In this week’s “Shipping Number of the Week”, BIMCO’s Shipping Analysis Manager Filipe Gouveia looks at the bulker fleet which is growing at about half the pace seen in the 2010s despite a pick-up in deliveries.
BIMCO forecasts that bulker deliveries will gradually increase this year and in 2026, reaching 41.2m Deadweight Tonnes (DWT) and a six-year high. Bulker newbuilding contracting was strong in 2023 and 2024, and several of the ships ordered during this period are expected to be delivered during this and next year, according to Gouveia.Of the 59.3 million DWT expected to be delivered until the end of 2026, the panamax segment accounts for 33.9% while supramax accounts for 28.3%. Ordering for these segments rose in 2023 and 2024 as they were benefitting from comparatively higher freight rates.Although capesize newbuilding contracting rose in 2024, supported by higher freight rates, the segment is estimated to only account for 23.9% of deliveries. Capesize ships are the largest in size and take longer to build. Consequently, most of the orders from 2024 will only be delivered after 2026.
Out of the ships to be delivered, 9.1% can use alternative fuels while an additional 10.7% can be retrofitted. Out of the capable ships, LNG and methanol are the most popular choices for alternative fuels, accounting for 37.1% and 34.9% of capacity.
Credit: BIMCO
"Despite a pick-up in deliveries, the dry bulk fleet is only growing half as fast as it did during the 2010s. During that period, strong Chinese demand was the key driver for dry bulk tonne mile demand, consequently driving newbuilding contracting. Demand growth has been slowing since then and in recent years, sailing distances have partly compensated for weaker cargo growth" said Gouveia.
So far in the 2020s, sanctions on Russian coal and the rerouting of ships away from the Red Sea to routes around the Cape of Good Hope, have been key drivers for sailing distances. This has boosted dry bulk ship demand beyond expectations and consequently led to a slowdown in fleet renewal. Since contracting had been low, older ships which would normally have been recycled kept operating.
This year, freight rates have on average been lower due to weak demand and they could stay low through 2025 and 2026. Forward Freight Agreements (FFAs) indicate that the market expects poor freight rates for the panamax and supramax segments, while the capesize segment could fare better.
"A pick-up in deliveries in the panamax and supramax segments will likely contribute to poorer market conditions for these segments. Consequently, this may lead to a slight and gradual increase in ship recycling of older and less competitive ships in these segments ."Gouveia concluded.
Source: Safety4sea
