What does a ceasefire in Gaza mean for Suez Canal traffic? Egypt is set to receive a fleet of vessels from the French shipping line CMA CGM today, according to a Suez Canal Authority statement, giving us reason to believe the ceasefire in Gaza has set the stage for Suez Canal traffic returning to normal.

Some expect Suez Canal traffic to normalize within weeks, including Suez and Red Sea Navigation Chamber head Abdel Qader Gaballa, who told EnterpriseAM that some shipping lines could return to the Red Sea in two to three weeks, assuming the recently brokered Gaza truce holds. That includes DP World, whose deputy chief executive Yuvraj Narayan told Reuters that ships with no Israeli links could return to the Red Sea “in as little as two weeks.”

The news shortly follows Yemen’s Houthis saying they’ll now only target Israeli-linked ships following the ceasefire, according to statements sent from the armed group to shipping companies.

Remember: Red Sea disruptions cost the public purse USD 7 bn in Suez Canal revenues in 2024, marking a roughly 60% y-o-y fall from the year before.

With traffic returning to the waterway, shipping costs should also fall, with those in the industry expecting a reduction in ins. and escort costs that had burdened companies in recent months, Gaballa told us. The return of vessels to the Red Sea could result in a dip of 20-25% in sea freight prices, Narayan said.

Shipping lines should be keen to return, given that the alternative Cape of Good Hope route has proven too costly for shipping agencies. “Shipping companies burned 30% more fuel navigating the Cape of Good Hope during the crisis, sharply increasing costs and stretching sailing times to as long as 80 days,” International Federation of Freight Forwarders Association’s Egypt VP Ahmed Moustafa told EnterpriseAM.

But industry insiders told EnterpriseAM that we shouldn’t get ahead of ourselves just yet, as “it is difficult to assess the situation within hours of the ceasefire agreement in Gaza,” a senior maritime sector source told EnterpriseAM. There are also other wildcards, like Donald Trump’s threat to take over the Panama Canal that could shake up the industry in ways we can’t predict, our source added.

Persuading shipping lines to route through the waterway won’t happen overnight, because “attracting shipping agencies back will require aggressive marketing, incentives, and a strong focus on ensuring safe passage,” Moustafa argued. Action must be taken quickly as well, with the world’s top shipping companies already investing in refueling infrastructure in South Africa — efforts that Egypt should counter with its own investments in refueling stations and logistics services, Moustafa added.

Apart from just bringing back traffic to its previous levels, Egypt should take advantage of changes to global commodity chains, Moustafa said. As companies move their production out of China, Egypt is in a position to “fully exploit its geographical advantage” to establish Egypt as an “indispensable logistics hub.” On top of this, “there’s an opportunity here to capitalize on the Panama Canal crisis and position Egypt as the top choice for shipping agencies,” he said.

When traffic returns to the Suez Canal, Egypt will be ready to handle more ships, with a new 10-km extension near Little Bitter Lake set to go live in 1Q 2025 following successful tests last week, expanding the two-way section to 82 km and boosting capacity to accommodate rising trade flows as global shipping lines gradually return to the Red Sea, according to a Suez Canal Authority statement.

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