Greek shipowner explains how reopening Red Sea could affect container markets

In an interview podcast with Capital Link, Mr Lister noted, “Clearly, there would be an impact on the market, but there are a couple of mitigants to bear in mind.”

Greece-based Global Ship Lease is a US-listed container vessel specialist backed by George Youroukos, operating a diversified fleet of mid-sized and smaller ships.

The ongoing conflict in the Middle East has forced much of the global container vessel fleet to divert from the Suez Canal to the Cape of Good Hope, significantly extending voyage distances. This disruption has revitalised the charter market in 2024, evoking memories of the surge seen during the pandemic.

While no immediate resolution to the Middle East conflict is in sight, the sector is carefully considering potential market outcomes should the crisis eventually be resolved.

"Near-term reopening feels remote"

Mr Lister highlighted the current uncertainty regarding the reopening of the Red Sea, stating, "From what we are seeing in the news, the prospect of the Red Sea opening in the near term feels remote." 

However, Mr Lister warned if the Red Sea situation were to normalise, it would inevitably cause a shift in supply-demand dynamics. When the crisis began, approximately one-third of the global container fleet was diverted around the Cape of Good Hope, representing roughly one-fifth of global containerised volumes.

This diversion, he explained, had a tightening effect on supply, reducing global capacity by about 10%. "It’s a big deal," Mr Lister remarked.

Liner networks and vessel speeds

The Global Ship Lease chief executive pointed to two key factors that could mitigate the impact of a Red Sea reopening. First, liner networks are not easily reconfigured, meaning there would be some lag before operators could adjust routes back through the Suez Canal. "There would be a certain amount of inertia before companies could make those changes," he explained.

Second, Mr Lister noted that shipping lines have increased vessel speeds to compensate for the longer transit distances caused by the Cape diversion. This acceleration effectively adds capacity to the system, but comes at a cost. Burning more fuel is economically inefficient and significantly increases emissions, he said.

If the Red Sea disruptions were resolved, he expects operators would slow vessels back down, which "could limit the release of additional capacity into the market."

Bullish sentiment

Discussing the current market dynamics, Mr Lister described the charter environment as "tight," with idle capacity at less than 1%. He noted, “When supply is this constrained, earnings remain supported.”

Charter rates surged during the first half of the year and have since levelled off, but charterers’ behaviour suggests optimism about future market conditions. According to the Global Ship Lease chief executive, charterers are forward-fixing ships even off-2025 positions, signalling their belief in demand for tonnage.