In BIMCO’s “Shipping Number of the Week” analysis for this week (ending May 16, 2025), Filipe Gouveia, BIMCO’s Shipping Analysis Manager, examines the trend in dry bulk ship recycling. His analysis reveals a significant 24% decrease in the recycling of dry bulk vessels at the beginning of 2025 compared to the same period last year.
Decline Noted
Filipe Gouveia noted that dry bulk ship recycling experienced a significant year-on-year decline of 24% between January and April 2025. This reduction has brought recycling activity to a 17-year low, despite a substantial 35% year-on-year decrease in the Baltic Dry Index (BDI).
Gouveia explained that while weaker freight rates typically incentivize the recycling of older, less profitable vessels, the prevailing high level of uncertainty regarding future demand prospects may be causing delays in shipowners’ recycling decisions.
The pace of dry bulk ship recycling has been slow since the first quarter of 2021. This period coincided with a significant strengthening of freight rates, driven by a recovery in demand and increased port congestion. Subsequently, freight rates have been further supported by strong demand from China and the longer sailing distances resulting from sanctions imposed on Russian coal. The rerouting of vessels via the Cape of Good Hope due to attacks on ships in the Red Sea has also contributed to these longer distances and supported rates.
However, in the period leading up to April 2025, freight rates have fallen due to a less favorable balance between supply and demand in the dry bulk shipping market.
Gradual Awakening
While the overall volume of ship recycling has declined, there has been an increase in recycling activity within the Panamax and Handysize vessel segments. These segments accounted for 51% and 26% of the total recycled capacity, respectively. The gradual weakening of Panamax freight rates since the second half of 2024 has likely contributed to the increased recycling in this size category. Freight rates in the Handysize segment have also softened, although to a lesser degree.
Currently, 6% of the total dry bulk fleet, representing 3% of the operating ship capacity, is over 25 years old. This age is typically when most bulk carriers are considered for recycling. This trend is most pronounced in the Handysize segment, which comprises the smallest ships in the fleet. In this segment, 10% of the ships, accounting for 8% of the capacity, are over 25 years old.
Looking forward, projections indicate that ship deliveries are expected to grow by 2% year-on-year in 2025 and significantly by 16% year-on-year in 2026. The highest volume of these new deliveries is anticipated in the Panamax and Supramax segments. This influx of new, larger vessels could potentially incentivize the recycling of older tonnage, particularly within the smaller ship segments like Handysize.
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Source: BIMCO
