Shipping rates outlook at risk as Red Sea return + boosted fleet capacity hang in balance

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What we're tracking today

TODAY: The shipping supply glut: Suez return meets a record orderbook

Good morning, folks. The news cycle slowdown continues as we inch closer to the new year, leaving us with a brisk read this morning.

In our top story today, we take a look at a perfect storm scenario for the global shipping industry, as it braces for a possible supply glut by 2027 amid an expected record-breaking wave of new ship deliveries coinciding with a potential full-scale return to the Suez Canal.

Why does it matter? If carriers trade the current long-haul routes around Africa for the shorter Red Sea transit just as fleet capacity hits an all-time high, Bimco warns we could see a 10% drop in global ship demand.

ALSO- We take a dive into Saudi’s play to dominate the regional data center market by leveraging its low-cost solar power and land resources, as well as pushing for new trans-continental connections that bypass the Red Sea and Egypt’s bottlenecks.

Watch this space

SHIP REPAIRS — Is Egypt making a USD 200 mn play for local ship repair? A consortium of local and foreign private-sector players, led by the Transport Ministry, is planning to deploy USD 200 mn into building a ship repair and construction hub at Damietta Port, Chamber of Engineering Industries Shipbuilding and Repair head Ibrahim El Desouki told Al Boursa. The project aims to be fully operational within three years once construction begins.

Why it matters: This isn't just about building docks — it's a strategic push to capture some of the high-margin MRO (Maintenance, Repair, and Overhaul) spend of the 26k+ vessels transiting the region annually. Currently, most major repairs bypass Egypt for more established yards in the Mediterranean and Red Sea, Desouki added.

DATA POINT- Global demand for ship-building and repair services is projected to surge 7% annually over the next decade. Meanwhile, Egypt is looking to grow its local shipbuilding and repair sector to a value of USD 500 mn over the next five years.

SHIPPING — More CMA CGM ships brave the Red Sea route:

Two containerships operated by logistics giants CMA CGM have transited through the Suez Canal outside of fixed schedules, in yet another signal that the French shipping giant is serious about its return to the Red Sea route. The move comes after the company rerouted its India America Express back to the Red Sea earlier this month.

BUT- It’s too early to say it's a full comeback. This isn't a return to normalcy just yet, with carriers rather testing the waters with limited transits as calm builds up. However, the threat profile from the Houthis has remained high, especially as a fragile ceasefire in Gaza makes conditions unpredictable, EOS Risk’s Martin Kelly told EnterpriseAM.

Market watch

Oil prices remained largely unchanged this morning after a five-day rally driven by robust economic data from the US and concerns of a supply crunch, Reuters reports. Brent crude futures shed USD 0.01 to trade at USD 62.37 / bbl as of 03:26 GMT, while US West Texas Intermediate (WTI) rose USD 0.01 to USD 58.39 / bbl.

Baltic index remains on a downward spiral: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 4.5% to 1,889 points on Tuesday. The capesize slipped 6.2% to 3,337, while the panamax index dipped 1.3% to 1,266 points, and the smaller supramax index eased by 31 points to 1,162.

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A Red Sea return could tilt the scales of global ship supply and demand

The container shipping market is bracing for a supply glut in 2027, as the potential full return to the Suez Canal meets a record-breaking wave of new ship deliveries, shipowner association Bimco said in a report seen by EnterpriseAM. The possibility of a return to Suez Canal routings “looms large over the market outlook,” putting the global ship demand on a trajectory to fall by 10%, Bimco said.

The outlook: Bimco expects a close supply and demand balance in 2026, with supply growing 3% and demand at 2.5–3.5%. However, supply is expected to outpace demand in 2027 as more new ships are delivered.

DATA POINT- Fleet capacity is slated to jump to over 36 mn TEUs by the end of 2027, largely driven by a 20% growth in vessels with a capacity of more than 12k TEU.

