Expert Column Impact of the end of
the Israel-Hamas war
on the maritime logistics market

This column covers the current status and outlook of the Red Sea crisis, which has had the greatest impact on the ocean shipping market in 2025, following 2024.

1. Red Sea Crisis Caused by Israel-Hamas War

On October 7, 2023, following the outbreak of the Israel-Hamas war, the Houthis, a pro-Iran armed group, expressed their support for Hamas and began attacking commercial ships passing through the Red Sea from December of the same year. As a result, not only were there restrictions on entry into Israeli ports, but also an avoidance of the Suez Route, a global trunk route. After attacks on commercial ships occurred in the Red Sea, where the Suez Canal is located, our government advised domestic shipping companies to divert their vessels passing through the Red Sea. As of November 2025, more than 100 commercial ships have been attacked, four ships have sunk, and eight crew members have died, with the remaining geopolitical risks ongoing.

The issues arising in the Red Sea directly impact the fleet operations of shipping companies using the Suez Canal. The Suez Canal is a maritime passage of 193km connecting Asia and Europe, handling about 12%~15% of global trade, about 30% of container cargo volume, 9% of crude oil, and about 8% of LNG. Before December 2023, an average of 50 to 60 ships sailed through it every day ^[1], and more than $1 trillion worth of goods navigated through the Suez Canal annually. ^[2] But since the end of 2023, as the risk of attacks rose, the number of ships sailing has decreased.

As of November 2025, among the top global carriers, European carriers such as CMA CGM, Maersk, and MSC are currently using the Suez Canal for some of their services, while Asian carriers, such as HMM, ONE, and Yangming, have rarely crossed through the Suez Canal in 2025. Among these, CMA CGM has seen ships with a total capacity of 1.5 million TEU pass through the Suez Canal by October 2025, and it is the only carrier that has used the Suez Canal for some of its Asia-Europe services. Maersk and MSC are using the Suez Canal for regional shuttle services connecting Egypt and Saudi Arabia, not for Asia-Europe routes. Other than these, companies such as Turkey's Akkon Lines, Singapore's SeaLead Shipping, and Russia's FESCO are actively navigating the Suez Canal, but most of these are medium- and small-sized vessels and do not account for a significant proportion. ^[3]

2. Impact of the Red Sea Crisis on the Shipping Market

2.1 Suez Canal Traffic Volume Due to the Red Sea Crisis

After December 2023, as risks to the Suez Canal increased, traffic saw a sharp decrease. The types of vessels that experienced the largest drop compared to 2023 were car carriers (-88.7%), LNG (-85.5%), and containers (-69.6%). Particularly, container vessels, with ultra-large vessels diverting around the Cape of Good Hope, saw a significant decline in traffic from an average of 5.46 million TEU per month in 2023 to 0.604 million TEU in 2024, a decrease of 88.9%. In addition, dry bulk (-46.8%) and tankers (-37.1%) also declined, but these rates did not reach the overall average drop of 50.8%.

<Suez Canal Traffic Volume and Number of Vessels>
(Unit: million DWT, ships) Source: Clarkson, Author's revision

2.2 Impact of Detour Around Cape of Good Hope on the Shipping Market

Most vessel types using the Suez Canal are tramp ships that move according to market supply and demand, whereas container ships, which are based on reliability, are directly affected as they need to increase the number of vessels deployed to provide the same service when detouring around the Cape of Good Hope. When passing through the Suez Canal, a single Asia-Europe service typically deploys 11 to 13 ships, while diversion around the Cape of Good Hope requires 13 to 17 ships to be deployed. In reality, while 240 ships were deployed for 19 Asia-Europe services in 2023, 305 ships were needed in 2024, increased by 27.1% increase. The amount of capacity went up from approximately 5.39 million TEU at the end of 2023 to around 7.44 million TEU at the end of 2024, an increase of about 30.8%.

In the container market, this increase in the fleet has mitigated market supply. In the case of containers, part of the 2.93 million TEU of new deliveries in 2024 has absorbed the oversupply. Furthermore, since the second half of 2023, the container freight rates have risen substantially due to overlapping with the operation restrictions caused by the drought in the Panama Canal. The Asia-Europe freight rate in 2023 recorded around $1,000 per TEU, but in 2024 it reached around the $3,000 per TEU range.

<Vessels diverting the Cape of Good Hope and Container Freight Index>
(Unit: dollars, TEU) Source: Clarkson, Author's revision

In addition to containers, freight rates for LNG, car carriers, or bulk carriers went up as the actual supply declined with increasing Ton-Mile, but did not record a sharp rise like that of containers. Due to the route detour, not only freight rates but also costs rose; when detouring around the Cape of Good Hope, fuel costs of the additional sailing distance of 10 to 14 days were incurred, and carbon emission costs implemented by the EU’s ETS also went up.

