The security situation in the Red Sea continues to drive shipping stock prices both up and down. Longer voyage distances due to detours around the Cape of Good Hope reduce effective capacity, a positive for freight rates, and thus share pricing. Conversely, if fewer ships divert, fleet capacity is preserved and stocks fall.
The bullish stock thesis going into the Christmas break was that all container lines would continue to divert vessels due to concerns over crew safety, regardless of Operation Prosperity Guardian (OPG), a U.S.-led military effort to patrol the Red Sea.
