Despite announcements by Maersk and Hapag-Lloyd that they would resume some services through the Suez Canal, other shipping companies remain reluctant to reroute vessels back to the Egyptian waterway while the Red Sea remains classified as a high-risk area and insurance costs for transiting ships stay elevated.
On Monday, the two global shipping companies announced changes to the Gemini network’s AE19 service, allowing ships to return to the Suez Canal instead of sailing around the Cape of Good Hope.
The moves are an early test of whether shipping traffic can begin returning to the Suez Canal after nearly three years of disruption in the Red Sea pushed carriers toward the longer Cape of Good Hope route.
But a source at French shipping company CMA CGM told Al Manassa that it currently has no plans to increase its transits through the canal because the Red Sea is still considered a high-risk area, driving up insurance costs and affecting the viability of voyages through the canal.
The source, who asked not to be named, said insurance costs can in some cases exceed the value of the cargo itself, making the Cape of Good Hope route a more attractive option for some operators despite being longer and more expensive.
The French company currently sends about six to seven vessels a week through the Suez Canal, about 30% of its pre-crisis traffic, while routing the rest around the Cape of Good Hope, according to the source. Ships using the canal rely on French protection measures, but security concerns in the Bab Al-Mandeb Strait, the southern gateway to the Suez Canal, remain a major factor in the company’s decisions.
Insurance costs
After the Israeli assault on Gaza began in October 2023, Yemen’s Ansar Allah (Houthi) group joined the resistance and carried out numerous attacks on ships passing through the Red Sea, prompting many shipping companies to reroute vessels around the Cape of Good Hope.
The Joint War Committee, a grouping representing global insurers, classified the approaches to the Suez Canal as a high-risk area, raising insurance costs for ships transiting the route.
Those risks have helped cut Suez Canal traffic by roughly half since 2024, hurting Egypt’s revenue from the canal, one of the country’s most important sources of foreign currency.
Those concerns resurfaced yesterday after Yemen’s Houthis announced an attack on a vessel they said was Saudi and carrying military equipment in Bab Al-Mandeb. It later emerged that the vessel was owned by an Egypt-based company, prompting a statement from the Ministry of Transport, which said the ship was not registered with Egyptian shipping chambers and had not been licensed by Egypt’s Maritime Transport and Logistics Sector to operate as a maritime agency.
“The Bab Al-Mandeb Strait remains a major concern for shipping companies because of its proximity to areas of Houthi activity. A broad return to the Suez Canal would therefore require sustained political and security stability, not merely a temporary improvement,” the source said.
Will other companies follow Maersk?
Ahmed Tarek, commercial director at the ONE shipping alliance, told Al Manassa that Maersk’s return to the Suez Canal appears to be an individual move reflecting the company’s own assessment of regional developments, rather than a broader industry trend, and does not necessarily mean other shipping companies are ready to follow while uncertainty persists.
He added that although the Cape of Good Hope route is longer than the Suez Canal, the market has grown accustomed to it and shipping companies and customers have adapted, reducing the likelihood of a rapid return to the traditional route unless the risk calculus shifts decisively.
Adel Lamei, head of the Port Said Chamber of Shipping, told Al Manassa that Maersk’s return could prompt other shipping companies to reconsider their positions and resume Suez Canal transits in the remaining months of the year, particularly given the canal’s importance as one of the world’s key maritime routes.
But he stressed that geopolitical stability remains the most important factor in restoring shipping traffic to previous levels, saying sustained security and political improvements in the Red Sea and Bab Al-Mandeb could pave the way for more companies to return to the Suez Canal.
For shipping companies, the equation therefore comes down to three main factors: the level of risk in the Red Sea, insurance costs, and sustained stability in Bab Al-Mandeb that would allow companies to rebuild their operating plans around the Suez Canal.