3. Impact of the Resumption of Suez Canal Transit on the Shipping Market

In November, Israel and the Suez Canal Authority announced a strategic partnership with Maersk, requesting the resumption of transit, but it is expected that it will take a considerable amount of time for full normalization. The main reason is concerns about the safety of transit through the Suez Canal. In January 2025, the Houthi rebels issued a statement agreeing to a ceasefire between Israel and Hamas and not to attack commercial vessels transiting the Suez. In March, the Suez Canal Authority formed a strategic partnership with a few shipping companies, but it did not actually lead to a return. Therefore, carriers could continue to be cautious about the transit through the Suez Canal until the risks in the Middle East region completely disappear.

In addition to navigational safety, major reasons why container carriers are hesitant to return to the Suez route are: Firstly, concerns about a decline in freight rates due to structural oversupply. Since 2024, a capacity of over 5 million TEU of newbuilds was delivered, leading to an estimate of oversupply; however, the Red Sea crisis, which caused ships to detour around the Cape of Good Hope, resulted in an effective reduction of supply by approximately 2 million TEU.

Additionally, as of November 2025, the orderbook for container ships amounts to 10.26 million TEU, making up 31.3% of the total fleet. Thus, returning to the Suez Canal would worsen supply and demand and inevitably cause a freight drop.

Second, risk premiums such as insurance fees will continue to stay at a high level upon returning to the Suez Canal. It is forecasted that return would not be feasible in the short term, as shipping lines could judge that they could resume the transit after the risk premiums are lowered to reduce the costs and ensure navigational safety.

Third, since a regular service network has already been designed and operated based on the Cape of Good Hope, there may be congestion at the Port of Call upon return. Congestion is already occurring at major ports such as Belgium and Germany due to port strikes; therefore, schedule readjustment could reduce operational efficiency. In addition, since schedules are adjusted gradually when transiting the Suez Canal, a minimum adjustment period of 2 to 3 months is required. For types of vessels experiencing supply-demand imbalances, such as vessels carrying containers, dry cargo, and cars, a gradual return to the Red Sea is expected to improve fleet efficiency and act as a factor lowering freight rates; however, the impact could be limited. To prevent a decline in freight rates, shipping lines can consider two options. First, cutting down on supply through lowering speed and blank sailings. However, these approaches are only a tentative measure as they cannot solve structural problems. Second, reducing supply through scrapping. It removes oversupplied fleets caused by efficiency improvements from the market. However, it is difficult to implement it in a short period of time. Also, since the Hong Kong International Convention, signed in 2009, will come into effect from 2026, it is unclear whether the scrapping market can absorb large-scale scrapping if it occurs.

The shipping market is a paradoxical market where market conditions improve when disruptions occur due to unpredictable events, the Black Swan (an event with a very low probability of occurrence but, once it happens, has a significant impact on society and the economy). As a result, shipping companies are expected to take careful measures regarding the return to the Suez Canal.

In the future, when fleets return to the Suez Canal, both shippers and carriers would find it hard to avoid confusion arising from port congestion and other reasons for a certain period of time, requiring them to consider sufficient lead time.

[1] Clarkson (2025), https://sin.clarksons.net/
[2] https://ipdefenseforum.com/ko/2024/08/%EB%AF%B8%EA%B5%AD-%EC%A3%BC%EB%8F%84%EC%9D%98-%EC%97%B0%ED%95%A9%EA%B5%B0-%ED%99%8D%ED%95%B4%EC%9D%98-%ED%95%B4%EC%96%91-%EC%95%88%EB%B3%B4-%EC%9C%A0%EC%A7%80/
[3] Alphaliner(2025), The weekly container shipping newsletter. no.45
- Alphaliner(2025), Monthly Monitor November 2024
- Drewry(2025), Container forecaster
- KMI(2024), Trends and Outlook of the Container Market, Presentation Materials from the Global Shipping Outlook Seminar
- https://www.trade.gov/market-intelligence/israel-raw-materials-supply-chain-affected-israel-hamas-conflict
- https://www.jpmorgan.com/insights/global-research/supply-chain/red-sea-shipping

Associate Researcher
/ General Manager

Gun Woo Choi

Currnet) Director of the Maritime Logistics and
Shipping Policy Research Office at the Korea Maritime Institute

Past) General Manager, Maritime Financial Research Center, Korea Maritime

Past) Researcher, Port Research Center, Korea Maritime Institute

Current) Director of the Maritime Logistics
and Shipping Policy Research Office
at the Korea Maritime Institute

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