Xeneta: Calm in the Red Sea Could Sharply Drive Down Freight Rates
Xeneta: Calm in the Red Sea Could Sharply Drive Down Freight Rates
The Houthis' announcement that they are suspending attacks on Israel and commercial vessels has the potential to create a game-changing impact on global container shipping. However, market intelligence platform Xeneta's Chief Analyst Peter Sand emphasized that "the situation remains extremely uncertain," noting that carriers and insurers cannot return to normal operations based solely on verbal assurance.
Risk tolerance varies from carrier to carrier
Sand noted that some lines are gradually testing the Red Sea. It is known that CMA CGM Zheng He and CMA CGM Benjamin Franklin from the CMA CGM fleet transited through Suez in November. Nevertheless, the number of container ships passing through the Suez Canal declined significantly throughout 2025.
According to the analyst, if there is a partial improvement in security perception, transit numbers could increase; however, expecting a rapid return to 2023 levels would not be realistic.
Impact of Cape of Good Hope routings: 2 million TEU withdrawn from the market
Currently, the majority of lines continue with Cape of Good Hope routings. This extended route has led to approximately 2 million TEU equivalent capacity being absorbed from the global fleet utilization. This situation has:
tightened global supply,
supported freight rates due to capacity shortage,
increased vessel utilization for carriers.
Sand stated that a rapid and mass return to Suez would:
reduce pressure on transport demand,
bring global supply back to normal levels,
and thereby sharply drive down freight rates.
Freight rates already declining
According to Xeneta data, since the beginning of 2025:
Far East to Northern Europe,
Far East to Mediterranean,
Far East to US East Coast
spot freight rates have declined by more than 50%.
If the Red Sea reopens at full capacity, this could intensify further. Sand states that "a sudden influx of capacity into the market could trigger a new global freight rate collapse," with rates potentially declining by an additional 25%.
Risk for carriers: Profitability at the edge
Many container lines are operating at the threshold of profitability as of late 2025.
If freight rates decline further, companies may be forced to:
idle vessels,
implement slow-steaming,
announce more blank sailings
These measures aim to artificially tighten supply and stabilize prices. However, at the same time, schedule reliability could deteriorate and supply chains could become vulnerable to new types of disruptions.
Warning for shippers: Return to Suez could trigger a new wave of volatility
Sand cautioned that as carriers return to Suez, the supply chain could experience short-term chaos and disorder:
"If Suez operations resume, we will initially see substantial uncertainty. Shippers should be prepared for this scenario."
During this transition period, short-term pressures could emerge on ETAs, schedule stability, and port queues.
About Xeneta
Xeneta is a Norway-based freight market intelligence platform that provides carriers, forwarders, and global shippers with real-time rate and capacity analytics. The company maintains one of the largest data repositories for spot and contract freight rates.
Key Takeaways:
Houthi suspension of attacks could trigger a return to Suez but uncertainty remains high.
Cape of Good Hope routings are absorbing 2 million TEU from global fleet capacity.
Mass return to Suez could trigger sharp freight rate declines.
Major route spot rates have already fallen more than 50% in 2025.
There is potential for rates to decline an additional 25% in 2026.
Shippers should be prepared for potential volatility.
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News Link: https://en.portnews.ru/news/384378/
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Author: SedatOnat.com
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