The anticipated reopening of the Suez Canal has raised concerns about overcapacity in shipping

Since the escalation of the Red Sea situation at the end of 2023, which led global shipping companies to collectively detour around the Cape of Good Hope, the prospects of the Suez Canal's navigation have always been a concern for the industry. With the release of ceasefire signals by the Houthi armed forces and signs of easing in regional security, there is a general consensus in the industry that this shipping artery connecting Asia and Europe is expected to resume normal operations by 2026, and the early layout of shipping giants has gradually put this expectation into practice.

As a leading enterprise with a clear resumption plan, Dafei Shipping stated in its route announcement that starting from January 1, 2026, its core route FAL1 (from Northern Europe to East Asia) will officially resume the traditional route via the Suez Canal. The 18 ultra large container ships (with an average capacity of 14000 TEUs) that operate on this route every week will all adjust their navigation paths, and it is expected that a single voyage can shorten the distance by 3500 nautical miles, saving transportation time by 7-10 days. This decision has received a positive response from the Suez Canal Authority (SCA), which has introduced a 15% toll discount for large container ships over 130000 tons to attract fleet returns.

Maersk Line, Mediterranean Shipping and other companies have not announced a specific timetable for resuming flights, but their actions are equally clear. Maersk has signed a strategic cooperation agreement with the Suez Canal Authority, reaching consensus on upgrading port facilities and optimizing navigation efficiency. Its internal route planning documents show that the capacity allocation plan for the Asia Europe route has reserved the "Suez Passage" interface, and plans to complete the first batch of route switching in the second quarter of 2026. Mediterranean shipping has paved the way for cargo transshipment after resuming operations by increasing the reserve of empty containers at ports around the Suez Canal. Relevant data shows that its empty container inventory at the port of Sukona in Egypt has increased by 40% compared to the beginning of the year.

Behind the active layout of shipping companies is the huge cost pressure brought by circumnavigating the Cape of Good Hope. Data shows that by 2025, the average cost of a single round trip on the Asia Europe route will increase by $500000 in fuel costs. Combined with port congestion surcharges, crew overtime pay, and other expenses, the total additional cost for top airlines for the year will exceed $3 billion. However, not all the benefits brought by the resumption of shipping are positive. Dr. Zhou Dequan, Director of the Shipping Market Research Office at the Shanghai International Shipping Research Center, issued a clear warning during an industry seminar: "During the Red Sea crisis, the extended voyage caused by detours unexpectedly absorbed about 6% -7% of the global container capacity (equivalent to 1.5-2 million TEUs), and this part of the capacity will be released with the resumption of shipping, directly triggering a global overcapacity. He further pointed out that the current global container ship order volume has reached 28% of the existing capacity, and there will be over 3 million TEU new ships delivered in 2026. The impact of the resumption of shipping capacity may lead to a 25% -30% drop in freight rates on the Asia Europe route compared to the current level.

This concern has prompted shipping companies to initiate response measures in advance. Dafei has clearly stated that it will adopt a "capacity hedging" strategy in the initial stage of resuming operations. While the FAL1 route resumes Suez passage, two temporary overtime routes will be suspended to maintain capacity balance through "one increase and one decrease"; Maersk plans to include some over aged ships in the early dismantling plan, and the 12 old ships (with a total capacity of 80000 TEUs) planned to be dismantled in 2026 have entered the bidding process. Some small and medium-sized shipping companies choose to gradually resume operations, first using small and medium-sized ships to undertake non sensitive cargo transportation, testing market reactions, and then expanding the scale of navigation.

In contrast to the caution of shipping companies, there is a positive expectation from the cargo owner group. According to a survey by the China Chamber of Commerce for Import and Export of Machinery and Electrical Products, 82% of surveyed foreign trade enterprises view the resumption of Suez as a key opportunity to reduce logistics costs, with industries such as electronics and automotive parts that are sensitive to transportation time being particularly urgent. The person in charge of a company specializing in exporting new energy vehicles said, "During the detour period, the transportation cost from Shanghai to Hamburg skyrocketed from $3000 per container to $12000. If the freight rate falls back to a reasonable range after resuming operations, the competitiveness of product exports will directly increase by 15%

The uncertainty in the current resumption process comes from safety risks and insurance costs. Despite the announcement of a ceasefire by the Houthis, insurance companies have not downgraded their risk ratings for the Red Sea route. According to Marsh, an insurance brokerage company, the war risk rates for routes related to the Red Sea and Mandeb Strait remain at 0.7% -1% of the ship's value, more than double the pre crisis level, and the validity period of premium quotes has been shortened from 48 hours to 24 hours. Martin Kelly, head of consulting at EOS Risk Group, explained: "The ceasefire commitment of the Houthis lacks long-term guarantees, and their missile and drone strike capabilities have not been substantially weakened. This' potential rebound 'risk makes the insurance industry wary." As of early December, the resumption plans of companies such as Maersk and Daffy have attached the prerequisite of' controllable insurance costs', and if premiums continue to be high, the possibility of delaying resumption cannot be ruled out.

The Chairman of the Suez Canal Authority, Rabie, stated that they have joined forces with Egypt and the International Maritime Organization (IMO) to promote the establishment of a "Red Sea Shipping Risk Sharing Fund", which plans to share insurance costs through airline payments and subsidies. Currently, 12 airlines have expressed their intention to participate. The industry expects that the implementation of this mechanism will become a key indicator for the resumption of the Suez Canal in 2026.