The Suez Canal, one of the world’s most critical maritime chokepoints, is experiencing a dramatic collapse in traffic as shipping companies abandon not just the Red Sea but the entire Middle East region. As of early 2026, canal transits remain roughly 60% below where they stood in the corresponding week of 2023, according to BIMCO chief shipping analyst Niels Rasmussen — and that figure persists even after more than 100 days without a single Houthi attack on commercial vessels. The problem is no longer just Yemeni militants with anti-ship missiles. It is a broader regional conflagration that has made the calculus simple for the world’s largest carriers: the savings from transiting the Suez Canal are not worth the risk of sailing anywhere near the Middle East. The March 2026 escalation drove the point home with brutal clarity.
On March 1, 2026, CMA CGM and Hapag-Lloyd suspended all transits through both the Suez Canal and the Strait of Hormuz following a series of US-Israeli strikes against Iran and subsequent Iranian retaliatory strikes. Maersk quickly followed, rerouting its own vessels away from the Suez Canal and the Bab el-Mandeb Strait. This reversed what had been a cautious recovery — just weeks earlier, carriers had been tentatively returning to the canal. The reversal has sent shockwaves through global supply chains, inflated shipping costs, and put Egypt’s projected return to $10 billion in annual canal revenue in serious jeopardy. This article examines the data behind the traffic decline, the financial toll on Egypt, the cost of rerouting around Africa, and what the collapse of Suez transit confidence means for consumers and global trade.
Table of Contents
- Why Are Ships Avoiding the Suez Canal and the Entire Middle East Region?
- The Financial Toll on Egypt’s Canal Revenue
- What Rerouting Around the Cape of Good Hope Actually Costs
- Container Ships vs. Tankers — Who Is Still Using the Canal?
- The Brief Recovery That Wasn’t
- What This Means for Consumer Prices and Supply Chains
- Can the Suez Canal Recover, and What Would It Take?
- Conclusion
- Frequently Asked Questions
Why Are Ships Avoiding the Suez Canal and the Entire Middle East Region?
The short answer is that two years of accumulated risk have fundamentally altered how shipping companies evaluate Middle East routes. Between November 2023 and September 2025, Houthi forces attacked or hijacked commercial ships 99 times, according to Lloyd’s List. The last vessel targeted was the Minervagracht on September 29, 2025, and the Houthis announced a suspension of their maritime operations 43 days later. But the cessation of attacks did not trigger the stampede back to the canal that many expected. container shipping transits through the Suez Canal in the fourth quarter of 2025 were still down 86% compared to 2023 levels, per BIMCO data.
The reason is straightforward: shipping companies and their insurers don’t trust the calm. A Houthi ceasefire means little when the broader Middle East security environment has deteriorated. The March 2026 US-Israeli strikes against iran and Iran’s retaliatory response confirmed what many in the industry already feared — that the risk envelope extends well beyond Yemen. When CMA CGM, Hapag-Lloyd, and Maersk all suspended Suez transits within days of each other in early March, it was not a knee-jerk reaction. It was the industry acknowledging that the entire eastern Mediterranean-to-Indian Ocean corridor has become unreliable. On March 4, 2026, daily transits through the canal fell to just 23 crossings, a 53% decline from the previous day and well below the 7-day average of 38.
The Financial Toll on Egypt’s Canal Revenue
Egypt’s Suez Canal Authority has watched its most reliable revenue stream evaporate. Canal revenue plummeted to approximately $4 billion in 2024, down from a historic high of $10.25 billion in 2023, according to the Maritime Executive. That is a loss of more than $6 billion in a single year for an economy already under severe strain from inflation, currency devaluation, and mounting debt obligations. There were signs of recovery heading into 2026.
