PROFITS TODAY, PRESSURES TOMORROW: DRY BULK’S RENEWAL GAP
Dry bulk shipping is living through a paradox. Despite a subdued global economy, freight earnings across sizes remain robust.
Yet beneath this resilience lies a structural weakness: contracting of new ships has slowed, orderbooks are thinning, and the fleet is steadily aging.
Firm markets should encourage investment in new ships. This time, owners are hesitant. Shipyards are prioritising higher-value segments such as LNG carriers, tankers and car carriers, leaving few slots for bulkers before the late 2020s. At the same time, uncertainty over future fuels makes committing to a new ship construction a gamble. Extending the life of older vessels remains profitable in the short term, but it risks exposing owners to escalating costs and declining competitiveness.
This cautious approach is creating a renewal gap. Unless ordering accelerates, the supply of younger, compliant ships will tighten in the years ahead. For commodity traders, that translates into a freight market where transportation costs are more likely to rise than fall. Figure 1.
Figure 1: Dry Bulk Vessel Period Rates Capesize
10 15 20 25 30 35 40
0 5
AN AGING FLEET WITH LIMITED RENEWAL The global dry bulk fleet continues to age, with a growing share of vessels approaching the end of their economic life. At the same time, second-hand markets have grown more expensive, reflecting scarcity and uncertainty. Owners may be extracting value from existing tonnage, but replacement is falling behind.
This imbalance is manageable for now, while earnings remain strong. Yet, it points to a constrained future. A fleet that ages faster than it is renewed will reduce effective capacity and increase the value of modern ships that can meet regulatory and charterer requirements. Figure 2.
EXTENDING THE LIFE OF OLDER VESSELS REMAINS PROFITABLE IN THE SHORT TERM.
Kamsarmax Ultramax L. Handy
REGULATION EMBEDDING COST Overlaying these dynamics is a tightening regulatory framework. The International Maritime Organization has committed to net-zero greenhouse gas emissions by 2050, with interim checkpoints in 2030 and 2040. Regional measures are already shaping the economics of trade. The EU Emissions Trading System extended to shipping in 2024, imposes a cost of carbon. FuelEU Maritime meanwhile requires the gradual integration of lower-carbon fuels and supports the use of wind-assisted propulsion.
Enforcement is also becoming stricter, using satellite monitoring and charterer-driven performance assessments. This gradually creates a growing divide between compliant, efficient ships and older vessels that struggle to compete. For charterers and traders, the implication is straightforward: carbon costs are now embedded in freight economics and will increasingly shape delivered commodity prices.
Source: Bureau Veritas 14 | ADMISI - The Ghost In The Machine | Q3 Edition 2025
USD k/day
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25
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