Red Sea Shipping: How Fast is the Return Line and How Much Does It Cost?
AWith global airlines assessing the possibility of resuming Red Sea transit, Supal Shah, CEO of Sarjak Container Lines, said the real question is not whether the industry will return, but how soon. The speed of those returns will determine whether the market experiences a decline in interest rates or a more orderly stabilization.
Sarjak Container Lines operates services in and out of the region, providing direct visibility into conditions on the ground and evolving sentiment among ship operators.
A Temporary Pause Does Not Guarantee Lasting Stability
While reports of reduced attacks are encouraging, Shah noted that the situation remains fragile and highly conditional. Previous lulls were short-lived and current insurance evaluations reflect ongoing risks.
“From our operating experience, a temporary reduction in incidents does not translate into safe and reliable passage. This area has not demonstrated the sustained stability required by crews, insurance companies and operators,” Shah said.
The risk premium of war remains significantly elevated. Until the risk classification is changed, there will likely be no immediate benefits on an industrial scale.
If Shipping Lines Return Quickly: Market Shock Possible
The rapid return of the Suez route would suddenly shorten shipping distances, allowing huge amounts of capacity to return to the global system. According to Shah, such sudden changes can trigger:
- Surplus tonnage surges in key east-west trade
- Rapid downward pressure on freight and rental rates
- Increased risk of empty sailing, idling and slow steam
- Potential schedule disruptions due to networks adjusting too quickly
“The industry is entering a period where supply is already exceeding demand,” Shah said. “Rapid returns could accelerate the erosion of interest rates and destabilize markets as they search for balance.”
If Returns Occur Gradually: A More Stable Path
In contrast, a gradual return, guided by consistent security improvements, lower war risk premiums, and operational planning, would allow the system to rebalance in a controlled manner.
A scenario like this would allow operators to:
- Restore the Suez route gradually, avoiding sudden capacity shocks
- Smooth recalibration of feeder networks and port rotation
- Protect the charter market from sudden changes in interest rates
- Maintain a more predictable flow of equipment for shippers
“Measurable and sequential returns support stability across the supply chain,” Shah said. “This gives operators, ports and customers time to adapt, not react.”
Operational Structures Cannot Shift Overnight
Shah emphasized that the global network has been reconfiguring for almost a year. Alliance rings, bunkering strategies, and transshipment patterns have been redesigned around the Cape of Good Hope.
“Even if conditions improved tomorrow, it would still take weeks or months for the industry to wind down the current emergency network,” he said. “Operators need strong certainty before making any other major structural changes.”
Shah likened the situation to an important bridge that has long been unsafe:
“If engineers declare a damaged bridge ‘temporarily safe,’ most drivers will not return immediately. They wait for intensive inspections, until weight restrictions are lifted, until the structure can be proven. Otherwise, the risk of another closure outweighs the comfort benefits. Likewise with the Red Sea corridor, returning too quickly could create new vulnerabilities if stability is not guaranteed.”
Conclusion: It’s Not “If” But “How Soon”
Shah concluded that the Red Sea’s importance to global trade warranted its full reopening. The question now is rate and the consequences that speed will bring.
“The Red Sea will reopen to large-scale traffic, of which there is no doubt. But the speed of return will determine whether the industry experiences new volatility or a more balanced adjustment. A rapid return risks exacerbating a cycle of oversupply. A gradual return provides a healthier and more commercially sustainable path.”
“Based on what we are seeing in our operations in the region, decision-making continues to be prudent. Evidently, lasting stability will ultimately determine the pace of the industry’s return.”
Source: Sarjak Container Line
