Desk Report,
Will the Houthi attack derail Saudi Crown Prince’s Red Sea port plans?
Saudi Arabia, the dominant Middle Eastern country, has invested heavily in Red Sea ports as part of a plan to diversify its economy away from oil. But attacks by Yemen’s Houthi rebels have dealt a major blow to those ambitions.
Will the Houthi attack derail Saudi Crown Prince’s Red Sea port plans?
King Abdullah Port, which opened in 2014, received 188 container ships in 2023. That number has fallen to 59 in 2024, a drop of about 70 percent. So far this year, only 51 ships have arrived, according to ship monitoring company Marine Traffic.
When King Abdullah Port opened in 2014, it had two objectives. First, the Saudi government thought that the port, located on the Red Sea trade route, would generate revenue from the transshipment business by unloading goods from large ships and loading them onto smaller ships for their final destinations. Second, they wanted to develop it as a transportation hub for the King Abdullah Economic Zone. Foreign businesses are being encouraged to set up factories here. Two port officials say transshipment business through King Abdullah Port has fallen sharply, as international shipping companies are avoiding the Red Sea due to Houthi attacks.
One official said business at King Abdullah Port is so bad that the owners cannot sell the container terminal even if they want to.
The Saudi port is owned by a company linked to the United Arab Emirates (UAE) real estate companies Emaar and Hutha Marine Works. Saudi Arabia’s Public Investment Fund (PIF) bought a 25 percent stake in Emaar’s ‘The Economic City’ in 2021.
According to Marine Traffic data, shipping traffic has also decreased at Saudi Arabia’s Jeddah Islamic Port. But the impact there is relatively small. In 2023, 400 container ships arrived there. In 2024, that number fell by about 14 percent to 344.
Executives say the port is the main gateway for imports into western Saudi Arabia, so it is less dependent on transshipment, so business is somewhat stable.
But officials say container ships from Asia are now docking at King Abdulaziz Port in Dammam on Saudi Arabia’s east coast. One official said BYBD’s vehicles are now going to Dammam, not the Red Sea port. That is now safer.
The Houthis began attacking ships in the Red Sea in November 2023 in solidarity with the besieged Palestinians in Gaza. The attacks have caused the biggest economic loss to Egypt, because Egypt earns a lot of foreign exchange from the Suez Canal. Many ships are now turning around the southern tip of Africa to avoid Houthi attacks, which has reduced traffic through the Suez Canal.
Saudi Arabia has also suffered. This major shift in Saudi port business shows that the impact of the Houthi attacks has unexpectedly become a problem for Riyadh.
