Strait of Hormuz on the opposite side of the Arabian Peninsula, meaning the region now has two active chokepoint risks instead of one. If the Houthis consolidate control of the southern Red Sea while Saudi oil exports increasingly rely on Red Sea routes as Hormuz traffic falls, the incentive structure for disruption has improved, not deteriorated.
Darron Wadey of Dynamar captured the cautious view precisely, noting there will be "no mad rush back to Suez" because carriers need "a firm security foundation" to build on. The carriers' own language echoes this: Maersk's return remains conditional on "the absence of any escalation in conflicts in the region." A conditional return is a reversible return. If a single incident - a missile strike on a commercial vessel, an attack on a Saudi export facility, a Hormuz closure - forces the Gemini services back around the Cape, the capacity that was just released gets re-absorbed, and the rate relief vanishes as quickly as it appeared.
There is also the insurance question. War-risk premiums for transiting the canal surged during the crisis and likely need to fall significantly before a full return is economical, or voyages must be approved before proceeding. If insurers keep premiums elevated because the underlying conflict is unresolved, the cost advantage of the Suez route narrows, and carriers may find the economics less attractive than the transit-time math suggests.
The counter-thesis is credible, but it has a limit. Carriers are not naive; they are testing the route incrementally, starting with backhaul legs and lower-risk services, and they have made clear they will reverse course if conditions deteriorate. The market has not priced a full, permanent reopening - it has priced a partial, reversible one. The risk is not that the return happens; it is that it happens, rates fall, and then the route closes again before carriers have earned back the efficiency gains. That is a timing risk, not a thesis-breaker.
What to Watch: The Signals That Decide the Trade
The base case is a gradual, partial normalization through the end of 2026. Six Gemini services on the trans-Suez route by late September, more if the security picture holds, with spot rates on the Asia-Europe lane continuing to drift lower as the capacity release takes effect. Contract rates for 2027 will be negotiated in this softer environment, and carrier earnings will compress toward the middle of Maersk's $4.5 billion to $7 billion EBITDA guidance rather than the top.
The upside case is that security holds and the return accelerates faster than expected. If the Houthi position stabilizes and no incidents occur through the fourth quarter, more carriers - including those still on the Cape - will follow, transit times normalize, and the rate decline steepens. In that scenario the beneficiaries are shippers and importers, who capture lower freight costs, while carrier margins compress faster than the base case assumes.
The downside case is a security incident that forces a reversal. The falsifying signal is specific and observable: if a commercial container vessel is attacked or interdicted in the southern Red Sea or Bab el-Mandeb Strait between now and year-end, or if Houthi operations expand to explicitly target commercial traffic again, the Gemini services will divert back around the Cape, the released capacity will be re-absorbed, and the rate-relief thesis breaks. A secondary signal: if the Drewry World Container Index's Asia-Europe components stop declining and turn up for three consecutive weekly assessments, the market is telling you the capacity release is not materializing.
Split by time horizon, the picture is asymmetric. In the short term - the next one to two quarters - the return is operationally positive for shippers (shorter transit times, fewer empty-container imbalances) and mildly negative for carrier rates on the affected lanes. In the medium term - through 2027 - the structural supply overhang dominates regardless of routing, and carrier earnings compress. In the long term, the structural change is on the shipper side: a permanent, if modest, willingness to pay for routing redundancy that gives the Cape route a residual role even after the crisis ends.
For investors, the exposure runs through the listed carriers - Maersk and Hapag-Lloyd in Europe, and indirectly through the broader container complex - while the beneficiaries on the demand side are the retailers and manufacturers that move volume Asia-Europe and have been carrying the freight premium in their costs. The asymmetry is clear: the upside from here is limited rate relief; the downside is a reopened war-risk premium.
The Red Sea is reopening not because the war is over, but because the economics of avoiding it finally broke. That is a fragile foundation for a trade - and the market knows it.
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