HSBC has cut its freight rate forecasts for container shipping, warning that a gradual resumption of Red Sea transits is likely to accelerate the sector’s downcycle after a prolonged period of disruption-driven strength.
In a note to clients, the bank said “cautious resumptions” of Red Sea trading are beginning to unwind the longer routings around the Cape of Good Hope that have supported freight rates and vessel demand over the past year. As carriers slowly return to the Suez Canal, effective supply is set to rise, putting renewed pressure on spot and contract rates.
The downgrade follows AP Moller-Maersk’s announcement that it will resume sailings on its India, Middle East–US East Coast service via the Red Sea and Suez Canal from 26 January. HSBC views the move as an important signal that liner confidence in the region is improving, even if returns remain selective and phased.
“While the security situation remains fluid, incremental redeployment back to the Red Sea shortens voyage times materially,” HSBC said. “This effectively adds capacity back into the market at a time when demand growth remains modest and the orderbook is still elevated.”
During much of 2024 and early 2025, attacks by Yemen’s Houthi rebels forced most major container lines to divert vessels around southern Africa, adding up to two weeks to round voyages between Asia and Europe or the US East Coast. The longer distances absorbed capacity and helped offset weak cargo demand, lending unexpected resilience to freight rates.
HSBC now expects that dynamic to reverse. The bank has lowered its average container freight rate assumptions for 2026 and 2027, citing faster vessel turnaround times, easing congestion and intensifying competition among carriers as capacity returns to core trades.
The analysts cautioned that a full-scale return to the Red Sea is unlikely in the near term, with carriers expected to maintain a “wait-and-see” approach and deploy armed guards, higher insurance cover and selective routing. However, even partial normalization could have an outsized impact on market balance.
HSBC also highlighted that Maersk’s move could prompt other liners to follow, particularly on east–west routes where schedule reliability and cost efficiency are critical. “Once one major operator re-enters, the competitive pressure on peers increases,” the bank said.
As a result, HSBC maintains a cautious outlook for listed container shipping companies, arguing that earnings risk is skewed to the downside as geopolitical risk premiums fade and structural oversupply reasserts itself.
