Summary:
- The ceasefire between Israel and Hamas, established on January 15, 2025, has recently collapsed.
- 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%.
Ceasefire between Israel and Hamas
Ceasefire Collapse and Renewed Hostilities:
On March 18, 2025, Israel initiated extensive air and ground operations in Gaza, effectively ending the two-month ceasefire. These operations resulted in the deaths of at least 400 Palestinians, including many women and children, and left numerous others injured.
In response, Hamas fired rockets at Tel Aviv, marking its first offensive since the ceasefire’s collapse. Hamas stated that this action was in retaliation for Israeli strikes that resulted in civilian casualties.
Israeli Prime Minister Benjamin Netanyahu declared that the recent airstrikes were “just the beginning,” indicating a continuation of military operations until all objectives, including the release of Israeli hostages and the dismantling of Hamas, are achieved.
Humanitarian Impact and Reconstruction Efforts:
The renewed conflict has exacerbated Gaza’s humanitarian crisis. Hospitals are overwhelmed with casualties, and essential supplies, including food, water, and medical aid, are scarce due to blockades and ongoing military operations.
Prior to the ceasefire’s collapse, Arab leaders had endorsed Egypt’s $53 billion reconstruction plan for Gaza, aiming to rebuild infrastructure and improve living conditions without displacing Palestinians. However, this plan has faced challenges, including differing political agendas and the complex security situation on the ground.
International Reactions and Diplomatic Efforts:
The international community has expressed deep concern over the escalation. Countries including Turkey, Iran, South Africa, France, Saudi Arabia, and Egypt have condemned the Israeli airstrikes and called for an immediate ceasefire. The United Nations and other international agencies have labeled the situation as dire, urging immediate humanitarian relief and protection of civilians.
Efforts to mediate a new ceasefire are underway. Hamas is reviewing a U.S. proposal, known as the “Witkoff plan,” which aims to extend the ceasefire into April to allow time for negotiations on a permanent cessation of hostilities. However, the success of this initiative remains uncertain amid ongoing hostilities and mutual distrust.
Implications for Regional Stability and Global Supply Chains:
With the renewed hostility in the region, it is highly unlikely that major carriers will resume passage through the Red Sea any time in the foreseeable future. This means that transit times for key routes leveraging the Suez Canal will remain high, and any costs associated with shipments going around the Cape of Good Hope will remain in place.
The situation remains highly volatile, with ongoing military operations and diplomatic efforts to restore peace. Continuous monitoring of developments is essential for understanding the evolving dynamics of the conflict and its broader implications.
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 February 2025.
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.
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 recent collapse of the ceasefire, volumes will not return to the Suez Canal in the near future, meaning transit times will stay at their current heights.