Bimco also flagged some macro risks: If the US AI bubble bursts, global container volume growth could drop 1 percentage point below current forecasts. This is combined with a lag in retail sales volumes in the US, EU, and China — “all growing at less than 2% y-o-y over the last three months,” says the report.

Why does this matter? If ships return to the shorter Suez route, they complete voyages faster, effectively increasing available capacity. If that happens while new ships are still being delivered at the current pace, rates could crash.

Serious enough to test the waters? France’s CMA CGM and Maersk recently sent vessels through the Bab El Mandeb Strait for the first time in years — but nowhere near ready to dive in.

Dig deeper: EnterpriseAM sat down with Martin Kelly, head analyst at EOS Marine, part of EOS Risk Group, to explore how serious global shipping giants are about returning to the Red Sea.

Saudi poised to lead the Gulf’s data center boom

Saudi Arabia is poised to become the GCC’s primary destination for data center investment over the next few years, Fitch Solutions’ research unit BMI said in a recent note. The Kingdom leads in planned data center capacity alongside its neighbor, the UAE — both boasting some 75% of current capacity in the region.

Cheap power and ample land are main drivers

Saudi Arabia’s pitch to become a data center hub is backed in part by the country’s lowelectricity costs — a fraction of the global average — especially from substantial solar plants that power AI data centers, as well as large swaths of available land. An example of the former is the Al Shuaiba solar field, which produces 600 MW of electricity for just over a cent per kilowatt-hour — nearly a twentieth of the cost at the UK’s in-the-works Hinkley Point C nuclear power facility.

Specialized chips are also paramount

These chips are made for inference — and that’s exactly what they do: Aramco Digital’s agreement with AI player Groq earlier this year granted the KSA access to hardware specifically designed for inference workloads, the process through which AI draws conclusions from brand-new data. This positioning allows Saudi Arabia to become an inference-as-a-service player, situating it at the floor of AI inference cost.

This drastically reduces the cost of producing one token, the fundamental unit of AI output, at a cost much lower than what customers pay. This could enable Riyadh to become an exporter of these tokens to the world. PIF-backed Humain managed to sell output tokens for approximately half the going market price, Humain CEO Tareq Amin told The Economist.

Could a “data landbridge” put the Saudis ahead?

Red Sea disruption could prompt an overland logistics pivot: The report highlighted that Red Sea disruptions could also be a boon for cities overlooking the Gulf waters, such as Dammam and Dubai, “as data center operators and investors seek alternative routes and stable locations.” Issues in the Red Sea — not least of which involved severed undersea cables from anchor dragging — reveal more enticing potential for interconnecting the Gulf with West Asia, bypassing the Red Sea and Egypt.

A landbridge… for data: The Red Sea’s relative vulnerability and its status as a potential data chokepoint could work in Riyadh’s favor, as it integrates fiber-optic cables into its USD 7 bn Saudi Landbridge project. The project spans 1.5k km of rail, connecting Riyadh, Jeddah, and Dammam, and the primary developer Saudi Railway Company clinched a Carrier Service Provider license earlier this year. This development could potentially allow the company to provide telecommunications infrastructure capacity — such as fiber optics — to licensed individual service providers.

One hurdle to overcome? Water…

Scaling up data center infrastructure necessitates proportional water consumption for cooling purposes, with Saudi Arabia’s data centers reportedly requiring 15 bn liters of water last year. The entire Gulf’s data centers are expected to consume upwards of 426 bn liters of water annually by 2030.

… what are the options? Some analysts have pointed to liquid cooling as a water-conscious method, as it can potentially cut data center water consumption by up to 92%. This method still imposes steep Capex costs, entails piping and other components, and raises concerns over leaks, contamination, and convoluted servicing needs.

That means Saudi needs to figure out a cooling alternative: Saudi data centers with hyperscaling capacity primarily rely on conventional air cooling systems, which typically consume significant amounts of water, Data Center Operations Engineer Abdullah Mahrous told EnterpriseAM. Higher-capacity data centers are more likely to use chillers, which, albeit very efficient in power terms, are water-intensive.

