The return of container shipping to the Red Sea is ramping up, according to analysis from Xeneta. This blog focuses on the major fronthaul trades from Far East to North Europe and Mediterranean, which are directly impacted operationally by diversions away from Suez Canal and around Cape of Good Hope.

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Operational updates indicate 2026 will be the year that container shipping returns to the region at large. Last week Maersk announced full loop transits via Suez Canal would return for its MECL1 service, with MAERSK DENVER completing a successful test voyage. With Maersk being one of the more risk averse carriers, this is a significant moment. Other carriers including CMA CGM have already announced eastbound and westbound schedules returning to Suez Canal on services like the INDAMEX.

Xeneta data shows there is still a long way to go before normality returns. The monthly average offered capacity passing through the Suez Canal in 2023 on Asia-Europe services was 4.1m TEU. In 2025, that monthly average offered capacity was just 292K TEU.

Long-Term Rates Decline at Start of 2026

The start of 2026 has brought lower long term rates for shippers on the Europe-bound fronthauls from Far East. Average long term rates entering validity in the last three months between the Far East and Mediterranean were down 25% on 21 January compared to the end of 2025 at USD 2,308 per FEU. A smaller drop of 10% is found on the trade into North Europe, with average long term rates standing at USD 2,010 per FEU. This means both trades have reached their lowest level since 2023.

Compared to the beginning of 2025, average long term rates into North Europe are down 27%. The difference in the magnitude of decline across the two European fronthauls is a reflection of how long term rates developed in the second half of 2025. While rates into North Europe fell in April and remained low, those into the Mediterranean rose consistently between June and October. By mid-October, long term rates into the Mediterranean were USD 1,160 per FEU higher than into North Europe. New 2026 contracts have seen this spread narrow to USD 300 per FEU.

Spot Market Versus Long-Term Contracts

At the end of 2025, average spot rates had fallen below long term rates. However, long term rates entering validity in Q1 2026 are coming in lower than the current spot market. On 21 January, average long term rates from the Far East to Mediterranean stood USD 2,200 per FEU lower than the average spot rate. Into North Europe, the spread is a lesser USD 770 per FEU.

A significant gap between spot and long rates on these trades clearly indicate expectations on both sides of the negotiating table for a weakening market in 2026. However, this spread is still a high starting point. If there is another major disruption or Black Swan event causing spot rates to spike, cargo being moved against long term contacts could be vulnerable.

Risks and Considerations for Shippers

If there is a largescale return of container ships to the Red Sea, there could be an interim period of disruption and port congestion as global supply chains adjust to new schedules. This transition could take a number of months. The geo-political situation also remains fragile. Only this week, President Trump threatened (then rescinded) further tariffs against EU nations as a lever in efforts to gain control over Greenland.

Expectations for the rest of the year is for a softening of the market, in part due to a return to the Red Sea freeing up large amounts of capacity. The expectation of a largescale return to the Red Sea, in the absence of another black swan event, means falling freight rates. Shippers should be aware that rates still have a long way to fall before they reach the levels of 2023. Average long term rates from Far East to Mediterranean on 21 January were up 45% compared to the end of 2023. Into North Europe, long term rates were up an even bigger 58%.

It would be foolish for shippers to leave money on the table during new long term contact negotiations, but they should be mindful of risk. If freight rates continue to fall, shippers need to make sure surcharges related to Red Sea are clearly defined and removed/reduced as the situation develops. They can also insert trigger points to request renegotiation if a Red Sea return gathers pace. Similarly, they can consider mechanisms to protect supply chains, such as index-linked contracts or exchange-traded futures.

Striking the right price is only half the battle. Shippers must have solid operational data, including schedule reliability and transit times, to select the right carrier or freight forwarder and hold them to account.

Source: IndexBox Market Intelligence Platform