The ceasefire announced on May 6th between the US and Houthi rebels has sparked cautious optimism about the revival of the Red Sea trade route. However, industry experts warn that a swift return of container vessels to the Suez Canal remains unlikely in the near future.

With carriers currently detouring via the Cape of Good Hope, each service loop requires two to three additional vessels due to extended transit times. A sudden reversion to the Suez route could flood the market with surplus capacity, potentially triggering a sharp decline in global freight rates—an outcome carriers are eager to avoid.

Compounding this, global demand has already been cooling, pressured by recent US tariffs. Shipping lines are wary of exacerbating rate volatility by reintroducing capacity too quickly.

Reinstating Red Sea operations would also involve complex fleet reshuffles and operational adjustments. Many carriers remain hesitant, pointing to the fragile nature of the ceasefire and continued safety risks. Just this week, reports emerged of Houthi efforts to impose a naval blockade on Israel’s port of Haifa, signaling ongoing threats to regional shipping.

Meanwhile, the Suez Canal Authority is offering a 15% toll rebate for container vessels over 130,000 net tonnes to lure traffic back.

Despite the progress, many industry experts believe full restoration of Red Sea routes may not occur before year’s end.