With global major carriers making diverging decisions on returning to the Suez Canal, expectations for the canal's normalization are growing uncertain. On top of that, as U.S. President Donald Trump considers military action targeting Iran, security uncertainty in the Middle East has increased.
The shipping industry had largely expected tolls to fall in the first half of this year as Suez Canal transits resumed, but the decline could now be delayed. It is also expected to be a boon for HMM, which operates Asia-Europe services.
According to the shipping industry on the 1st, French carrier CMA CGM decided on the 20th of last month to halt transits through the Suez Canal, citing global geopolitical uncertainty. After test runs of ultra-large container ships starting last month, CMA CGM began operating three Asia-Europe routes via the Suez Canal this year, but suspended them in less than a month.
This contrasts with rival Danish carrier Maersk, which released a return to the Suez Canal. Maersk began operating its Middle East–India–U.S. East Coast (MECL) service via the Suez Canal on the 15th of last month. Maersk's resumption of Suez Canal operations comes two years after the Red Sea crisis triggered by Yemen's Houthi rebels in 2023.
The industry sees the carriers' diverging decisions as stemming from heightened military tensions between the United States and Iran, which have destabilized the Middle East. A cease-fire in Gaza in October last year eased tensions in the Red Sea and led many carriers to consider returning to the Suez Canal. However, as projections spread that the U.S. military could intervene amid large-scale protests in Iran, regional security again turned uncertain, prompting carriers to postpone returning to the Suez Canal.
Moreover, the Houthi rebels behind the Red Sea crisis recently hinted at resuming attacks on vessels by releasing a video suggesting missile and drone strikes on U.S. aircraft carriers in connection with a possible U.S. strike on Iran. Houthi Spokesperson Yahya Saree also said in a recent statement, "We will stand with all Arab and Islamic countries facing aggression."
For an industry that had expected Suez Canal traffic to resume in the first half of this year, security uncertainty has turned into a tailwind. Since the Red Sea crisis in 2023, the industry has rerouted Europe-Asia services around the Cape of Good Hope in Africa, effectively reducing available capacity.
According to Korea Ocean Business Corporation (KOBC), the Cape of Good Hope detour is absorbing 1.5 million TEUs—5% to 6% of global capacity (1 TEU = one 20-foot container). If Suez Canal transits resume, that capacity would surge at once.
As a result, while ocean freight rates have been on a downward trend due to oversupply, they remain higher than in 2023, before the Red Sea crisis. The Shanghai Containerized Freight Index (SCFI), a benchmark of major routes based in Shanghai, averaged 1,581.34 last year, 37% lower than a year earlier, but 57% higher than the 2023 SCFI average (1,005.79) before the Red Sea crisis. The Korea Maritime Institute (KMI) projected that if Suez Canal traffic resumes, the SCFI could fall to the 1,100 level.
Some also predict that the resumption of Suez Canal traffic will not come until around China's National Day in October, when Asia-Europe cargo demand rises, which would be favorable for HMM.
HMM derives 34% of its revenue from Europe routes directly affected by a Suez Canal reopening, so a drop in rates on those routes could cause significant damage. Before the Red Sea crisis in 2023, HMM posted revenue of 8.4009 trillion won and operating profit of 584.8 billion won. Last year's revenue is estimated at 10.796 trillion won, with operating profit at 1.378 trillion won.
A shipping industry official said, "This year's ocean freight rates are likely to fall due to excessive supply, and if the Suez Canal normalizes, the decline could be steep," adding, "That is why delays in normalizing the Suez Canal are a positive factor for long-haul carriers, including HMM."