Egypt’s canal revenue grew 17.5% in late 2025, and officials projected a return to $10 billion in annual revenue by late 2026, according to EgyptToday. However, the March 2026 escalation has thrown that target into doubt. If the three largest container carriers — Maersk, CMA CGM, and Hapag-Lloyd collectively control a dominant share of global container capacity — are unwilling to transit the canal, Egypt’s revenue projections are aspirational at best. The canal authority can lower transit fees to attract smaller operators, but price cuts cannot compensate for the absence of the mega-ships that generate the bulk of toll revenue. Egypt’s government faces a difficult reality: the canal’s earning potential is now hostage to geopolitical forces entirely outside Cairo’s control.
What Rerouting Around the Cape of Good Hope Actually Costs
The alternative to the Suez Canal is the Cape of Good Hope at the southern tip of Africa, and it is not cheap. Rerouting around the Cape adds approximately 3,500 to 4,000 nautical miles to a typical Asia-to-Europe voyage, consumes an additional 1,300 tons of fuel per trip, and costs upwards of $900,000 in extra expenses per voyage, according to estimates from DocShipper and marine Insight. Returning to the Suez route saves carriers 10 to 14 days of transit time, per the Ecofin Agency. The rerouting surge is visible in the data.
Cape of Good Hope crossings hit 89 on March 8, 2026 — an 89% increase from the previous day — as the March escalation forced carriers southward in a hurry. For a single large container ship making 10 to 12 round trips per year between Asia and Europe, the annual cost premium of Cape routing over Suez routing can run into the tens of millions of dollars. Those costs do not vanish. They flow downstream to importers, retailers, and ultimately consumers in the form of higher prices and longer delivery times. For time-sensitive goods — fresh produce, pharmaceuticals, automotive components built for just-in-time manufacturing — the extra two weeks at sea can mean spoilage, production delays, and contractual penalties.
Container Ships vs. Tankers — Who Is Still Using the Canal?
Not all vessel categories have abandoned the Suez Canal equally, and the split reveals how risk tolerance varies across shipping segments. Container shipping has been hit hardest, with fourth-quarter 2025 transits down 86% compared to 2023. Container carriers operate on fixed schedules with high-value consumer goods, and the reputational and financial cost of a single vessel being attacked or delayed is enormous. Their insurance premiums for Red Sea transit have skyrocketed, and many underwriters have simply declined to cover the route at any price.
Product tankers, by contrast, saw only a 19% decline in Suez transits during the same period, according to BIMCO. The economics are different for tankers: freight rate premiums for vessels willing to transit the canal can be substantial, and tanker operators — often smaller and more opportunistic than the major container lines — have been willing to pocket the premium in exchange for the risk. This creates a two-tier system in which the canal still functions for certain cargo types while being effectively abandoned for containerized trade. The distinction matters for consumers: the goods most likely to see price increases and delivery delays are manufactured products shipped in containers, not crude oil or refined petroleum products.
The Brief Recovery That Wasn’t
For a few weeks in late 2025 and early 2026, there was genuine optimism that Suez traffic would normalize. CMA CGM announced the return of its MEDEX and INDAMEX services to Suez routes starting in January 2026. In December 2025, Maersk’s vessel Maersk Sebarok became the first Maersk ship to transit the canal since early 2024, a milestone that the industry watched closely as a bellwether of confidence. Smaller carriers began trickling back, and Egypt’s canal authority pointed to improving revenue figures as evidence that the worst was over. The March 2026 Iran escalation demolished that narrative in a matter of days.
CMA CGM and Hapag-Lloyd suspended not just Suez transits but also passage through the Strait of Hormuz, the narrow waterway through which roughly 20% of the world’s oil supply flows. Maersk followed with its own suspension. The lesson for the industry was unambiguous: regional security conditions can deteriorate faster than shipping schedules can adapt. Carriers that had spent months cautiously testing the waters — literally — found themselves scrambling to reroute vessels that were already en route. The whiplash has made future recovery attempts even harder, because every carrier executive now knows that a return to Suez is a bet that can unravel overnight.
