Geopolitics Oct 14, 2026 · 8 min read

Saudi-Houthi war puts the Red Sea back into Asia-Europe pricing

Riyadh airport shut, Aramco HQ hit: the Red Sea discount is now on loan. Houthi missiles hit Saudi Aramco’s headquarters overnight, FreightWaves reported on 14 October. Riyadh’s main airport is shut until at least 17 October. Our view: the Asia-Europe rate slide was built on carriers returning to the Red Sea, and that return now depends on a Saudi-Houthi war. Asia-Mediterranean spot rates already rose 7% to $3,800 per 40-foot container last week (FreightWaves). Freightos calls it “uncertainty rather than a confirmed capacity shock”. For now. Our call: Asia-Med spot holds above $3,500 per container through end-November instead of resuming its fall.

Cheap Asia-Europe freight is now riding on a Saudi-Houthi ceasefire that does not exist
Houthi missiles hit the headquarters of Saudi Aramco, the state oil company, overnight into 14 October, FreightWaves reported. Strikes on Riyadh’s King Khalid International Airport have killed at least 14 people and injured more than 300, according to the same report. Saudi Arabia has vowed a “serious response”. The Saudi-led coalition says it has hit fuel facilities the Houthis use to support drone and missile attacks (The National, 13 October).
Our view is simple. Since July, Asia-Europe shippers have been paying less because carriers went back through the Red Sea. That discount now depends on a war between the Houthis and Saudi Arabia, whose coast runs the length of the Red Sea. The market is pricing this as background noise. We think it should be priced as a live risk to the Asia-Europe rate slide.

What happened this week

The airport is the clearest damage so far. King Khalid International has been closed since Saturday 10 October, when an attack killed 13 people and injured more than 300, The Filipino Times reported. A second attack on Sunday killed one more person. Reported tolls differ by outlet. FreightWaves puts the total at “at least 14”.
A notice to airmen (NOTAM), the official alert pilots must check before flying, was issued on Monday. In The Filipino Times’ words, it “indicated that the airport would remain closed until 9 p.m. GMT on October 17.” The Saudi aviation regulator, GACA, said “airport operations would remain suspended while safety inspections and operational readiness assessments continued”, according to Breakbulk News.
Airlines have pulled back well beyond that date:

Lufthansa Group has cancelled Riyadh flights until 16 October (Breakbulk News).

Air France-KLM has extended its suspension of Riyadh services until the end of October (Breakbulk News).

Etihad has extended its Riyadh cancellations to 19 October (The National).

Cirium, an aviation data firm, said 99.7% of scheduled flights at Riyadh were cancelled on Sunday (via Breakbulk News), and that cancellations across the kingdom’s airports reached 46.4% (via The Filipino Times).

The US Federal Aviation Administration advised American carriers on Sunday to be cautious flying to or over Saudi Arabia (Breakbulk News).

Then came the Aramco headquarters strike. The Houthis had already told employees and civilians near Aramco facilities to evacuate (The National). The coalition’s answer was strikes on Houthi fuel sites. A coalition spokesman said the aim is to neutralise the group’s ability to attack Saudi Arabia (The National).

This did not start on Saturday

Forwarders who only follow rate indices may have missed how long this has been building.
The Houthis declared a maritime blockade of Saudi Arabia on 20 July, according to FDD’s Long War Journal (6 August). Within days, tankers were being hit. Riyadh confirmed on 23 July that an attack on the tanker Encelia caused a fire. The Saudi-operated tanker NCC Masa was damaged in a Red Sea attack on 24 July but continued to its destination (FDD).
On 25 July, the Houthis claimed attacks on Aramco energy sites at Yanbu and Jazan. Aramco suspended operations at Jazan. Ship traffic reacted at once. Reuters, carried by MarineLink, reported that “Eleven commodity vessels passed through the Bab el-Mandeb strait on Sunday, the lowest level in months”. The Bab el-Mandeb is the narrow strait at the southern end of the Red Sea, between Yemen and the Horn of Africa.
By early August, FDD counted Houthi claims of attacks on “eight Saudi-linked vessels transiting the Red Sea”. On 30 July, Saudi Arabia announced a maritime coalition with 13 other countries to protect the Red Sea. FDD noted that “the coalition does not include the United States or the European Union, which were invited to join.”
In September, Freightos reported, via FreightWaves, that the Houthis had “recently seized a strategic port and island directly on the Bab el-Mandeb Strait at the south end of the Red Sea.” Neither article named the port.
So the Houthis now have a stated blockade, a record of hitting Saudi ships, a foothold on the strait, and a fresh reason to escalate. FreightWaves says no broad closure of the Red Sea has been confirmed. That is true today. It is not a guarantee.

