Suez Routing Now Covers 63% of Far East-Europe Capacity as Reliability Sticks at 68%

The Analysis

Flexport's update carries one line that reads like a milestone and four numbers that take the milestone apart. About 63 per cent of deployed Far East-to-Europe capacity now sails through Suez. Split the single figure and it stops being single: 70 per cent on Far East-Mediterranean, 58 per cent on Far East-North Europe. MSC went back in August. Maersk and Hapag-Lloyd's Gemini Cooperation began returning services in the third quarter, with Maersk targeting every service by March 2027. Ocean Alliance has restored six. ZIM has not. And underneath all of it sits the number that never made the headline: schedule reliability for the largest networks was 68 to 69 per cent in August and September, against a 90 per cent goal.

Begin with what 63 per cent is a percentage of. Deployed capacity is slots multiplied by voyages, which means the count is weighted by ship size and not by how many services came back. One large loop restored to Suez moves this number further than four mid-size services put together. That matters because the same note says Ocean Alliance restored six services. Six is a count of services. It is not six of anything you can set against 63 per cent. The note prints both, side by side, and a reader comes away thinking six services is most of the gap. It might be a fifth of it. It might be half. The note does not say, and you cannot do the division without the slot counts.

Then the split, which is the more useful pair of numbers in the whole update. Seventy on the Mediterranean, fifty-eight on the north. Twelve points of daylight between two lanes that load at the same Asian terminals. If your boxes go to Barcelona, Genoa or Valencia you are inside the seventy. If they go to Rotterdam, Antwerp or Hamburg you are inside the fifty-eight, and roughly four boxes in ten of what you thought was a normal weekly rotation is still going the long way. Same contract, same booking rhythm, different ocean.

Why the twelve points, the note does not explain, so here is my read and you can price it as a read. Mediterranean strings are shorter end to end, so a detour costs a larger share of the round voyage and the case for coming back is louder there. Mediterranean ports are also where a lot of Asian volume enters southern Europe before it moves north by truck or short sea, which puts the slot economics in a better place. North Europe is the deeper, slower, more expensive string to re-phase, and it is the one where the restored services and the Cape services run into the same terminals. Assume the south comes back first and the north comes back last, and assume the last ten points are the hardest ten.

Put it on a book. Assume 40 FEU a month into North Europe, split the way the market is split. That gives 23 boxes through Suez and 17 around the Cape. A Mediterranean book of the same size splits 28 and 12. Now the part that bites: the two groups do not arrive on the same day, and the gap is not small print. Seventeen boxes out of forty is 42 per cent of your month landing on a schedule that is a fortnight behind the other 58 per cent, and your warehouse plan has one date on it.

Here is the number that should have been the headline. Sixty-eight to sixty-nine per cent on-time across August and September for the largest networks, against a 90 per cent goal. On the 40-box month that is 27 boxes on time and 13 late. At 90 per cent it is 36 and 4. Nine boxes a month, ten or eleven months a year, close to a hundred boxes of variance annually that your safety stock is quietly financing. The carrier's target is not your service level, and the twenty-two point gap between the two is the actual product you are buying when you sign.

Why the reliability number will not climb at the same speed as the capacity share. A proforma is a timetable written for one rotation. Move a service from the Cape back to Suez and the rotation shortens, every port call in the string shifts, and the terminal that had berth windows built around the old arrival pattern now serves two patterns: the restored string and the strings that never left. Berth windows are allocated against history, not auctioned, so in the first two or three voyages of a restored service the window is an informed guess. A schedule that is 68 per cent on time is a schedule where your box has roughly one chance in three of missing its allocated slot, and one in three is precisely the rate at which a customer stops believing the ETA and starts building their own buffer.

