• Red Sea shipping traffic has recovered to 65% of normal levels, up from 50% in September, according to Bank of America (BAC).
  • Oil tanker rates remain elevated at up to $650,000 per day, while dry bulk rates are up 31% year-over-year.
  • The recovery is uneven: more container vessels are returning to Suez, but expensive fuel, security risks, and disruption elsewhere in the Middle East continue to support freight costs.

A Fragile Recovery

Red Sea shipping is staging a comeback, but the rebound is far from complete. According to Bank of America, traffic through the Suez Canal has recovered to 65% of normal levels, up from 50% in September. The improvement suggests that more container vessels are returning to the Red Sea route after months of diversions around the Cape of Good Hope. However, industry data paints a more nuanced picture. Lloyd’s List Intelligence reported 1,228 Suez transits in September, up 21% year-over-year but still 39% below pre-crisis levels. Alphaliner found that 63% of deployed Far East–Europe container capacity had returned to Red Sea routing as of late October, close to the headline figure but measuring a specific trade rather than all Red Sea shipping.

The recovery is not translating into lower costs across the board. Oil tanker rates remain exceptionally high, with very large crude carriers (VLCCs) commanding average spot earnings near $642,000 a day, according to Clarksons Research (CKN.L). Some routes were reported considerably higher. Dry bulk rates are also up 31% year-over-year, though that figure could not be independently verified. “The inflation risk is credible, but improved traffic does not automatically mean either cheaper shipping or an imminent rise in consumer inflation,” said one shipping analyst, who asked not to be named because they were not authorized to speak publicly.

The main inflation channel is higher delivered costs for imported goods and energy. But the reviewed evidence does not establish a specific increase in global inflation attributable to the recovery-and-cost combination. It is better described as an ongoing inflation risk than a quantified forecast. Container spot rates on Far East–North Europe routes stood at $3,698 per 40-foot container as of October 23, up 6.8% in a week, according to Xeneta. Mediterranean rates reached $4,442, up 5.8%. Both nevertheless remained substantially below their July peaks.

Why Costs Stay High

Returning to Suez shortens voyages and releases vessel capacity, which ordinarily puts downward pressure on freight rates. But that effect is being offset by other forces. Demand has been strong: Xeneta reports Far East–Europe volumes rose 12.2% in the first seven months of 2026, helping explain why rates recently increased despite returning capacity. Fuel costs are also a factor. Singapore very-low-sulphur fuel oil was priced at $881 per tonne, up 97% year-over-year, according to Alphaliner. That strengthens carriers’ incentive to use shorter routes while keeping operating costs elevated.

Security and operational friction remain significant. Restrictions around the Strait of Hormuz and Bab el-Mandeb, longer tanker journeys, ship-to-ship transfers, and war-risk premiums have constrained usable tanker capacity. Container-port congestion also continues to absorb some capacity. On October 20, the European External Action Service said Operation Aspides faced more requests for protection than available naval vessels could satisfy, describing a “two-strait” crisis affecting the region. The EU has extended Aspides through February 28, 2027, with a mandate that includes accompanying commercial vessels and protecting them against attacks.

The benefits are already visible in some trades. Indian exporters reported Tuticorin–Antwerp/Rotterdam quotes of $2,350–2,450 per 40-foot container, compared with $6,100–7,000 at the July peak. Chennai–Rotterdam transit times reportedly improved to 23–24 days from 34–36 days via southern Africa. Comparable benefits had not yet reached US-bound shipments. Gulf logistics companies, meanwhile, report sharply higher trucking costs as cargo is redirected through Oman, the UAE, and Jordan before moving overland into Saudi Arabia. Thus, cheaper ocean transport on one route can coexist with more expensive inland logistics elsewhere.

What to Watch

In the short term, rates are likely to remain volatile rather than return cleanly to normal. Xeneta chief analyst Peter Sand attributes the recent resilience of Europe-bound rates partly to strong demand. He expects US-bound rates to soften through the remainder of 2026, illustrating why a single global rate forecast would be misleading. More than 100 vessels above 16,000 TEU have passed through Suez since September, signaling the return of large ships, though overall capacity remains below pre-crisis levels.

Bank of America did not respond to a request for comment on the methodology behind its figures. The original research note could not be independently verified, and the 65% of normal, 50% in September, and dry bulk up 31% figures should be attributed to the headline rather than treated as independently confirmed statistics. A correction was made to clarify that tanker earnings are not a universal charter quote and vary by route.

The central uncertainty is whether the security improvement lasts. Current evidence supports a partial restoration of trade routes—not a complete removal of the geopolitical and operating costs that made shipping expensive. For now, the recovery is real but fragile, and the inflation risk it poses is credible but not yet quantifiable.