Since the Israeli-Palestinian conflict, the Suez Canal, a vital artery of global shipping, has been severely impacted. A significant amount of shipping capacity has been forced to detour around the Cape of Good Hope due to the threat posed by the Houthi rebels in the Red Sea region, incurring greater time and financial costs. However, it seems this waterway is finally on the verge of reopening.
Recently, the Suez Canal Authority convened a meeting of representatives from 20 major shipping companies and agencies to discuss developments in the Red Sea. The Authority aimed to consult on "future transit plans and timelines" and invited shipping companies to conduct trial voyages. According to the Authority's report, from July to October, cargo throughput through the Suez Canal increased by 10% year-on-year, while the number of transit vessels increased by 2%, indicating that larger vessels are passing through the canal this year compared to last year. The report states that over 4,400 vessels transited the canal in the four months, with 229 vessels returning in October alone. CMA CGM has recently deployed two large vessels for transit through the Suez Canal. During its latest sea trials, CMA CGM's 17,000 TEU container ships transited the Suez Canal, but 23,000 TEU ultra-large container ships have not yet returned.
The Suez Canal Authority stated in its meeting summary that CMA CGM announced plans to increase its transit routes through the Suez Canal. Other shipping companies are continuing to monitor developments, with Mediterranean Shipping Company (MSC) predicting that "southbound vessels may quickly resume passage in the near future."
As the fragile ceasefire in the Gaza Strip continues, the Houthi rebels in Yemen have indicated they have ceased attacks against Israel and Red Sea shipping. According to the Associated Press, in an undated letter posted online by the Houthis to Hamas's Qassam Brigades, the group clearly signaled a cessation of operations. In summary, the letter, formally sent by the Yemeni military (the Houthi-controlled government) to the Qassam Brigades, expresses fraternal friendship and support, and emphasizes that they will resume military operations if Israel resumes its military campaign in Gaza. From another perspective, the Houthis previously only claimed they would no longer attack non-Israeli targets, but this latest announcement is tantamount to the first formal declaration by the Houthis of a suspension of naval attacks against Israel and the lifting of the so-called "maritime blockade" of Israeli ports. The probability of resumption of navigation has certainly increased. This article presents facts as well as various positions and viewpoints; please pay attention to the distinctions and the multifaceted presentation. Let's wait and see, and rely on further developments.
While shipping companies have expressed relatively positive sentiments, getting them back to the Suez Canal is not a simple matter. Industry insiders point out that the high cost of marine insurance for transiting the region is the main reason why many shipping companies are delaying the resumption of transit through the Suez Canal. Although the Israeli-Palestinian conflict has temporarily eased, the Middle East remains a powder keg, and no one can guarantee it won't explode in the future. Insurance companies are unwilling to bear this risk and will charge high premiums. Therefore, for many shipping companies, transiting through the Suez Canal is currently not economically viable. The reopening of the Suez Canal on a large scale would have a significant impact on the current shipping market. For container shipping, any move back to the much shorter Suez route would free up an additional 130 vessels (equivalent to 5.9% of global capacity) for redeployment, triggering a dramatic shift in the freight and chartering markets. The global shipping industry is already experiencing a relative overcapacity; the large-scale reopening of the Suez Canal would further intensify freight rate competition.
However, for textile companies, while freight rates directly affect costs, they are not the most crucial factor. The biggest problem they face is a lack of market demand. Affected by the US-China tariff war and supply chain restructuring, textile and apparel exports continued to be under pressure in October. According to the latest data from the General Administration of Customs, textile and apparel exports in October totaled US$22.26 billion, a year-on-year decrease of 12.6%. Textile exports reached US$11.26 billion, down 9.0%, and apparel exports reached US$11 billion, down 16.0%. From January to October, China's cumulative textile and apparel exports reached US$243.94 billion, a year-on-year decrease of 1.6%.
However, the good news is that, driven by positive news from Sino-US trade negotiations, China's textile exports to the US may rebound in the last two months of the fourth quarter, and exports for the whole year are expected to show a stable trend.
