The Red Sea crisis: Ceasefire in Gaza could signal end of vessel attacks

Summary:

  • A ceasefire was announced on January 15th, 2025. Major ocean carriers have not announced if this will impact sailing routes, but targeted attacks on vessels should stop.
  • Vessel types most disrupted by the attacks were container, followed by tankers and bulk vessels.
  • Volume through the canal remains low. 2024 saw a 75% decrease in volume compared to 2023.
  • Transit times from Southeast Asia to the US East Coast have increased by 47%, and to Europe by 33%. From China to Europe, transit times have risen by 25%.
  • Sailing schedules are still seeing delays of 4-6 days but have improved by up to 70% since February 2024.

Ceasefire between Israel and Hamas

As of January 15, 2025, a ceasefire agreement between Israel and Hamas marks the conclusion of 15 months of conflict in the Gaza Strip. Mediated by Qatar, Egypt, and the United States, the agreement includes critical terms that have significant implications for regional stability and global supply chains:

Ceasefire and Hostage Exchange:

  • A 42-day cessation of hostilities is underway, accompanied by a gradual withdrawal of Israeli forces from central Gaza.
  • Hamas has committed to releasing 33 Israeli hostages, including women, children, and individuals requiring medical attention, in exchange for the release of hundreds of Palestinian prisoners by Israel.

Humanitarian Aid and Reconstruction:

  • Daily deliveries of 600 truckloads of humanitarian aid, including essential supplies and fuel, are permitted into Gaza.
  • A reconstruction plan for Gaza will be supervised by Egypt, Qatar, and the United Nations.

Long-term Peace Negotiations:

  • Discussions for a permanent ceasefire and the resolution of hostilities are set to begin by the 16th day of the agreement.

This ceasefire is expected to provide much-needed relief to humanitarian efforts and stabilize regional trade routes, particularly those impacted by disruptions in the Middle East.

Volume through the Suez Canal

Since the attacks began in late 2023, hundreds of vessels across major carriers have rerouted to avoid the Red Sea, leading to historically low volumes through the Suez Canal. The year 2024 saw a 75% decrease in total container vessel volumes compared to 2023. With a ceasefire announced, it is likely that shipping through the Suez Canal will begin to increase for 2025.   

The chart below expands on the impact across various vessel types and their frequency through the canal.

While container vessels are the most affected, they are not the only ones rerouting to avoid the Red Sea. There has also been a decline in bulk vessels and tankers. Tankers often carry hazardous materials, such as crude oil, which pose substantial environmental risks in case of attacks. General cargo vessels and Ro-Ro vessels have not been as severely impacted, but these vessel types already constitute a smaller portion of the traffic through the Suez Canal.

Impacts to transit times

As vessels divert to avoid the Red Sea, transit times have increased by an average of 7-14 days for lanes that traditionally pass through the canal. The charts below show the median transit times on major routes, as recorded monthly through November 2024.

Median transit times have surged to approximately two months. Southeast Asia, a key exporter of electronics, clothing, accessories, and footwear, is particularly affected. Shipments to the U.S. East Coast now take 47% longer, while shipments to Europe take 33% more time to arrive. Transit times from China to Europe, another major source of consumer goods, have risen by 25%. Please note that shipments from China to the U.S. East Coast have not been affected, as they typically transit through the Panama Canal rather than the Red Sea.

Shippers have adjusted to the increase in transit times and adjusted ordering practices to make up for the additional time on the water and major stock-outs have not been observed.

The vessel schedule reliability chart below tracks how late containers in transit are expected to be based on updates in schedules.

While carriers have become better at predicting sailing schedules along the Cape of Good Hope route, performance remains lower than before the rerouting. Longer transit means more opportunities for delays due to factors such as weather and port congestion. In November, carriers experienced a median delay of 4-6 days. This has greatly improved, particularly for Southeast Asia to Europe, which peaked at a median of almost 13 days late in February 2024 and has improved by 70%.

Historical trade through the Suez Canal:

The Suez Canal was opened in 1869 to connect the North Atlantic Ocean to the Indian Ocean through the Mediterranean and Red Seas. Since then, it has become an integral trade route for global supply chains and saves 7-20 days of travel that would be needed for vessels to go all the way around Africa. Interruptions to the flow of vessels can have major impacts to trade as demonstrated in 2021 when a stuck vessel halted operations for six days.

With safe passage through the canal hindered, delays on this route have continued. The United States has seen some relief with the droughts impacting capacity through the Panama Canal lessening, giving a better option than around Africa, but Europe continues to feel the full force of vessels being unable to pass through the canal.

Concern for safety of front-line seafarers

While project44 has made it a priority to provide frequent updates on the Red Sea crisis, the safety of the crew members on these ships remains top priority in these challenging times. They and their families are in our thoughts.

Summary

The ongoing Houthi rebel attacks on commercial vessels in the Red Sea have drastically impacted global shipping routes, particularly through the Suez Canal, leading to significant delays and disruptions. Carriers have been forced to reroute vessels, resulting in increased transit times of up to 47% on key trade lanes, especially those connecting Asia to Europe and the U.S. The rerouting has hit European ports the hardest, while the U.S. East Coast has seen less disruption due to the Panama Canal offering an alternative route. With the new announcement of the ceasefire, it is uncertain when volumes will return to the Suez Canal, but it is likely that shippers will begin to shift routes back through the Red Sea, easing transit times globally.

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