The Houthi militant group's recent announcement to pause maritime operations in the Red Sea has caught the attention of the global shipping industry. This change may provide some relief to a sector that has faced nearly two years of attacks, but experts caution that a quick return to normal operations is still uncertain.
This suspension was reported in a formal letter to the military wing of Hamas, written by the new Houthi Chief of Staff, Yousef Hassan Al Madani. It represents a noteworthy shift following the fragile peace agreement between Israel and Hamas reached in October. The Associated Press was the first to cover this letter.
This development suggests that the Iranian-supported group may be formally ending its naval blockade of Israeli ports, and attacks on vessels previously seen as linked to Israel have been halted. However, the group has not officially confirmed the suspension yet.
Peter Sand, Chief Analyst at Xeneta, pointed out how important a return to operations in the Red Sea would be for container shipping. “The details are unclear, and we can't rely on Houthi militia statements for the safety of crews, ships, and cargo,” Sand stated. “Carriers need more reliable assurances, and so do insurance companies.”
Xeneta reports that diversions around the Cape of Good Hope still account for around 2 million TEU of global container capacity. Analyst John McCown estimates this crisis has led to an 8% reduction in global shipping capacity. If many ships return to the Red Sea, it could result in a surplus of capacity, worsening the problem of hidden overcapacity in the sector and leading to lower freight rates.
“Average spot rates for routes from the Far East to North Europe, the Mediterranean, and the US East Coast—three routes that usually pass through the Red Sea—have all dropped by over 50% since the start of the year,” Sand noted. “A major return of container ships to the Red Sea would flood the market with capacity, causing even lower freight rates across various global routes, not just those affected by diversions.”
The Drewry World Container Index (WCI) saw an 8% increase to $1,959 per 40-foot container last week, marking the fourth consecutive weekly rise after Asia's Golden Week, following 17 weeks of decline. Carriers on the Asia-Europe routes are now implementing higher FAK rates to improve spot rates ahead of contract negotiations, but Drewry predicts that a weakening supply-demand balance will lead to lower spot rates in the upcoming quarters.
Maritime security experts are advising operators to be very cautious. Martin Kelly, Head of Advisory at EOS Risk Group, emphasized that while the risk has decreased, it hasn't been completely eliminated. “As of November 11, the risk of Houthi attacks against shipping in the Red Sea and the Gulf of Aden is much lower,” Kelly said. “Nonetheless, despite the declared pause, the Houthis still have the capability to carry out missile, drone, and USV attacks against commercial shipping.”
The conditional nature of the suspension adds further uncertainty. In his letter, Al Madani made it clear that attacks could restart if Israel resumes its actions against Gaza. “We are closely monitoring events, and if the enemy resumes aggression against Gaza, we will return to our military operations and reinstate the ban on Israeli navigation in the Red and Arabian Seas,” Al Madani wrote.
Since the attacks began after the October 2023 outbreak of the Israel-Hamas conflict, the Houthis have targeted over 100 merchant ships in the Red Sea, sinking four vessels, seizing one, and causing the deaths of at least eight seafarers.
The Suez Canal Authority has reported positive signs of recovery, with October seeing the highest monthly rate of returning vessels since the crisis began. Chairman Admiral Ossama Rabiee announced that 229 vessels traveled through the waterway in October alone.
CMA CGM has taken the lead in returning to this route, with the massive containership CMA CGM BENJAMIN FRANKLIN—which can carry 17,859 containers—successfully completing its first transit through the Suez Canal and Bab el-Mandeb Strait, becoming the largest containership to do so since the blockade started.
“There is no alternative to the Suez Canal,” said CMA CGM CEO Tariq Zaghloul, expressing confidence in the future of this route.
However, significant challenges remain. High marine insurance costs are still a major barrier and have contributed to the delays in many shipping lines resuming their voyages through the Suez Canal.
Sand cautioned that shippers should prepare for potential disruptions. “Carriers are already drifting into loss-making situations, and freight rates are predicted to drop by up to 25% globally in 2026, even if the situation in the Red Sea remains unchanged,” he said. “Shippers should create contingency plans because a large-scale return of vessels would lead to major disruptions across global ocean supply chains as services through the Suez Canal are reinstated.”
Kelly recommended that maritime operators continue treating the risk as subdued rather than eradicated, especially for vessels connected to Israel, its allies, or perceived Western interests. Since Western officials had yet to confirm the suspension at the time of the announcement, the industry now faces a waiting game that could have significant consequences for global trade.