The Dry Bulk Shipping Industry Is Sailing Into a Storm

The global dry bulk shipping market is bracing for turbulence as trade tensions, slowing demand, and shifting supply chains converge. New tariffs, economic uncertainty, and China’s cooling appetite for raw materials are reshaping the industry—and not for the better.

Trade Wars and Ton Miles

Fresh US-China tariff hikes, effective April 25, will directly hit 4% of dry bulk ton mile demand, according to industry analysts. The move is expected to dent US exports while pushing China toward alternative suppliers—reshuffling trade routes but not reviving overall demand. BIMCO has already slashed its cargo demand growth forecast by 0.5 percentage points for both 2025 and 2026, citing trade policy volatility and macroeconomic headwinds.

“This isn’t just about tariffs—it’s about the entire demand equation changing,” says one shipping executive. “When China sneezes, bulk carriers catch pneumonia.”

Iron, Coal, and Stagnation

Iron ore shipments, long the backbone of dry bulk trade, are projected to flatline in 2025–2026 as Chinese steel demand wanes. Coal—another critical cargo—faces a steeper decline, with shipments expected to drop 2-3% in 2025 and another 1-2% in 2026. The double whammy reflects both China’s slowing construction sector and the global energy transition’s uneven progress.

Fleet Growth vs. Freight Reality

Shipowners are tapping the brakes. With freight rates sagging, operators are cutting sailing speeds to reduce supply—a tactical slowdown that’s barely keeping pace with weakening demand. BIMCO projects fleet growth of 1.5-2.5% in 2025 and 2-3% in 2026, while demand stagnates next year before a tepid 1-2% rebound in 2026. The math isn’t pretty.

Rates are expected to stay depressed through 2026, with panamax vessels—overexposed to coal’s decline—faring worst. Capesize rates might cling to slightly higher levels due to constrained fleet expansion, but no segment will match 2024’s numbers.

Red Sea Rerouting: The Wild Card

The industry’s fragile balance could tip further if Red Sea shipping lanes fully reopen. Continued diversions around the Cape of Good Hope are baked into current forecasts—but a sudden return to Suez transit would slash ship demand by 2%, worsening the oversupply crisis. Meanwhile, asset prices keep sliding, with secondhand ships and newbuilds losing value. The message is clear: the dry bulk boom is over.