The thing the coverage skipped is what the 68 per cent is grading. The note attributes it to the largest networks, and the largest networks are the alliances, which are the ones that came back. The 37 per cent of capacity still rounding the Cape is mostly the book of carriers outside those networks, and ZIM is named as the one that has not returned at all. So the reliability figure is a grade for the half of the market that came back, and nobody is grading the half that did not. Practically, two bookings on the same lane in the same week at the same quoted transit can carry different risk under the same label, because routing follows the carrier and not the trade. Ask which string. The answer is on the booking confirmation or it is nowhere.

The 90 per cent goal deserves its own paragraph, because the note gives you a target and no date. A goal without a date is a direction, not a commitment. Read the 68 to 69 as the current reading and the 90 as the aspiration, and then notice that the note never says when the aspiration was set or whether it has ever been met. Carriers do not usually publish the deadline for a target they are missing by twenty-two points. That absence is information. If 90 were a contractual threshold for anyone, you would be reading about penalties, not about a goal.

There is a capacity effect in the 63 per cent that almost nobody prices. A shorter rotation means each ship completes more round voyages in a year. Returning capacity to Suez does not add a single vessel to the fleet, and it still adds effective supply, because the same hull now does more trips. Carriers are usually aware of this and are usually careful about how fast they bring strings back, because every string restored adds capacity to a market they would rather keep tight. So the 63 per cent is two stories wearing one coat: it is a routing story for your booking and a supply story for your rate. When the share goes from 63 to 80, expect the second story to arrive before the first one feels better.

There is an alternative explanation for the 68 per cent and it is worth holding in the same hand, because the note does not rule it out. Reliability can fall for reasons that have nothing to do with re-phasing: a bad month at a hub, a congestion wave after a weather event, a labour action at a terminal. The honest position is that a two-month reading against a goal cannot separate a structural rebuild from a bad quarter. The test is cheap. Structural re-phasing shows up as lateness concentrated on the restored strings; congestion shows up across every string at one port. Pull your own on-time data by service and by port of discharge for August and September, and if the misses cluster on the services that came back, you are looking at the rebuild. If they cluster on one terminal, you are looking at that terminal, and the fix is a different port of call rather than a different carrier.

Watch the next three prints and what each one would mean. If the capacity share rises and reliability stays flat at 68, the re-phasing is doing what it does and the rebuild is on schedule. If the share rises and reliability drops below 65, the carriers are bringing strings back faster than the terminals can absorb, and that is the version where your buffer has to grow rather than shrink. If the share stalls near 63 while reliability climbs past 75, the market is being held back on purpose and the good service is being rationed, which is the one outcome where paying up for the stable string is worth the money. Three prints, three different decisions, and one number will not tell you which one you are in.

Maersk's March 2027 is the date to diary and it is later than it sounds. Restoring every service by March 2027 does not mean a stable network in March 2027. Restoration is the input, proforma stabilisation is the output, and the two sit a quarter or two apart because each restored string needs a few voyages before its window holds. If the market is at 63 now and the last big carrier finishes in the first quarter of 2027, the plausible shape is capacity share climbing through this winter and reliability crossing 80 somewhere in the second half of next year. Book 2027 as a year in which the network is being rebuilt. Do not book it as a year in which the network is rebuilt.

Now the case against, because the bullish read is not the only read. If the share jumped from 63 to 85 in one quarter, reliability would fall before it rose, since you would be re-phasing a third of the fleet at once and every re-phased string loses its first window. Slow restoration is the version that protects your ETA. The opposite risk is that the conditions which pushed everyone around the Cape come back, in which case the 63 per cent reverses inside weeks, because capacity is mobile and schedules are not. Anyone who priced a Suez rotation this quarter wears that. The divergence worth naming is ZIM staying out. Either it is a bet that the Cape is cheaper per slot on its network, or it is a fleet constraint dressed as a strategy. Either way it is the one large book fully exposed to a Suez reopening, and it is the one that would have to buy its way back in at the worst moment.