Liquid cooling does not rely on water — it uses a dielectric fluid instead. However, the technique is yet to be employed on a large scale in Egypt or the Gulf states, Mahrous said. This method could entail direct-to-chip or immersion cooling methods.

Egypt’s Beheira to get agricultural processing hub

Al Amal to pour c. EGP 600 mn into new processing hub

Egypt-based Al Amal Agricultural Crops plans to invest between EGP 500-600 mn to establish a sorting and packaging facility in Beheira, Chairman Ragab Shehata tells EnterpriseAM. The 25k sqm facility is designed to deepen the company’s control over the value chain for its core products — dates, raisins, peanuts, sesame, and beans — replacing reliance on third-party facilities. The company is also exploring contract farming to secure the stable supply needed to feed its target of 30% annual export growth, he added.

Organic funding: The company plans to finance the project entirely from its own balance sheet. This highlights a critical competitive advantage for exporters in the current climate — the ability to fund capex through USD liquidity, bypassing the prohibitive cost of bank borrowing that is currently stifling expansion for purely domestic players.

Humain awards MIS a SAR 1.9 bn contract for an AI data center

Al Moammar Information Systems (MIS) will design and build an AI-focused data center for Humain under a contract valued at over 155% of its 2024 revenue, it said in a disclosure to Tadawul. The awarded contract is valued at about SAR 1.9 bn, based on our calculations —

MIS has a few data center projects under its belt: MIS is expanding Saudi Fransi Capital’s data center capacity by 64 MW at a cost of SAR 1.95-2.5 bn, and has signed a framework agreement to add up to 112 MW in capacity to Saudi Data Center Fund 1’s existing facilities.

Calendar

2026

JANUARY

19-23 January (Monday-Friday): World Economic Forum Annual Meeting, Davos, Switzerland.

21-22 January (Wednesday-Thursday):IOSA Operator Workshop, Dubai, UAE.

FEBRUARY

3-4 February (Tuesday-Wednesday): Middle East Bunkering Convention, Dubai, UAE.

4-5 February (Wednesday-Thursday): Breakbulk Middle East, Dubai, UAE.

4-5 February (Wednesday-Thursday): MRO Middle East, Dubai, UAE.

9-11 February (Monday-Wednesday): Future Warehouses & Logistics, Dubai, UAE.

10-12 February (Tuesday-Thursday): Sustainable Aviation Future MENA, Dubai, UAE.

12 February (Thursday): Technical Seminar on Marine Biofuels, London, UK.

15-17 February (Sunday-Tuesday): World Advanced Manufacturing Logistics Summit and Expo, Riyadh, Saudi Arabia.

17-19 February (Tuesday-Thursday): World Legal Symposium (WLS), Warsaw, Poland.

20-22 February (Friday-Sunday): Dubai Freight Camp, Dubai, UAE.

24-25 February (Tuesday-Wednesday): Green Shipping Summit, Athens, Greece.

25-27 February (Wednesday-Friday): Air Cargo Africa, Nairobi, Kenya.

25-27 February (Wednesday-Friday): Air Law Treaty Workshop Tanzania (Third Edition), Dar es Salaam, Tanzania.

MARCH

5-6 March (Thursday-Friday): CargoIS Forum, Miami, United States.

9-13 March (Monday-Friday): WCA Worldwide Conference, Singapore.

10-12 March (Tuesday-Thursday): World Cargo Symposium, Lima, Peru.

18-19 March (Wednesday-Thursday): IntraLogisteX, Birmingham, United Kingdom.

18-19 March (Wednesday-Thursday): Green Marine Transport Conference, Amsterdam, The Netherlands.

26 March (Thursday): Gulf Ship Finance Forum, Dubai, UAE.

APRIL

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

MAY

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

12-14 May (Tuesday-Thursday):Aviation Energy Forum (AEF), Paris, France.

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