September 3rd, 2026 – Competitive pressure is expected to accelerate ocean carriers’ return to the Suez Canal, with liners increasingly likely to shift all Asia-Europe services back to the shorter route by the end of the year, according to Sea-Intelligence Maritime Analysis.
The latest step toward a broader return came Monday when Mediterranean Shipping Co. announced that its Albatros, Jade, Himalaya and Tiger services would resume Red Sea transits.
Currently, about 19% of westbound Asia-Europe services are routed through the Suez Canal, but Sea-Intelligence expects that share could reach 100% by year-end. Carriers that continue routing vessels around the Cape of Good Hope would face a significant competitive disadvantage because of higher operating costs and longer transit times.
Improving perceptions of security in the Red Sea, combined with the cost and transit-time advantages of the Suez route, have encouraged Maersk, Hapag-Lloyd, CMA CGM, Cosco Shipping and MSC to gradually restore services through the region. Security concerns remain, however, particularly following an Aug. 11 Houthi missile attack on a Tanzanian freighter in the Bab el-Mandeb Strait that killed six people.
Despite the ongoing risk, carrier activity through the region continues to increase. Seven MSC vessels crossed the Bab el-Mandeb in mid-August, while Cosco has resumed bookings for select Red Sea and Asia-Red Sea services. Maersk has already shifted more than 30% of its volume previously routed around Africa back through the Suez Canal.
Data from rate benchmarking platform Xeneta shows average monthly capacity scheduled to transit the Suez Canal from July through October will reach approximately 1.3 million TEUs. That represents a 60% increase compared with the monthly average during the first half of the year, although capacity remains at only about one-fifth of the levels recorded before Houthi attacks on commercial shipping began in late 2023.
The widespread diversions around the Cape of Good Hope added roughly two weeks to Asia-Europe voyages while increasing fuel consumption by approximately 30%. Those longer routes also absorbed significant vessel capacity, helping carriers manage an overcapacity problem that analysts expect will become increasingly difficult over the next several years.
Suez Return Puts Overcapacity Back in Focus
An estimated 8% of global container shipping capacity has been absorbed by diversions around southern Africa. As more vessels return to the Suez Canal, that capacity will effectively be released back into the global market at the same time carriers are preparing to take delivery of a substantial number of new ships.
The container shipping industry currently has approximately 13.5 million TEUs of capacity on order, equal to about 40% of the existing global fleet, according to Sea-web data. Approximately 3.5 million TEUs of new capacity is scheduled for delivery in 2027, followed by another 5 million TEUs in 2028. Meanwhile, carriers continue to scrap very few older vessels.
A sustained return to the Red Sea could further intensify the imbalance between vessel supply and cargo demand. Even if underlying head-haul container demand maintains the 6.6% average growth rate recorded during the past 12 months, Sea-Intelligence projects demand measured in TEU miles could decline 8.7% year over year during the first half of 2027.
The decline would largely result from shorter sailing distances. When vessels no longer need to travel around southern Africa, fewer vessel miles will be required to move the same amount of cargo. Combined with the large volume of new capacity entering the market, the shift could create significant downward pressure on freight rates.
Not everyone in the industry expects the order book to produce severe overcapacity. Maersk CEO Vincent Clerc recently pointed to persistent congestion at ports across Asia and Europe as a structural problem that could continue absorbing vessel capacity for years.
Sea-Intelligence takes a more cautious view, arguing that port congestion is unlikely to offset the sheer volume of new capacity scheduled for delivery. Similar arguments about improved carrier discipline and structural capacity constraints have emerged during previous shipping cycles, only for excess supply to eventually push rates lower.
If Red Sea conditions remain stable enough for carriers to continue restoring Suez services, the combination of shorter voyages and millions of TEUs of new vessel capacity entering the fleet could set the stage for a significant shift in the container shipping market in 2027 and beyond.
