Atlantic Panamax Market Declines Amid Weak Tonne-Mile Demand

• Atlantic Panamax markets faced significant negative volatility in Q4, with weakened support from normalized Suez Canal operations and reduced tonne-mile demand.
• The Platts KMAX 9 Index plunged over 50%, reflecting decreased earnings and lackluster Q4 demand.
• Limited rate recovery observed late in the quarter, supported by thinning tonnage.
• Challenging market conditions expected, with freight levels under pressure due to high vessel supply and soft demand.

According to S&P Global, The Atlantic Panamax freight market started Q4 with a cautious outlook. Market sentiment was impacted by the normalization of Suez Canal operations, reducing re-routing opportunities that had previously supported longer distances. Despite expectations for an end-of-year surge in cargo demand, activity remained subdued, with any potential rate increases relying heavily on limited vessel availability.

Platts KMAX 9 Index Decline

The Platts KMAX 9 Index, which tracks Kamsarmax bulk carrier earnings, dropped to 54% below the levels recorded in Q4 2023. This sharp decline was attributed to reduced tonne-mile demand and weaker-than-anticipated Q4 activity. The index’s poor performance highlighted the absence of traditional Q4 demand drivers.

Golden Week and Strikes Add Pressure

The start of the quarter coincided with Golden Week in China and a major strike at US ports, disrupting container traffic at critical hubs like New York and Houston. These factors compounded the already challenging conditions, creating uncertainty and limiting market movement.

Freight Trends Across Routes

• Coal Routes: Rates on the Hampton Roads-Rotterdam coal route averaged $9,000/d in Q4, with a low point of $11/mt in November before recovering to $12.25/mt by late December.
• Grain Fronthaul Routes: The Santos-Qingdao grains route peaked at $40.50/mt in mid-October but declined steadily, reaching $30.50/mt in December.

Activity on trans-Atlantic mineral cargoes remained stable, while East Coast South America agribulk shipments saw steep declines, dropping 41% from the previous quarter.

Late Quarter Stabilization

Tonnage tightening supported a modest recovery in freight rates late in the quarter. However, overall demand remained lackluster, and rate improvements were short-lived due to an oversupply of tonnage and limited cargo availability.

2025 Outlook

The outlook for the sub-Capesize sector remains challenging. While the first half of 2024 found support from tonne-mile demand and increased cargo flows, the absence of these factors in 2025 presents significant headwinds. A growing orderbook and increasing vessel supply further pressure freight levels, with a bleak forecast for Q1 and the broader year ahead.

Market participants expect continued difficulties in the Atlantic Panamax market as trade dynamics between the US and China unfold and global economic uncertainties persist.