1: Red Sea, Suez Canal, Bab el-Mandeb

Current operating environment
Major container carriers continue to operate a materially reduced level of transits through the Red Sea and Suez Canal corridor for Asia–Europe services. The dominant routing pattern remains via the Cape of Good Hope, reflecting ongoing risk-based decision-making rather than physical canal constraints.

Key developments

• Most global carriers continue to prioritise Cape routing for mainline Asia–Europe services
• Selective and case-by-case transits through Suez have occurred but remain limited in scope
• Network planning has adjusted to longer voyage assumptions rather than short-term disruption management
• Some carriers have reduced service frequency or redeployed capacity to reflect extended round voyage times

Current assessment

• No sustained return to pre-disruption Suez routing patterns
• Operational decisions remain driven primarily by security risk assessments
• The Cape of Good Hope has become the baseline routing assumption for many schedules

2: Strait of Hormuz

Current operating environment
The Strait of Hormuz remains fully operational for commercial traffic but continues to operate under elevated geopolitical tension. While vessel movements remain active, shipping lines and insurers maintain heightened risk sensitivity.

Key developments

• No sustained closure or systemic interruption of commercial flows
• Periodic escalations in regional tension have influenced insurance premiums and routing caution
• Security incidents in the wider Gulf region have contributed to operational uncertainty

Current assessment

• Commercial flows remain broadly intact
• Risk pricing and insurance conditions remain elevated
• Operational disruption is primarily precautionary rather than structural

Cape of Good Hope routing impact

3: Operational impact

The Cape of Good Hope route remains the primary alternative for Asia–Europe container services affected by Red Sea risk avoidance.

Key implications

• Voyage durations extended by approximately 10–15 days depending on rotation and port calls
• Increased fuel consumption and higher bunker exposure
• Schedule reliability reduced due to longer cycle times
• Structural integration into carrier network planning rather than temporary contingency routing

Current assessment
Cape routing is now embedded into baseline operational assumptions for a significant portion of global east–west container services.

4: Freight rates and contracting environment

Market structure

The freight market continues to operate within an elevated pricing environment compared with pre-2023 baselines. While volatility has moderated from peak disruption phases, pricing remains sensitive to geopolitical developments and capacity adjustments.

Carrier behaviour

Major carriers, including Maersk, MSC, CMA CGM, and Hapag-Lloyd, continue to apply:

• War risk surcharges on exposed routes
• Conflict-related operational surcharges
• Selective booking acceptance on higher-risk corridors
• Capacity management aligned with extended voyage cycles

Current assessment

• Pricing remains structurally elevated
• Short-term volatility persists but is more controlled than peak disruption phases
• Carrier leverage remains strong due to effective capacity tightening

5: Cost structure pressures

Insurance
War risk insurance premiums remain elevated across Middle East and Red Sea-linked exposures. Underwriting conditions remain selective, with enhanced exclusions or restrictions in certain high-risk corridors.

Fuel and bunker exposure
Bunker Adjustment Factors remain sensitive to crude oil volatility
Extended routing via southern Africa continues to structurally increase fuel consumption per voyage

Surcharges
Commonly applied charges include:

• War risk surcharges
• Emergency operational surcharges
• Port congestion-related fees
• Route deviation and disruption-related adjustments

Current assessment
Cost inflation is now embedded within standard carrier pricing structures rather than treated as exceptional surcharging.

6: Supply chain efficiency and equipment flows

Port and network congestion
European hub ports continue to experience periodic congestion due to vessel bunching
Asian export hubs face intermittent pressure linked to slower vessel rotation cycles

Container equipment imbalance

• Empty container repositioning remains inefficient across major trade lanes
• Asia continues to experience episodic equipment tightness due to delayed return cycles

Capacity impact
Despite no significant vessel loss, effective global capacity remains constrained due to:

• Longer voyage durations
• Reduced vessel rotation speed
• Slower container turnaround cycles

Current assessment
The global network is operating under structurally reduced efficiency conditions rather than temporary congestion alone.

7: Air freight and aviation conditions

Airspace environment
Middle East airspace continues to operate with heightened caution during periods of regional tension, with routing adjustments applied dynamically based on security assessments.

Operational impact

• Selective rerouting on Europe–Asia and Europe–Australia corridors
• Increased fuel burn on extended flight paths
• Pressure on crew duty cycles in certain long-haul operations

Cargo market impact

• Air freight remains fully operational across global networks
• Pricing remains elevated on routes affected by rerouting or capacity pressure
• Modal shift into airfreight continues during periods of maritime disruption

Current assessment
Air cargo has proven resilient but is not immune to cost and scheduling impacts arising from broader geopolitical conditions.