Why a Gaza Deal Doesn’t Reopen the Red Sea (Yet)

TL;DR: Despite ceasefire talks around Gaza, major container lines have not resumed routine transits via the Red Sea/Suez. Security incidents and war-risk insurance costs still make the route commercially and operationally unattractive. Expect the “Cape of Good Hope as default” model to persist into late 2025. Any reopening will likely be gradual (weeks to months), not a flip of a switch.

Where things stand (late Oct 2025)

Carriers’ posture: Leading lines (e.g., Maersk, Hapag-Lloyd) continue to route around the Cape and say a near-term return to Red Sea/Suez is unlikely until security and insurance conditions materially improve. Investor reaction to ceasefire headlines has been real (e.g., Maersk’s share dip on reopening hopes), but operators’ operational stance is unchanged.
Security picture: The MV MINERVAGRACHT was attacked on Sept 29 southeast of Aden; EU naval mission ASPIDES issued advisories. Separately, the LPG tanker MV Falcon suffered an explosion/fire on Oct 18 in the Gulf of Aden and remains under salvage—cause under investigation but the event underscores navigational risk in the corridor.
Policy/monitoring: The EU has prolonged its ASPIDES mandate into 2026; UN Security Council briefings on Yemen continue to flag a volatile environment. None of this amounts to a green light for routine commercial transits.

Why a Gaza deal ≠ a Red Sea reopening

Even a durable Gaza ceasefire would not, by itself, remove threats along Yemen’s coast and the Bab al-Mandeb. The Houthis’ ability to target shipping and the broader security vacuum at chokepoints are distinct from Gaza diplomacy. Insurers and P&I clubs will require sustained evidence of risk reduction before repricing cover or widening terms.

The gating factor most shippers underestimate: insurance

War-risk pricing: Premiums for Red Sea exposures spiked after the July sinkings, with market quotes reported around ~0.7% of hull value for a 7-day period (and in some cases as high as ~1% depending on voyage and perceived risk). Several underwriters temporarily paused cover for certain profiles at peaks.
What that means in practice: On a US$80–100m hull, a 0.7% quote for a seven-day risk window adds US$560k–700k to voyage costs—before bunker, schedule risk, or inventory carry. Until these premia normalize and exclusions ease, Suez is a hard sell for boards and brokers.

Signals to watch before you even consider switching back

Incident lull: 60–90 days without successful attacks on commercial vessels in/near Bab al-Mandeb/Gulf of Aden, corroborated by naval reporting.
Insurance repricing: War-risk quotes trend down materially from mid-2025 peaks (e.g., toward pre-spike ranges), with fewer exclusions and broader appetite among underwriters.
Carrier declarations: Public timetables from top liners restoring scheduled Suez routings (not just one-off trial voyages).
Escort/convoy clarity: Clear, published procedures for escorted transits (EU ASPIDES/coalition guidelines), including booking, eligibility, and liability arrangements.

If two or fewer of the above are true, assume the Cape detour remains the rational baseline.

Procurement & rate risk

Contract tenor: Favor shorter commitments (e.g., 3–6 months) on Asia–Europe trades to preserve flexibility. A sudden, credible reopening could add effective capacity (shorter routing + redeployed tonnage) and pressure spot rates.
Optionality over price: Where available, buy options on volume (or tiered MQCs) instead of locking large fixed blocks at today’s levels. Re-test the market if two or more “Signals to watch” flip.
Inventory math, not just freight: Keep simple spreadsheets that translate days saved (Suez vs Cape) into inventory carrying cost for your SKUs. On lower-value cargo, the insurance delta may outweigh time savings for months after any reopening.

What a reopening would actually look like

Don’t expect an overnight reset. Realistically, a return would start with limited or escorted convoys, followed by insurance renegotiations and gradual schedule rebuilds. Trade analysts and some carrier executives suggest weeks to months before networks resemble “normal” again; some put full normalization at up to ~6 months depending on convoy capacity, insurer appetite, and port windowing.

Practical next steps

Keep the Cape default baked into planning for Q4’25–Q1’26 lead times and safety stock.
Codify your triggers: Agree internally on the four “Signals to watch” and who signs off on any route change.
Pre-draft comms to buyers for both scenarios: (A) status quo; (B) phased reopening with convoy constraints and possible EU port bunching.
Refresh insurance discussions monthly: Ask your broker about current Red Sea war-risk appetite, exclusions, and any convoy-linked endorsements.

Turn Cape detours into clarity—get up to 12 refreshes daily and predictive ETAs that flag delays early.

References

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