When the major container lines began rerouting Asia-Europe services around the Cape of Good Hope in late 2023, the assumption among most retail sourcing teams was that the disruption would be temporary. Eighteen months on, the Cape route is no longer a contingency. For Asia-to-Northern-Europe trades, it is the default. The question retail operators are now asking is not when freight returns to the Suez baseline, but which of the cost lines this has introduced are permanent and which can be unwound.

What stuck

Longer transit times have been normalized into planning. The Cape detour adds roughly 10 to 14 days to a typical Shanghai-Rotterdam rotation. Sourcing teams we spoke to have largely rebuilt their critical-path calendars around this. The painful adjustment happened in 2024; the cost of carrying that adjustment is now baked in.

Freight rates have come down from the 2024 peaks but not to 2019 levels. Spot rates on Asia-Europe lanes spent much of 2024 running well above pre-pandemic baselines — operators we spoke to described peaks 60 to 110 percent above 2019. They have since softened materially as overcapacity returns to the market, but the structural cost of the longer route, higher bunker consumption, and elevated war-risk insurance has put a floor under rates that did not exist before. A logistics director at a European apparel group described current rates as "expensive enough that we are not relaxing, cheap enough that we are not panicking."

Inventory positioning has shifted west and north. Several large retailers have quietly increased forward-deployed inventory in Northern European DCs to absorb the additional transit variance. This is the cost line that most surprised the finance teams we spoke to — not the freight bill, but the working capital tied up in safety stock that did not previously need to exist.

Insurance premiums for Red Sea transits, where carriers still offer them, remain elevated. The handful of services that have returned to the Suez routing have done so selectively and at a premium. The reinsurance market has not normalized.

What reverted

Carrier schedule reliability is back in the range it was in 2019, give or take. This was not obvious a year ago. The big lines have adapted their rotations and added tonnage to absorb the longer cycle. On-time arrival rates on Asia-Europe trades, by most public measures, are now close to the pre-disruption baseline. The reroute is long, but it is predictable, and predictability is what supply chain teams plan around.

Air freight substitution has receded. The 2024 spike in air freight bookings out of South and Southeast Asia, driven by retailers trying to claw back transit time, has largely unwound. Most operators we spoke to have re-disciplined themselves to ocean and absorbed the calendar hit. Air remains the lever for genuine peaks and recoveries, not a structural part of the program.

The "China-plus-one" conversations that this disruption accelerated have not produced as much actual relocation as the early 2024 commentary suggested. Several sourcing leads have told us they explored Indian and Vietnamese alternatives more seriously, but the lanes out of those origins are not immune to the same Red Sea routing and the savings, once costed properly, were thinner than expected.

Where the cost is actually showing up

The clearest pattern in conversations with retail finance and supply chain leaders is this: the freight bill is not where the pain lives anymore. The pain lives in inventory carrying cost, in safety stock decisions, and in the loss of the just-in-time discipline that the 2010s assumed.

A head of supply chain at a mid-market home category retailer described the trade-off plainly: their freight cost per unit is up modestly versus 2019, but their average inventory days have crept up by something in the range of 15 to 25 percent, and that is the bigger drag on return on invested capital. The company has accepted this as the cost of operating in an environment where the cheapest route between Asia and Europe is not the one that has been the default for fifty years.

What to watch

The carriers will tell you that they would return to the Suez routing the moment it is commercially and politically viable. The question is whether their customers — particularly retail shippers who have rebuilt their planning around the Cape — will actually want them to. Recalibrating safety stock down, repositioning DC inventory, retraining buyer teams on shorter lead times: all of that has a cost too. The transition back, if it comes, will not be free.

For now, the second-order effects of the reroute — the inventory ones — are the line item that operators should be measuring in their 2026 plans, not the freight rate itself.