Outlook for the dry bulk shipping market in the next 5 years

Abstract

The dry bulk market is experiencing tough situations and it is not expected to recover in the

coming year. The objective of this report is to understand the current situation of the dry bulk

market and hope to provide an outlook of it in the next five years. This report will provide a

thorough analysis of the factors that affect the balance of supply and demand and freight earnings

in the dry bulk industry.

The author touches on the fundamentals that affect supply, demand and the freight rates of the

dry bulk market. Through this research, a study of supply, demand for shipping services, freight

rates of the dry bulk market and the global economy will be conducted. The severity of the impacts

will also be looked into.

Oversupply is the main reason for the decline in the dry bulk market. Several reasons include the

delivery of newbuildings and the low rates of scrapping. With regards to the three major dry bulk

commodities, coal will see a decline in demand due to stricter environmental policies worldwide

as well as a slowdown in China’s demand. The demand for iron ore will be healthy but is affected

by China’s movements in the steel industry. Grain on the other hand will continue to rise in

demand as long as there is growth and increased standards of living.

The outlook in the next five years are pretty weak with low freight rates with many shipowners

operating below costs. The solution for the recovery of the dry bulk market is to ensure that supply

rapidly decreases in order to find a balance with the demand for dry bulk shipping services.

Shipowners need to realise that even though values of their vessels have dropped, there is a need

for scrap in order for a recovery. And even if signs of recovery are seen, players should ensure

that this recovery is consistent and their actions in response to this recovery do not hamper the

dry bulk market.