- Capesize and Panamax Lead Modest Shipping Recovery.
- Global Economy Slows as Trade Front-Loading Fades.
- North America and Latin America Face Growth Headwinds.
During the global recovery, the dry bulk market found some stability this week. The Baltic Capesize Index climbed close to its yearly peak before settling at $23,572 per day. Panamax rates bounced back to $11,210 per day after a brief dip, while Supramax and Handysize rates remained steady, albeit slightly lower. These improvements bring a glimmer of hope, but the larger economic pressures are still very much in play, reports Break Wave Advisors.
Global Economic Outlook Remains Uncertain
While inflation is starting to ease, industrial output is still lagging, and monetary policies remain tight across major economies. China’s recovery is slower than anticipated, and the ongoing rigidity of interest rates in the U.S. and Europe adds to the global uncertainty. These factors are shifting trade patterns, especially in dry bulk commodities like coal, bauxite, grains, and iron ore.
Growth Slows After 2024 Surge
Following a robust growth period in late 2024, global GDP has started to slow down in early 2025. The OECD points to trade being front-loaded in anticipation of tariff increases as a contributing factor. Now, global GDP is expected to dip from 3.3 per cent in 2024 to 2.9 per cent in 2025 and 2026. Although merchandise volumes surged earlier this year, container freight rates and export order data indicate that this momentum is beginning to wane.
North America and Latin America Feel the Pressure
The U.S. is experiencing a slowdown in growth due to rising tariffs and policy uncertainty, with GDP projected to drop to 1.6 per cent in 2025. Canada and Mexico are facing similar challenges, including persistent inflation and decreased trade activity. In Latin America, Brazil’s growth is expected to decline from 3.4 per cent in 2024 to 2.1 per cent in 2025, and further down to 1.6 per cent in 2026.
Europe’s Fragile Recovery
Europe is still struggling to get back on its feet. The euro area is projected to grow by a mere 1.0 per cent in 2025, with a slight uptick expected in 2026. While recovery funds and possible interest rate cuts could provide some relief, ongoing trade tensions and lacklustre short-term prospects are holding things back. Over in the UK, political turmoil and trade uncertainties are likely to keep growth around 1.0 per cent by 2026.
Asia’s Diverging Outlook
When it comes to Asia, the outlook is a mixed bag. China’s growth is anticipated to slow down due to new U.S. tariffs, although domestic stimulus efforts might cushion the impact. On the brighter side, India and Indonesia are shining stars, with growth rates expected to exceed 6 per cent and hover around 4.7–4.8 per cent, respectively. Japan is experiencing decent consumer spending, but external demand is starting to wane. Meanwhile, South Korea is poised for a stronger rebound in 2026, thanks to better income and employment figures.
From Globalisation to “Slowbalisation”
The OECD has coined the term “slowbalisation” to describe the current economic landscape, characterised by slower trade integration, increasing protectionism, and heightened policy uncertainty. They caution against the rise of economic nationalism and encourage nations to prioritise diversification and collaboration.
In the shipping sector, adjustments are being made to align with these new trade patterns. The dry bulk market is showing a cautious but slight increase in spot rates compared to last week. As global trade becomes more fragmented, the shipping industry must adapt to changing commodity flows and evolving economic conditions. Despite the hurdles, activity is still ongoing, though with a more cautious approach than in the past.
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Source: Break Wave Advisors
