Market Information on July 8th: Maersk Group and Hapag-Lloyd announced that one of their Gemini cooperation routes will resume operations on the Red Sea route through the Suez Canal. This move is the first step towards restoring the Asia-Europe container routes via the Red Sea shipping lane. The latest monitoring data from HIFLEET shipping big data shows that the number of container ships passing through the Red Sea route has shown a slow recovery trend, but the overall recovery pace is cautious and not obvious. The vast majority of large container ships still choose to bypass the Cape of Good Hope in Africa to avoid the safety risks in the Red Sea.

After the US and Iran signed the memorandum of understanding on June 18th, the market's panic over the escalation of conflicts in the Middle East and the attacks on ships in the Red Sea eased somewhat. The war insurance premiums slightly decreased, reducing the pressure on enterprises' transportation costs. However, the fragile ceasefire agreement was broken again on July 9th, and the resumption of traffic in the Strait of Hormuz became uncertain.

Taking a detour around the Cape of Good Hope will increase the voyage distance by 3,500 to 4,000 nautical miles, extend the transportation duration by 10 to 14 days, and simultaneously increase fuel consumption, vessel occupation, shipping schedule delays, and storage capital occupation costs. The Red Sea route can significantly shorten the delivery time and reduce the overall logistics costs, and is highly attractive for high-velocity goods such as fresh produce and e-commerce. Maersk and Hapag-Lloyd have partially resumed some of the Asia-Europe-Mediterranean trunk lines passing through Suez. CMA CGM and MSC have also conducted small-scale trial voyages. Small shipping companies will adjust their route strategies in accordance with the safety operation data and risk models of leading enterprises.

The resumption of the Red Sea route will shorten the round-trip cycle for individual vessels. Under the same fleet size, the global effective container transportation capacity is expected to increase by 7% to 9%. However, as airlines gradually resume operations and release the incremental capacity, there will be no sudden surge in short-term transportation capacity that would impact the market. In the medium and long term, the benchmark freight rates for the Asia-Europe routes are under pressure and are expected to decline. The additional charges for detouring, war risk insurance, and congestion are gradually reduced. The comprehensive freight rate for 40-foot containers has dropped by 15% to 30% compared to the peak during the crisis.

The Red Sea Express Line passing through Suez retains a small premium for time, while the Cape of Good Hope Slow Line focuses on low prices and large volumes. The price gap between these two routes has persisted for a long time, replacing the previous unified high-price market pattern. The fluctuation range of freight rates has narrowed: there is an additional alternative route for the shipping lanes, the risk of freight rate spikes caused by geopolitical conflicts has decreased, and the stability of current freight rates has improved.

Traders along the Mediterranean coast of Europe prefer the Red Sea route. In contrast, large-scale goods from Northern and Western Europe still favor the low-cost Cape of Good Hope route. The regional trade logistics routes have become differentiated. All airlines have established "dual-route contingency plans", simultaneously preparing two operation schemes: one for Red Sea passage and the other for detour via the Cape of Good Hope. Geopolitical risks have been incorporated into the long-term route planning. The Suez route has a shorter voyage, lower fuel consumption, and less carbon emissions. It is in line with the EU's carbon tax policy. In the long run, it will further encourage airlines to prioritize the Red Sea route under the premise of safety and controllability.

If the US-Iran agreement collapses and the Houthi rebels resume large-scale attacks on ships in the Red Sea, the market will quickly reverse. Container ships will once again collectively take a detour around the Cape of Good Hope. Capacity will shrink and freight rates will soar again. Port congestion and supply chain delays will recur. The short-term impact will completely offset all the positive effects brought about by the recovery of shipping routes.