Shipping routes likely to remain diverted until August

The diversion of container shipping around the Cape of Good Hope is expected to continue well into 2025 as carriers prioritise stability over the potential risks of returning to the Red Sea, despite recent advancements in the Suez Canal’s infrastructure

The reluctance to return to the Red Sea stems from attacks on commercial shipping by Iran-backed Houthi forces, which have created a precarious operating environment. Earlier incidents prompted carriers to divert ships around the Cape of Good Hope, and the industry remains cautious about resuming transits until the risks are fully mitigated.

Efforts by carriers like CMA CGM to reintroduce Suez services under naval protection have met resistance from shippers who fear both financial and operational uncertainties. As a result, even if the Red Sea crisis were resolved, it is likely that diversions around the Cape of Good Hope would persist for several months while confidence is rebuilt.

The logistical complexity of reconfiguring networks, combined with the risk of potential attacks, has led carriers to maintain their Cape of Good Hope detours and with the lines set to phase in new networks over February and March, further adjustments to accommodate Suez transits are unlikely before August at the earliest.

Shippers, too, are hesitant to support a return to the Red Sea. The concern is not just the extended transit times around Africa but the financial risks associated with general average (GA). If a ship were to be attacked and damaged, resulting in environmental cleanup or other liabilities, insurers may not cover GA in such high-risk zones.

Egypt has successfully tested a new 10 km extension of the Suez Canal, which allows for two-way traffic and increases the canal’s daily capacity by an additional 6 to 8 ships. This improvement also reduces the likelihood of severe disruptions, such as the grounding of the “Ever Given” in the single-lane section of the canal.

As conditions stabilise, the Suez will likely regain its position as the preferred route, but for now the added capacity is not required.

With geopolitical risks casting uncertainty over the industry, building resilient supply chains, securing comprehensive cargo insurance, and managing budgets effectively will be essential for shippers navigating the complexities of the 2025 sea freight landscape.

In this volatile market, our marine insurance cover and fixed-rate agreements on key shipping routes help minimise risk and provide budgetary stability.

To discover how Metro’s insurance solutions and fixed-rate options can support your business in 2025, please EMAIL Managing Director Andy Smith.