While HMM bypasses the Cape of Good Hope, competitors are moving to return to the Suez Canal

[Financial News] Global shipping companies are increasingly returning to routes that pass through the Red Sea and the Suez Canal. While shorter routes improve operational efficiency, the release of vessels previously tied up bypassing the Cape of Good Hope could put downward pressure on container freight rates, making it difficult for HMM to avoid the impact.
According to the shipping industry on the 16th, A.P. Moller - Maersk, the world's second-largest container shipping company, and Germany's Hapag-Lloyd are switching four regular services of the shipping alliance 'Gemini Cooperation'—AE5, AE11, AE12, and ME2—to routes passing through the Suez Canal instead of bypassing the Cape of Good Hope. After diverting some services connecting Asia with the Mediterranean and Europe to the Suez route in July and August, the two companies are further expanding the scope of services returning to the Suez Canal with this latest measure.
The biggest benefit of returning to the Suez Canal is the reduction in sailing distance. Because the route is shorter than the Cape of Good Hope route around the southern tip of Africa, which major shipping companies have used since the Red Sea crisis, it can reduce both transit times and fuel costs. A.P. Moller - Maersk previously stated that switching some services to the Suez Canal could shorten transit times by an average of 7 to 14 days, depending on the direction, compared with bypassing the Cape of Good Hope.
As shorter sailing times lead to an increase in 'effective vessel capacity' in the global container market, downward pressure on freight rates is also expected to intensify. Returning to the Suez Canal reduces the number of vessels needed to operate the same regular service compared with bypassing the Cape of Good Hope. If the surplus vessels are redeployed to other routes, they could increase supply not only on the Asia-Europe route but also on other major routes.
Competitors' return to the Suez Canal is expected to put pressure on HMM. HMM is currently continuing to bypass the Cape of Good Hope. Although competitors are increasingly returning to the Suez Canal, HMM says it is not considering an immediate return to the Suez route. An HMM official said, "We are currently bypassing the Cape of Good Hope," adding, "I understand that passage through the Suez Canal is not being considered because safety has not yet been secured." As Ansar Allah (Houthis) have recently raised the level of threats around the Red Sea and the Bab el-Mandeb Strait, some voyages or services could be switched back to the Cape of Good Hope route if the security situation deteriorates again.
A route change is not something HMM can decide unilaterally. Since services are jointly operated by members of the Straits of Malacca and Singapore Cooperation Mechanism and other partner shipping companies, consultations among the carriers must take place before any route changes. Some also say it remains to be seen whether returning to the Suez Canal will enhance service competitiveness.
An industry official said, "The shorter sailing time could be an advantage," but added, "Shippers will also consider the risks associated with cargo passing through hazardous areas." 

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