Danish shipping and logistics giant Maersk has reportedly been coming under increasing pressure to resume Red Sea and Suez Canal transits, Shipping Watch reports.

But such a return could also spell trouble for shipping lines, who may see increased freight fares and decreased earnings.

Maersk first paused its Red Sea routes in mid-December 2023 due to escalating Houthi militant attacks on commercial vessels. 

While they briefly attempted to resume some trips by the end of that month, a subsequent attack on the Maersk Hangzhou on December 31, 2023 prompted an indefinite suspension.

On Monday, Maersk, alongside Hapag-Lloyd said they would resume some sailings through the Suez Canal under their Gemini joint ‌network – a major operational partnership launched by the duo tapping into the shipping network using a hub-and-spoke model and a fleet of over 340 vessels across East-West trade routes.

Shares of both companies were hit following the announcement because of the potential impact on freight rates, Reuters reported.

On Thursday, Maersk rerouted its MECL service between India, the Middle East and the US East Coast through the Suez Canal. 

According to the shipping companies, the decision was made after careful consideration, and a notice to customers emphasises that contingency plans are in place should the situation in the region change.

But the latest pressure to return just makes business sense, according to analysts.

Where Maersk saw a crisis, someone else saw an opportunity.

According to Shipping Watch, Maersk’s French rival CMA CGM has continued transiting the Red Sea with support from the French military, among other security measures, allowing it to offer customers shorter transit times.

“This is, of course, part of the gradual normalisation in terms of returning to the Red Sea,” Haider Anjum, senior analyst at Jyske Bank, said in an interview with MarketWire.

On the decision Haider Anjum said, “But it’s also something Maersk has been somewhat pressured into, given that CMA CGM continues to operate more services through the Red Sea.”

According to Haider Anjum, CMA CGM’s strategy puts pressure on its competitors, as the shipping giant’s route through the Red Sea and the Suez Canal gives it a strong selling point.

“So CMA CGM gains a competitive advantage by being able to tell customers: If you choose us, you can have your goods shipped two weeks before everyone else because we can sail through the Red Sea. Maersk therefore has to protect its market share and follow suit,” he said.

According to Maersk, the change will shorten transit time by an average of seven days on westbound sailings and 14 days on eastbound sailings.

Maersk had earlier described the Trans-Suez Corridor as the fastest, most efficient, and most sustainable link between Asia, the Middle East, and the West.

But the Asia-Europe trade corridor through the Suez Canal was abandoned by most shippers after attacks in the Red Sea by Yemen's Houthis. 

That forced them ​to take the much longer trip around Africa's Cape of Good Hope.

Maersk’s decision to return to the troubled route will also put further pressure on other shipping lines, Anjum believes.

”Yes, I certainly think we may see that. Once CMA CGM, Maersk and, through the Gemini partnership, Hapag-Lloyd are back in the Red Sea, MSC and some of the other major shipping lines will also have to start looking at it,” Anjum said.

He predicted a 70-80% chance of the situation returning to normal this year, with “a full normalisation likely not coming until next year”, contingent on no further changes to the security situation in the country. 

Senior analyst Mikkel Emil Jensen from Sydbank, however, pointed out other issues.

“2027 looks like it will be a really tough year if all the shipping companies return to the Red Sea,” Jensen told Shipping Watch.

He said overcapacity in the container market, which will take effect the moment the major shipping companies decide to return to the Red Sea and the Suez on a large scale, would put a lot of pressure on freight rates and the shipping lines’ earnings.

He estimated around 2.5 million teu in shipping capacity to be freed up if the shipping lines return fully to the Red Sea and the Suez Canal instead of sailing the long route south of Africa.

Container analyst Lars Jensen from Vespucci Maritime, however, did not find the return surprising. 

“If this works out, I would expect the major shift to occur when the peak season ends, which is typically in late August or early September,” Lars Jensen told Shipping Watch,

He, however, warned that shipping lines could create bottlenecks in the ports if they all start sailing through the Suez Canal at once.