Carriers Weigh Insurance as they Cautiously Reroute Back Through the Red Sea

Major container lines are beginning to edge back toward the Suez Canal and Red Sea routes, but a sharp focus on insurance costs is shaping how - and how fast - that return will happen.

After more than two years of near-continuous disruptions tied to attacks on merchant shipping in the Red Sea, several carriers have announced partial resumptions of Suez transits.

France’s CMA CGM has publicly stated it will restore full-loop transits on some services, trimming voyages by up to two weeks compared with the long detour around the Cape of Good Hope.

But carriers including Maersk and Hapag-Lloyd are adopting a measured approach, saying route decisions will be driven by evolving risk assessments and insurance cover rather than timetable pressure alone.

At the heart of the calculations are war-risk premiums and broader hull and freight insurance costs.

Maritime underwriters dramatically raised premiums when attacks intensified, and while some rates have come down - industry sources say war-risk fees have fallen substantially from their peaks - they remain a material expense.

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For large containerships the difference between paying elevated premiums to transit the Red Sea versus the extra bunker and operating costs of the much longer Cape route can be razor-thin; many carriers are running the numbers on a voyage-by-voyage basis.

Insurers also require procedural and security assurances before reinstating cover. Several lines have said they will only resume direct transits once underwriters formally reduce or remove war-risk endorsements and once shippers’ and charterers’ liability positions are clear.

That bureaucratic friction - committee sign-offs, revised clauses and broker negotiations - means even if the security picture stabilizes quickly, insurance-led caution could stretch the timetable for a full return. Analysts warn the process could take weeks to months.

There are commercial knock-on effects. A rapid rush back through Suez would cut ton-miles and could depress spot freight rates that surged while the Cape detour sucked up extra vessel days.

Carriers say they must balance potential savings from reduced fuel and transit time against the immediate bill for insurance and the operational headache of managing a one-time redeployment of tonnage and berth slots. Industry analysts caution a phased, coordinated return is needed to avoid port congestion and rate volatility.

For shippers the outcome is mixed: some will welcome shorter transit times and lower fuel-related surcharges, while others may face continued surcharges tied to lingering insurance costs until insurers are fully satisfied the route is safe.

Ultimately, executives say, the choice to use the Suez Canal again will be a commercial calculus made where underwriting decisions, geopolitics and the balance sheets of carriers intersect.

As lines tiptoe back, the shipping industry’s message is clear: security improvements matter, but so do the fine print and the price tag - and until underwriters and carriers see sustained calm, insurance will continue to be the gatekeeper for a full-scale comeback.

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