Transportation & Logistics Analysis

Could ''butterfly'' services be the answer to the Red Sea problem?

March 01 2024

If the disruption continues in the Red Sea, shipping companies will need solid alternative routes. "Butterfly" services are one option, although they are still relatively rare.

Faced with the attacks of the Houthis in the Red Sea, the shipping companies have adapted their services by sending them round the coast of Africa via the Cape of Good Hope. If the problem in the Bab-El-Mandeb Strait persists beyond the end of the first quarter, however, they will need to think about less cumbersome ways of organising their operations.

The ship charter market is under pressure and fresh capacity is not due into service immediately. This year, however, unlike in 2023, we are seeing a resumption of vessel scrapping programmes, as the shipping companies seek to rid themselves not necessarily of their oldest vessels but of the ones causing most pollution.

This tactic, which is intended to increase demand for capacity, could end up turning against the shipping companies, however, since they risk finding themselves paying excessive charter rates for ships which will be insufficiently used over the year, particularly if "slow steaming" continues to be the order of the day. This hypothesis is starting to look increasingly likely, moreover, with tensions expected on the tanker market in the second half.

If higher speeds are ruled out, the shipping companies could be tempted to set up "butterfly" services as a way of ensuring that freight rates are restored in the longer term. These are services which are split into two separate loops as a means of reducing sailing times.


1/ Via South Africa

This option is not an innovation as such. It existed in the past. It involves the use of shuttle services, with short loops between North Europe and South Africa (the Cape or Durban) and another loop between South Africa and Asia.

  • The pros. If the loops do not cover too many ports and the different sections are well supplied with ships, waiting time for transhipment in South Africa would be very limited, enabling Asia-Europe transit times to be shorter than on end-to end services. It is also a good way of ensuring that departures and arrivals in Europe become more regular.

  • The cons. There is a risk that South African ports could become saturated and congested because of a lack of space, terminals and other infrastructure capable of handling 15,000+ TEU container ships efficiently. The option does not work very satisfactorily, moreover, for ports in the Mediterranean and the Black Sea.

NB: Mediterranean services have been hit particularly hard by the disruption in the Red Sea, given the increase in transit times via the Cape of Good Hope and the Gibraltar Strait. One option could be to create a butterfly service which would load and unload cargo to and from the Mediterranean ports in Tangiers or Algeciras.

2/ Via the Middle East

This option seems more satisfactory in terms of distance but supposes the creation of a real, highly complex road bridge from the port of Jebel Ali and Dubai to Jeddah in Saudi Arabia.

  • The pros. The idea is attractive on paper as a means of circumventing the Houthi threat with minimum disruption and looks to be a potentially effective way of serving the Mediterranean and Turkish ports.

  • The cons. It would be a costly option, however, and one which would take too long to set up. The number of containers to be sent by road would be too great, even supposing that a titanic effort were made in this respect.

A variation on this option, which would involve linking Jebel Ali and Haifa by road through Jordan, is also geographically possible. It would allow the Suez Canal to be avoided entirely but still lacks real credibility, since the road section would be even more complicated to organise than the one via Jeddah.

3/ Via the International North-South Transport Corridor

The origins of the International North-South Transport Corridor (INSTC) project go back to the early 2000s. The project was ratified by India, Russia and Iran in 2002 and was then extended to 11 other countries, most of them in Central Asia. It aims to connect the Indian Ocean and Persian Gulf to the Caspian Sea, with a possible extension to northern Europe, using a network of shipping, road and rail links.

The project has barely advanced during most of the last two decades, but the current geopolitical situation has revived interest in it as an alternative to the Suez Canal. The countries of the Global South, which want more control over east-west trade, see it as offering an opportunity. Russia, on the other hands, sees it as a way of getting round Western sanctions, following the start of the war in Ukraine. If this route were to catch on, it would inflict collateral damage on Egypt, which, even though it belongs to the Global South, would pay a heavy price for its "submission" to the Americans.

The project would involve concentrating the flow of traffic between the Iranian port of Bandar Abbas and Saint Petersburg. One wing of the "butterfly" would serve China, its satellite countries and India from Bandar Abbas, while the other would take in Saint Petersburg and the ports of northern Europe.

  • The pros. Although it is little used, the route makes some geographical sense and has proved its usefulness in the course of history. The prospect of greater use being made of the Northern Sea Route as a result of global warming makes it an even more interesting prospect, supposing that the former includes a link to Saint Petersburg. The corridor would also be a useful way of reducing India's isolation, since Mumbai is geographically close to Bandar Abbas.

  • The cons. Its credibility is undermined by the multiple political obstacles it would face.

4/ The Northern Sea Route

The Northern Sea Route is another old chestnut which is attracting renewed interest because of difficulties using the Suez Canal. It is becoming more accessible year by year and could also be organised in butterfly style from Murmansk, where suitable shipping capacity could be organised for the ice-bound part of the journey.

This route is useful as a means of serving northern China, Korea and Japan but much less so for southern China, Vietnam and India. It has been deliberately ignored by Western countries for environmental reasons but could be paid closer attention now by operators like Ocean Alliance member COSCO, given the situation in the Red Sea.

  • The pros. Trade between Germany and China would provide a solid base for the project, which would also offer the port of Hamburg a major growth opportunity.

  • The cons. The project is highly sensitive from an ecological point of view. It is also highly sensitive politically, particularly taking account of the war in Ukraine and the sanctions resulting from it.

As with the INSTC, the countries most interested in this solution are part of the Global South rather than the West.


→ There is no competitive, high-volume alternative to the Suez Canal in the short term.

→ It is highly probable that ships will continue to go round the Cape of Good Hope so long as the current geopolitical situation pertains in the Middle East. This route still offers the least bad solution for high-volume FCL/FCL (full container load) traffic.

The Cape of Good Hope route does not offer the shipping companies such a good deal as that in the longer term, however. The full container per slot load factor is too low to be financially profitable, even with higher freight rates.

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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