Why the rate slide is exposed

Here is the uncomfortable part. Carriers went back into the Red Sea while this was happening, not after it ended.
FreightWaves reported on 15 September that “Container lines are restoring more Suez Canal and southern Red Sea capacity.” Sea Intelligence estimated that more than a quarter of Asia-Europe capacity would transit the Red Sea in September. Container News, carrying the same Freightos update, put the Asia-Mediterranean share of headhaul capacity at 35%. Headhaul is the busier, fuller direction of a trade, here Asia to Europe.
Going via Suez instead of around Africa’s Cape of Good Hope cuts days off each voyage. The same fleet can then run more round trips a year. That frees up “effective capacity”, meaning more usable slots without building a single new ship. More slots, same cargo, lower prices.
That is what has been happening. FreightWaves says Asia-Europe spot rates have fallen steadily since July, mainly because peak season demand slowed and carriers returned to Red Sea routings. By mid-September, Asia-Mediterranean prices were about $3,000 below their July peak and Asia-North Europe about $2,000 below, per the 15 September FreightWaves piece.
Rates are not cheap in absolute terms, though. Both main Asia-Europe trades were above $3,000 per FEU last week, roughly 70% higher than in October 2025, FreightWaves reported on 14 October. FEU means forty-foot equivalent unit, the standard 40ft container.
And the slide has already stuttered. Asia-Mediterranean spot rates rose 7% to $3,800 per FEU last week. Over the same week, Far East to US West Coast rates fell 2% to $8,150 per FEU, which FreightWaves says may mark the start of the post-Golden Week decline. One trade that relies on the Red Sea went up. One that does not went down.
Freightos’ read, as reported by FreightWaves, is that the immediate effect for container lines is “uncertainty rather than a confirmed capacity shock.” We agree with the wording. We disagree with how relaxed the market seems about it. Uncertainty is exactly what makes carriers slow-walk further Red Sea returns, and that alone stops the capacity release that has been pushing rates down.

Air freight: Riyadh is already a problem

Ocean risk is a forecast. Air disruption is a fact.
Even before Saturday’s strike, Riyadh was losing lift. Breakbulk News, citing Rotate data reported by The Loadstar on 9 October, said “Riyadh’s international outbound cargo capacity had fallen 34% over 24 hours to 848 tonnes”. The airport has since shut entirely.
Much of the air cargo into a city like Riyadh flies in the belly, the hold of passenger aircraft. When Lufthansa, Air France-KLM and Etihad cancel passenger flights, that cargo space disappears with them. Air France-KLM’s suspension runs to the end of October, so belly space from Europe will stay thin for at least two weeks after the NOTAM’s 17 October date, even if the airport reopens on time.
For shipments already booked, the realistic options are:

Re-route via Dammam or Jeddah and finish by road. Check customs clearance location and inland trucking capacity before confirming.

Fly into another Gulf hub and truck across. Allow for border time.

Hold time-critical cargo until carriers confirm restart dates in writing, not just the NOTAM date.

So far, reports have not pointed to disruption at Saudi Red Sea ports such as Jeddah. That is worth watching closely, because Jeddah sits on the same water the Houthis say they are blockading.

What forwarders should do now

On ocean, the main risk is not a sudden spike next week. It is that the Asia-Europe decline stops. FreightWaves notes carriers are heading into 2027 contract talks with rates still historically elevated. Some shippers are hesitating to sign long-term deals because newbuild deliveries next year and more Red Sea transits could push rates lower. That bet now carries real risk.
Practical steps:

Keep spot quotes on Asia-Med and Asia-North Europe short. One week of validity, not four.

Ask carriers which Asia-Europe services currently route via Suez, and what their trigger is for switching back to the Cape. Price the Cape option now so it is not a surprise.

For 2027 tenders, avoid locking in rates that assume full Red Sea access all year. Build in a clause or index link for a reroute.

Warn importers on Saudi lanes about insurance. War-risk cover for Saudi-linked ships has an obvious reason to rise.

Demand will not rescue carriers on its own. The US National Retail Federation projects November ocean arrivals 11% lower than October, per FreightWaves. That is why the Red Sea matters so much. On a soft-demand market, capacity is the price lever, and the Red Sea is where the capacity comes from.

Our call

We expect the Asia-Europe rate slide to stall. Our prediction: Asia-Mediterranean spot rates stay above $3,500 per FEU through the end of November, rather than resuming the fall seen since July. We also expect Riyadh belly capacity from Europe to stay below pre-attack levels until at least November, even if the airport reopens on 17 October.
If a container ship on an Asia-Europe service is hit in the Red Sea before then, expect at least one major carrier to suspend Suez routings within days, and the rate falls seen since July to reverse quickly.

Sources