Red Sea route restarts

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According to Bloomberg, global container liner companies are preparing for a decline in profits in 2026 with the potential restart of Red Sea shipping routes. The resumption of the Red Sea route will drive down freight rates, aggravate the problem of overcapacity, and make the trade dilemma worse.

Shipping companies such as Maersk, Hapag-Lloyd, Nippon Yusen and Orient Overseas are all expected to see weaker profits in 2026 after a difficult year due to tariff turmoil in 2025.

Analysts at Bank of America said the resumption of navigation on the Red Sea route would exacerbate the existing "structural overcapacity problem."

According to Bloomberg Intelligence analyst Kenneth Loh, capacity supply continues to expand at a record pace, with new ship capacity expected to surge 36% from 2023 to 2027. On the other hand, he added, container shipping demand is expected to contract by 1.1% in 2026, assuming container liner companies fully resume sailings on the Red Sea routes.

Although the resumption of shipping in the Red Sea is not a certainty, it is now increasingly possible because Maersk has successfully transited the Red Sea twice for the first time since Yemen's Houthi rebels began attacking ships in 2023.

HSBC analyst Parash Jain previously expected that the Red Sea shipping disruption will last until at least mid-2026, which means freight rates will fall by 9% to 16% this year. Now, Maersk's return to the Red Sea suggests things will return to normal sooner than expected, with HSBC saying freight rates could fall a further 10%, pushing Maersk and Hapag-Lloyd into the red. A rapid resumption of traffic may initially cause congestion at European ports, which will support freight rates.

The team led by Citibank analyst Kaseedit Choonnawat said the restart of the Red Sea route in the first half of 2026 when Western economies restock, may also help freight rates initially.

Bank of America said freight rates will then stabilize at lower levels, and Maersk is expected to issue "weak" profit guidance for 2026 and cut its share buybacks by 50%. Consensus suggests the Danish shipping company is expected to post its first annual loss this year since 2017.

Arya Anshuman and Simon Heaney of Drewry Shipping Consultants said that at present, major shipping companies are acting cautiously because a sudden change in Houthi armed activities may force a complete reversal of routes overnight, so they are reluctant to completely adjust their route networks. “Cargo owners are also concerned about putting their valuable cargo at risk, now accustomed to long-distance shipping, and ports are unable to cope with a sudden influx of ships.”

Although Maersk has recently started sailing, CMA CGM has changed its decision after previously resuming services on three Red Sea routes. "This highlights the volatility and unpredictability of the situation in the region," said Bloomberg Intelligence analysts.

Counterparts in Asia face similar challenges. Analysts said that for the Asian shipping industry, the complete restart of the Red Sea route this year will be the "biggest uncertainty", even more than tariffs, because the United States and China have reached a trade truce.

Jefferies analyst Carlos Furuya wrote in a report that for Japanese shipping companies such as Nippon Yusen Co., Ltd., the profit pressure on the container business mainly comes from excess shipping capacity and tariff uncertainty. The company's third-quarter operating profit missed expectations, and Bloomberg Intelligence expects its container shipping business to deteriorate further due to lower freight rates and weak demand.

Ocean Network (ONE), a private container shipping company jointly owned by Nippon Yusen Line, Mitsui Lines and Kawasaki Lines, last week reported a net loss of US million in the third quarter of its last fiscal year due to an increase in new ships and slow cargo transportation on routes from Asia to North America and Europe. The company expects ships to continue to circumnavigate the Cape of Good Hope, which will result in a "small increase" in freight rates in the fourth quarter.

Asian shipping lines may be in a better position on margins than their European counterparts as they benefit from stronger regional demand and more elastic spot freight rates compared with the global average, according to researchers at Drewry Shipping Consultants. “Intra-Asia trade benefits from greater operational stability as it is less subject to geopolitical disruptions, such as tariffs and Red Sea security risks, which continue to impact major global trade routes such as the Trans-Pacific and Asia-Europe.”