The Red Sea discount is now structural

Eighteen months into the crisis, the market has stopped treating the southern Red Sea as a disruption and started treating it as a feature. Weekly transit calls through Bab el-Mandeb have held in a narrow band around 240 for months, with none of the recovery the optimists pencilled in. The ships still passing are a distinct population: smaller, older, regionally traded, and increasingly insured outside the main London market.

The rerouting index tells the structural half of the story. The Cape of Good Hope now carries more than twice the traffic of Suez, and the operators who committed to the longer route have built schedules, bunker contracts and port rotations around it. A reopening of the strait would no longer snap the network back in weeks; the friction is priced in on the way out too.

Two secondary signals deserve attention. First, GPS interference reports around Hormuz rose again this week, continuing a pattern that has made jamming the most frequently logged incident category this year. The navigational effect is limited; the insurance effect is not, since position integrity underpins both breach-of-warranty clauses and casualty investigation. Second, listed-area language in war-risk endorsements keeps widening: underwriters are drawing zones faster than circulars retire them.

What would change our reading: a sustained climb in Bab el-Mandeb transit calls, a rerouting index falling back toward parity, or a listed-area retirement that survives a renewal cycle. None of the three is in sight.

Transit figures in this issue are IMF PortWatch daily data, aggregated weekly by the observatory.