Repeated Houthi missile and drone attacks on Saudi Arabia’s airports and energy infrastructure have sharply escalated the Saudi-Houthi conflict, raising the prospect of renewed disruption to Red Sea shipping as the 2027 contract-tendering season gets underway.
Saudi Arabia has vowed a “serious response” after strikes on Riyadh’s King Khalid International Airport killed at least 14 people and injured more than 300. The airport remains closed until at least October 17, airlines have canceled flights, and the Houthis have threatened further attacks on Saudi airports, and military targets. The Yemen-based militia overnight hit the headquarters of Aramco, the Saudi oil producer, with missiles.
The attacks follow Houthi attempts beginning in July to close the Bab el-Mandeb Strait to Saudi-linked traffic, including vessel attacks into August after nearly nine months of relative quiet. The ‘other’ Mideast strait guards the Red Sea’s southern entrance to the Gulf of Aden. The latest escalation increases the likelihood that Red Sea transits could again become more dangerous, although no broad closure of the waterway has been confirmed.
For container lines, the immediate effect is uncertainty rather than a confirmed capacity shock, said analyst and SONAR data contributor Freightos (NASDAQ: CRGO). Carriers had gradually increased Asia-Europe transits through the Red Sea since June, helping expand effective vessel supply; a renewed wave of attacks could reverse that trend and support rates.
Asia-Europe Rates Still Elevated
Spot rates on Asia-Europe lanes have fallen steadily since July, driven primarily by the post-peak demand slowdown and by carriers’ gradual return to Red Sea routings. Yet prices remain well above year-ago levels: both major Asia-Europe trades were above $3,000 per FEU last week, roughly 70% higher than in October 2025.
Some carriers have already announced October general rate increases. Asia-Mediterranean spot prices rose 7% to $3,800 per FEU last week, a move that could help establish a higher benchmark ahead of annual contract negotiations.
The market’s underlying support is fragile. Lingering congestion in Northern Europe and the Far East has absorbed capacity, while a threatened German port strike that could have worsened European delays was recently averted.
Contract negotiations face uncertainty
Shippers and carriers are entering tendering season for 2027 annual contracts with conflicting signals. Carriers enter talks with rates still historically elevated, but there are reasons shippers may resist locking in current levels.
Newbuild deliveries expected next year would expand fleet capacity, while continued growth in Red Sea transits would further increase effective capacity by shortening Asia-Europe voyages. Those factors have led some shippers to expect rates to ease in 2027 and to hesitate over long-term commitments at present levels.
Trans-Pacific peak may be ending
The trans-Pacific trade has held near peak-season levels since July, supported by sustained demand and Asia congestion. But the first signs of easing are emerging: Far East-U.S West Coast rates dipped 2% to $8,150 per FEU, potentially signaling the start of a post-Golden Week decline.
The National Retail Federation’s latest U.S. import forecast points to a sharp seasonal slowdown, projecting November ocean arrivals to fall 11% month over month. Even so, full-year 2026 imports are projected to be just 1.4% above 2025 and 1.2% above 2024, approaching the record volume set in 2021.
Outlook
Rates may continue to soften through the remainder of the quarter as peak-season cargo tapers. The principal upside risk is geopolitical: A sustained Houthi campaign against Saudi targets, or renewed attacks on commercial shipping in the Red Sea, could tighten effective capacity and complicate carriers’ efforts to defend rate levels heading into 2027 contract talks.
Read more articles by Stuart Chirls here.
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