CMA CGM has decided against resuming Suez transits, opting for the Cape route due to complex international conditions, reports S&P Global.
CMA CGM has reversed plans to resume three Asia-Europe westbound services through the Red Sea and Suez, citing the complex international context and opting to continue routing via the Cape of Good Hope, reports London's S&P Global.
The carrier stated that voyages on its FAL 1, FAL 3, and MEX services would remain diverted around southern Africa, with the situation under regular review. This decision follows Maersk's announcement last week that its MECL service from India to the US East Coast would resume Suez sailings.
Analysts indicated that carriers face high risks to crew safety and brand reputation if attacks resume, despite Houthi rebels declaring in November that assaults had ended. Suez transits can cut up to 10 days off Asia-Europe voyages, but a sudden release of capacity could drive rates lower.
Drewry's Simon Heaney mentioned in a webinar that hybrid routing would dominate this year, with carriers sending backhaul and lower-value cargo via the Suez while keeping head-haul voyages on the Cape route. He noted that this would gradually introduce capacity into the market and avoid a collapse in pricing.
HSBC analysts warned that overcapacity would depress rates regardless of how quickly Suez transits resume. They stated that spot freight rates could fall sharply and weigh on transpacific contract negotiations in April and May.
Ocean carriers have cautiously increased Suez transits in recent months. CMA CGM is routing India-US services via the canal, while Maersk will resume MECL sailings through the Red Sea. The Ocean Alliance has scheduled eastbound NEU4 and MED2 services via the Suez from January and February.
Shippers remain divided on the issue. Some refuse Suez voyages under corporate directives, while others assert that insurance costs are manageable. Drewry noted that premiums have fallen to 0.2-0.3 percent of hull value, down from one percent during the height of Red Sea attacks.
Drewry expects a two-route schedule this year, reflecting carrier caution and shipper concerns. European retailers indicated that contracts now include clauses allowing renegotiation if Suez transits resume. Drewry's Philip Damas added that shippers are seeking dual rates for Cape and Suez routings to ease future adjustments.
