The Dry Bulk Recycling Crisis: Why Aging Ships Are Clogging the Seas
A perfect storm of geopolitics, economics, and aging fleets is reshaping global shipping
The dry bulk shipping industry is facing a recycling paradox. Despite a 35% year-over-year plunge in the Baltic Dry Index (BDI), shipbreaking yards saw a 24% drop in recycled tonnage from January to April 2025—the lowest level in 17 years. This disconnect reveals a market trapped between fading demand and stubbornly high operational lifespans, with consequences rippling across global trade.
“We’re witnessing the graying of the fleet,” says a Singapore-based shipbroker. “Owners are squeezing every last voyage from vessels that should’ve been scrapped years ago.”
The recycling slowdown traces back to Q1 2021, when freight rates skyrocketed due to China’s post-pandemic import surge, sanctions rerouting Russian coal shipments, and the Cape of Good Hope detours avoiding Red Sea risks. Now, even with weaker earnings, shipowners cling to aging hulls: the average dry bulk carrier is 12.6 years old—the oldest since 2010—with 8 million deadweight tons (DWT) of excess capacity that would typically be scrapped. Panamax and handysize segments, where rates deteriorated fastest, account for 77% of recycled capacity (51% and 26%, respectively), but it’s not enough to balance the market.
The ticking time bomb of “zombie tonnage”
Today, 6% of active dry bulk ships (3% of capacity) are over 25 years old—a critical threshold for mandatory surveys and retrofits. Handysize vessels are the worst offenders, with 10% of ships and 8% of capacity in this geriatric bracket. These aging workhorses face mounting efficiency penalties as carbon regulations tighten, yet weak earnings disincentivize replacements. “It’s a vicious cycle,” notes a Lloyd’s List analyst. “Every extra year of operation delays decarbonization investments and distorts supply.”
“The industry is playing chicken with IMO 2030 emissions targets,” warns a Geneva-based trader. “At some point, regulators will force their hand.”
Shipyards anticipate a reckoning. Deliveries are projected to rise 2% in 2025 and 16% in 2026, potentially flooding the market with modern tonnage and finally pushing older ships toward recycling—particularly in smaller segments. But wild cards remain: trade negotiations could revive coal demand, economic slowdowns might further suppress rates, and a Red Sea route reopening would slash voyage distances overnight. For now, the seas grow more crowded with ships that refuse to die.