Who actually gets hit. On an annual contract the rate is fixed and the routing is not, and routing decides whether your inland trucking slot still exists on the day the box lands. Your freight invoice does not move. Your detention, your demurrage and your customer's fill rate do. On spot you are paying a Suez price for a blended product, and the honest description is a coin with a 68 per cent face. The group hurt worst is the one with a fixed retail launch date on a Mediterranean routing: inside the seventy, which sounds like the good side, and therefore the least hedged against the re-phasing that is coming when the rest of the fleet follows.

There is a clause to add and it costs nothing at the table. Ask for transit time to be expressed as a window tied to a named string rather than a port pair, and ask what the carrier owes you if the box misses the window by more than the window itself. Most carriers will refuse the money. Almost all of them will accept the naming, and the naming is the part that has value, because it converts a promise about a trade into a promise about a ship. If a provider will not name the string in writing, that refusal is a fact about the provider and you can use it in the tender. Nobody ever lost a negotiation by asking a carrier to write down which route the vessel is taking.

Run a carrier audit against the six. Take your top ten providers, mark each one as returned, returning or not returning, and put next to the mark the share of your volume it carries. If 40 per cent of your monthly volume sits with providers in the returning group, you are structurally exposed to the re-phasing quarter and you should plan for it rather than be surprised by it. If the majority sits with providers that have not moved, your risk is different and possibly larger, because you are buying the Cape service at a price that assumes Suez. Either way the audit takes an afternoon and the answer is not in the newsletter.

One more layer, and this is the one that catches people who think they have already checked. In an alliance or a slot agreement the carrier you contract with is often not the carrier operating the vessel your box actually sits on. You buy from one line, the routing is set by whichever member operates that string, and that member's return schedule is the one that governs your ETA. So the question is not only whether your provider came back, it is whether the operator of the specific string came back, and whether that string is one of the six restored or one of the ones still on the Cape. Ask for the vessel operator's name next to the voyage number. Half the time the answer is a company you did not know was involved, and that company's March 2027 is your March 2027.

The clocks, in order of when they move. The booking clock is fastest, because routing is fixed at allocation, so the string you are on is decided the day you book and not the day you sail. The proforma clock runs two to six weeks behind: a restored service announces a window, misses it twice, then holds. The arrival clock is the one your customer feels, and it lags the proforma by a full voyage. Three clocks and the update hands you one date. That asymmetry is the whole job.

Put a cost on the 13 late boxes, and be explicit that what follows is an assumption rather than a published figure. Assume each missed window costs you seven days, which is the round number people use when the carrier gives them nothing better, and assume inventory carrying cost is one per cent of goods value per week, which is a common planning rate and not necessarily this trade's real one. On a 40-box month at an average 25,000 dollars a box, the 13 late boxes are 325,000 dollars of goods sitting one week longer than planned, and one per cent of that is 3,250 dollars a month, or 39,000 a year, on one lane, out of the gap between 68 per cent and 90.

Change either assumption and the total moves. The point is not the figure. The point is that the figure exists, that it is larger than most people expect, and that it never appears in a rate negotiation because the rate is quoted per box and this cost is quoted per promise.

So what do you do with a 63 per cent. Treat it as a description of the market and not of your booking, because your booking is 100 per cent one thing. On every allocation through the first quarter, put the routing in the confirmation in writing, Suez or Cape, and if the carrier will not commit then assume the Cape and plan the arrival on that basis. For North Europe, plan on the 58 and carry the 42 as risk rather than planning on the 63. For the Mediterranean, the 70 is high enough that you can still quote a firm date, which makes the southern book the one place this quarter where a promise is worth making.

One last thing about the arithmetic, and this is the cold bit. Sixty-three per cent is a fine number, it is the only number in the update anyone can act on, and it is also the one that says nothing about your box. Your box went one way. The market average went both ways and got quoted as an average, which is how a routing decision taken by a carrier's network desk in a different time zone ends up inside your warehouse plan. Two weeks from now, when the next update prints 66, somebody in your company will ask whether that is good news, and the correct answer will be that it depends which of your four lanes it landed on — and that nobody in the note thought to tell you.

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— By Vivian Zhao