NEWS

Freight market: In August 2024, the bulk carrier market continued to decline. The spot market daily earnings fell slightly by 2% month-on-month to US$15,751 per day. This is mainly due to the reduced demand for Panamax bulk carrier capacity. So far in 2024, the bulk carrier market as a whole remains strong. The overall earnings in the first eight months increased significantly by 53% year-on-year to US$15,844 per day. In the first seven months of this year, the global dry bulk shipping trade index increased by 3.7% year-on-year. The Red Sea incident also provided support for the market. The current sentiment in the dry bulk market remains optimistic - the time charter rent for dry bulk carriers has increased significantly year-on-year, the second-hand bulk carrier market remains active, and the asset price of dry bulk carriers is at a relatively high level. In terms of segmented markets, it is expected that the Capesize bulk carrier market will continue to benefit from the strong exports of iron ore and bauxite in the Atlantic region in the second half of this year. The small and medium-sized ship market may potentially weaken due to the La Niña phenomenon (see the special article this month for details). However, the earnings of the small and medium-sized bulk carrier market are still expected to remain at a stable level on the whole.

The Red Sea ship attack incident continues to be the focus of market attention. Due to some shipowners/operators choosing to detour, the average daily traffic of bulk carriers through the Suez Canal has been hovering at 40% of the level in the first half of December last year in recent months. At the same time, the average daily traffic of bulk carriers passing through the Cape of Good Hope is also relatively stable, 30% higher than the level in the first half of December last year. However, if the Suez Canal resumes traffic later, the market may face some slowdown pressure. At the same time, with the significant rise in the water level of the Panama Canal, the Panama Canal Authority has gradually relaxed ship transit restrictions. In late August, the average daily traffic of bulk carriers through the Panama Canal has approached the "normal" level. It is expected that before the peak season of grain exports from the Gulf of Mexico arrives, the daily traffic of dry bulk carriers through the Panama Canal is expected to further improve. However, to some extent, this may limit the growth rate of capacity demand.

Outlook for 2024: Supported by the Red Sea incident, the shipping distance of dry bulk carriers has increased, driving an additional 1.2% growth in global dry bulk ton-mile trade. Clarksons Research expects that under the "baseline scenario" and assuming that the Red Sea incident occurs throughout 2024 (although the Red Sea incident may continue further), the growth rate of global dry bulk ton-mile trade will reach 4.3% in 2024. At the same time, the growth rate of global bulk carrier fleet capacity is expected to reach 3.1%. The supply and demand fundamentals in 2024 will be further strengthened. However, uncertainties surrounding demand still exist. Although China's dry bulk import demand has remained strong for the past 18 months, the dry bulk trade demand of other countries except China has been weak this year. Considering the "fluctuations" in major economic indicators of developed economies (such as the United States and Japan) and China, and the continued uncertainty in China's future import demand for major bulk commodities (although China's recent dry bulk imports have reached a record level), overall, the outlook for global dry bulk trade demand has become more uncertain. On the other hand, a strong La Niña phenomenon is expected to occur in the second half of this year, and exports from major dry bulk exporting countries such as Australia, Brazil, and Indonesia may be disrupted.

Outlook for 2025: The dry bulk market may decline slightly in 2025. Although the growth rate of the global bulk carrier fleet will further slow down to 2.5% in 2025, considering the easing of the Red Sea situation, both global dry bulk trade and ton-mile trade will only increase slightly by 1% compared to 2024, lower than the fleet growth rate. However, if the Red Sea incident continues, it will further provide some support for the dry bulk market. In addition, considering the stable growth of dry bulk trade demand in recent years and the limited number of new bulk carrier orders (currently, the global bulk carrier order book only accounts for 9% of the fleet capacity), the supply and demand of capacity in the dry bulk market is stable, and the market downside is expected to be limited. On the other hand, the medium and long-term impact of new environmental protection regulations on the capacity side remains the focus of market attention. According to the 2023 CII rating standard, about 25% of the bulk carrier capacity will be rated as D or E grade. The increasing number of ships sailing at reduced speeds, installing energy-saving and environmental protection devices, scrapping of old ships, "layering" of the bulk carrier market, and the continuous increase in transaction volume in the second-hand ship market will all become characteristics of the bulk carrier market.