Estimated reading time: 5 minutes
A joint U.S. and Israeli military operation against Iran on 28 February 2026 triggered the most abrupt reversal in container shipping routing since the Houthi crisis began in late 2023, forcing the world’s three largest carriers back around the Cape of Good Hope and wiping out months of painstaking progress toward a Suez Canal return.
A Two Year Build Up Unravels in Days
CMA CGM and Hapag-Lloyd suspended Suez Canal and Strait of Hormuz transits on 1 March 2026, following U.S. and Israeli strikes against Iran and subsequent Iranian retaliatory action. Maersk confirmed the same posture on the same day. All three carriers cited crew safety as the primary factor.
The timing was particularly damaging for market confidence. CMA CGM had spent the preceding months as the most aggressive among the major lines in pushing back toward the Suez route, with a full operational resumption of Suez transits on its India to U.S. East Coast INDAMEX service planned for the second quarter of 2026. That plan is now shelved.
CMA CGM told vessels in the Persian Gulf to take shelter immediately and suspended passage through the Suez Canal, stating that affected vessels would be rerouted via the Cape of Good Hope and that customers would be contacted with details of possible alternative ports.
147 Ships Trapped, Rates Climbing
The commercial fallout was immediate. Xeneta data showed 147 container ships sheltering in the Arabian Gulf and unable to leave due to the risk of sailing through an active conflict zone.
Early Xeneta data captured the ripple effects across trade lanes within days of the escalation. Spot rates from China to Salalah in Oman rose 28% compared to levels recorded on 26 February, the day before the conflict intensified. Rates from China to Colombo in Sri Lanka climbed 17%, while rates from China to the United Kingdom increased 9%.
CMA CGM announced an Emergency Conflict Surcharge effective 2 March 2026, set at USD 2,000 per 20-foot dry container, USD 3,000 per 40-foot dry container, and USD 4,000 per reefer or special equipment unit. The surcharge applies to cargo moving to or from Iraq, Bahrain, Kuwait, Yemen, Qatar, Oman, the United Arab Emirates, Saudi Arabia, Jordan, Egypt through Ain Sokhna, Djibouti, Sudan, and Eritrea. The carrier also suspended all reefer bookings for those same countries with immediate effect.
War risk insurance premiums for Hormuz transits, which had stood at approximately 0.25% of insured hull and machinery value before the strikes, were reported by industry sources to be on course to reach 0.5% or higher. For a vessel valued at USD 150 million, that translates to an increase from USD 375,000 to USD 750,000 per transit, costs that carriers indicated would be passed to shippers through surcharges.
Analysts: Six Months at Minimum Before Any Return
Lars Jensen, chief executive of Vespucci Maritime, told an industry audience at the TPM26 conference in Long Beach on 4 March that the situation had set the Red Sea back by more than a year. Jensen said that any positive outlook on Red Sea operations normalizing had disappeared, with carriers pulling a U-turn on resumptions. He estimated it would take at least six months before carriers would contemplate a return, and only then if the Iranian conflict stopped immediately.
Jensen added that the wider market implications would now run through the full year. The 2026 ocean shipping market, initially positioned for slight overcapacity and downward pressure on rates, had fundamentally shifted, he said. A large-scale return to the Suez was expected to release substantial capacity over the summer and weaken the supply and demand balance. That scenario, he told the conference, was no longer going to happen.
Peter Sand, chief analyst at Xeneta, said the military operation had shattered any prospects of a large-scale return of container shipping to the Red Sea in 2026, adding that if Houthi forces resumed attacks, carriers would reverse service decisions and prioritize the safety of crew, ship, and cargo.
The Suez Canal’s own data underscores the structural scale of the pullback. Annual vessel transits through the canal in the period since the Houthi crisis began reached 12,758, representing a fall of 52% below the 2023 peak of 26,434. An estimated 2.5 million TEUs of capacity is currently absorbed by Cape diversions.
Multimodal Workarounds Fill the Gap
With direct Gulf port calls suspended, carriers and forwarders moved quickly to build alternative solutions. CMA CGM announced on 11 March that it was reopening import and export bookings for Iraq, Kuwait, Qatar, Bahrain, Saudi Arabia, and the UAE using specifically designed multimodal solutions rather than normal Gulf port calls, with applicable cargo including dry, frozen, and standard gauge equipment.
The carrier began using the port of Sohar in Oman both for imports into the Gulf and exports out of the Gulf, including movements from Kuwait, Qatar, Bahrain, and Iraq via feeder connections and land bridge. Salalah, Fujairah, and Jeddah have also emerged as key interim gateways, with bonded trucking into GCC markets reported as fully operational.
Jensen noted that carriers were positioned to implement as many and as high surcharges as possible, and that congestion effects building in Asia were set to affect Pacific trade lanes as well as Middle East routes. With annual contract negotiations already complicated by U.S. tariff uncertainty, the Iran escalation has introduced a further variable that is stalling final agreements between shippers and carriers across multiple trade lanes.