What This Means for Consumer Prices and Supply Chains
The Suez disruption is not an abstract geopolitical storyline. It has concrete effects on the price and availability of goods worldwide. The extra $900,000-plus per voyage in Cape rerouting costs is multiplied across thousands of sailings per year.
Shipping consultancies have estimated that the aggregate cost to the global container shipping industry runs into the billions of dollars annually. Those costs are ultimately borne by importers, who pass them to retailers, who pass them to consumers. European importers of Asian manufactured goods have been hit especially hard, as the Asia-to-Europe route is the one most directly affected by the Suez shutdown.
Can the Suez Canal Recover, and What Would It Take?
Any meaningful recovery depends on two conditions that are currently out of reach: a durable end to Houthi maritime threats and a de-escalation of the broader Iran conflict. The Houthis suspended attacks after September 2025, but that pause proved insufficient to lure back the major container carriers — the 60% traffic decline persisted through it.
The March 2026 Iran escalation demonstrated that even if the Houthi threat is contained, other regional flashpoints can close the corridor just as effectively. Egypt’s goal of returning to $10 billion in annual canal revenue by late 2026 now looks unrealistic unless there is a comprehensive regional ceasefire that the shipping industry and its insurers find credible. Until then, the Cape of Good Hope will remain the default route for the world’s largest carriers, and the Suez Canal will operate well below its capacity — a $23 billion infrastructure asset functioning at a fraction of its potential.
Conclusion
The Suez Canal’s traffic collapse is a story about compounding risk. Two years of Houthi attacks drove the initial diversions. A failure to recover even after attacks stopped revealed deep institutional skepticism. And the March 2026 Iran escalation turned skepticism into conviction that the entire Middle East maritime corridor is unreliable.
The numbers tell the story: 60% below normal traffic, container transits down 86%, Egypt’s revenue cut by more than half, and rerouting costs exceeding $900,000 per voyage. For consumers, the practical impact is higher prices and longer waits for imported goods, particularly manufactured products from Asia. For Egypt, the loss of canal revenue compounds an already precarious economic situation. And for the shipping industry, the Suez crisis has accelerated a broader rethinking of global trade routes and supply chain resilience. The canal will eventually recover — it is too strategically important not to — but that recovery is now measured in years, not months, and depends entirely on geopolitical developments that no shipping executive or Egyptian official can control.
Frequently Asked Questions
Is the Suez Canal completely closed to shipping?
No. The canal remains open and operational. However, the world’s largest container carriers — including Maersk, CMA CGM, and Hapag-Lloyd — have suspended transits as of March 2026 due to the broader Middle East conflict. Some smaller operators and product tankers continue to use the canal, but overall traffic is 60% below 2023 levels.
How much does it cost to reroute a ship around Africa instead of using the Suez Canal?
Rerouting via the Cape of Good Hope adds approximately 3,500 to 4,000 nautical miles, burns an extra 1,300 tons of fuel, and costs upwards of $900,000 per trip in additional expenses. It also adds 10 to 14 days to the voyage.
How many times did the Houthis attack ships in the Red Sea?
Between November 2023 and September 2025, Houthi forces attacked or hijacked commercial vessels 99 times, according to Lloyd’s List. The last vessel targeted was the Minervagracht on September 29, 2025.
How much revenue has Egypt lost from reduced Suez Canal traffic?
Suez Canal revenue fell from a record $10.25 billion in 2023 to approximately $4 billion in 2024 — a loss of more than $6 billion. Revenue showed a 17.5% improvement in late 2025, but the March 2026 escalation threatens Egypt’s projected recovery to $10 billion by late 2026.
Will shipping return to the Suez Canal in 2026?
A full recovery in 2026 appears unlikely. Even after 100-plus days without Houthi attacks, traffic remained 60% below normal. The March 2026 Iran conflict escalation caused major carriers to reverse their cautious return to Suez routes, and insurers remain unwilling to provide affordable coverage for the corridor.