Shipping rates are expected to come under further pressure when the Suez Canal route is reopened.Global shipping rates are already falling due to the brewing trade war between the Trump administration and most of the rest of the world.Container lines, in particular, should brace for a drop in demand once the rush to ship cargoes ahead of the tariffs taking effect recedes, says Fotios Katsoulas, a shipping analyst at S&P Global Commodity Insights.A return to the Suez Canal route will add further pressure as more vessel capacity will be freed up.Diverting vessels around the Cape of Good Hope adds 14 days for northern Europe, 18 for southern Europe, and a 30% rise in fuel consumption compared to the route through the Suez Canal, according to Rajeev Master of consultancy GEP.Industry analysts estimate that the effective global shipping capacity shrank by about 20% during the height of the Red Sea crisis due to the longer transit time.The Houthi attacks on shipping in the Red Sea were not the only factor affecting the availability of vessels.Transit volumes through the Panama Canal were affected by a drought, resulting in a 24% drop in vessel transits during the 2024 financial year. The canal has subsequently returned to near-normal operations, but the spectre of future droughts continues to be a risk. The canal authority has plans to build a new dam to supply water to the canals during drought conditions. ER
