Multiple Houthi missile attacks have shut down Riyadh airport since late last week, forcing some foreign carriers to suspend air cargo services into and out of Saudi Arabia and marking a sharp escalation in the Saudi-Houthi conflict. Saudi Arabia has promised retaliation for the deadly strikes. Interceptions at Dammam and attacks on other airports have triggered cancellations at neighboring hubs as well.

The blast radius stays limited, for now. Unlike Dubai or Doha, Saudi Arabia is not a major transhipment hub for international air cargo, so the closures may not be felt more broadly across the market. That's the one mercy in an otherwise ugly week.

The timing matters. The Houthis sought to close the Bab el-Mandeb Strait to Saudi-linked traffic in July, attacking several vessels into August after nearly nine months of quiet. The current escalation may raise the odds of renewed Red Sea strikes — precisely as container carriers have been gradually increasing Asia-Europe Red Sea transits since June.

What does this change for ocean shippers?

Not much yet, on rates. Container carriers have kept adding transits through the Red Sea, and combined with a post-peak-season slide in demand, that has produced uninterrupted spot rate decreases on Asia-Europe lanes since July.

But here's the tension: shippers and carriers on these trades are now entering tendering season for 2027's annual ocean contracts. This time last year, carriers cut capacity and pushed through a series of Q4 general rate increases to lift the benchmark around which long-term negotiations were based. Some carriers have already announced October increases — Asia-Mediterranean prices rose 7% to $3,800/FEU last week.

Even without further hikes, carriers hold a strong hand. Despite the slide since July, prices sit above $3,000/FEU on both Asia-Europe lanes, roughly 70% higher than a year ago.

Shippers know it, and they're hesitating. Current rate levels lean partly on lingering congestion in North Europe — a strike at German ports that could have worsened things was recently averted — and in the Far East. Newbuild deliveries will grow the fleet next year, and if Red Sea transits keep climbing, effective capacity expands further in 2027. Some shippers expect rates to ease next year and are reluctant to lock in annual contracts at today's levels.

Transpacific: peak season finally cracking?

On the transpacific, sustained peak season demand plus Far East congestion kept container rates near peak levels since July. But Far East-US West Coast rates dipped 2% to $8,150/FEU, and with Golden Week behind us, that could signal the start of a downward trend.

The National Retail Federation's latest US ocean import volume report projects November arrivals down 11% month on month — evidence that peak season is finally ending and rates may ease until pre-Lunar New Year demand kicks in late this year or in January. Even with the extended peak, NRF projections would put year totals just 1.4% above 2025 and up 1.2% from 2024, approaching the 2021 record.

Air cargo: capacity chases AI, not e-commerce

The clearest structural shift is in the air. More freighter capacity is moving away from Asia-Europe trades as e-commerce volumes slump, and toward lanes with stronger growth — notably the AI-fueled transpacific.

Elevated fuel costs and strong global volume growth have pushed the Freightos Air Index global benchmark up 33% year on year, and 29% above levels before the Strait of Hormuz closure.

Southeast Asia-North America rates tell the AI story: 40% higher than last year and than pre-war levels, reflecting data center volume growth baked into the global rate.

China-Europe tells the opposite story. Prices dipped to $3.58/kg last week, down 9% year on year and up just 4% versus pre-war levels. Even with capacity shifting out, falling e-commerce volumes appear to be dragging the lane down.

The weeks ahead hinge on two unknowns: whether Riyadh's promised retaliation reignites Red Sea strikes before 2027 contracts are signed, and how quickly transpacific rates give ground as November's 11% import drop lands.