The dry bulk shipping market, despite its inherent volatility, continues to be a crucial artery for global commodities. At the end of 2024, the prevailing sentiment for 2025 was one of caution, with market fundamentals appearing weak, especially concerning demand from China, a major driver of dry bulk trade. However, as 2025 has unfolded, significant geopolitical shifts and policy decisions, particularly from the White House, have introduced new dynamics.
Joining the discussion on these developments are:
- Joshua Minchin, Senior Reporter, Lloyd’s List
- Greg Miller, Senior Reporter, Lloyd’s List
Initial Outlook vs. Reality in H1 2025
The initial predictions for 2025 were indeed conservative, largely due to:
- Weak Chinese demand: China’s property market crisis continues to dampen demand for construction-related commodities like iron ore and cement. While government infrastructure projects offer some support, overall steel demand has softened. Beijing’s shift in urbanization strategy from rapid expansion to improving existing housing suggests a reframing of the property sector’s role, which will likely mean limited recovery in material demand from this area for dry bulk.
- Geopolitical risks: Ongoing conflicts (e.g., Russia-Ukraine, Gaza) and global trade negotiations have added layers of uncertainty.
- Fleet growth: Projections indicated continued fleet expansion, particularly for Supramax and Ultramax vessels, which could create an imbalance with demand.
However, the first half of 2025 has seen some unexpected turns:
- Capesize strength: Contrary to the general subdued outlook, the Capesize segment has shown surprising resilience and even a strong rally in mid-July. This has been driven by tightening tonnage lists and increased cargo volumes on long-haul routes, particularly from South America and West Africa to China. Despite Chinese steel mill capacity cuts, strong inquiry from major miners and robust activity in the Atlantic basin, including some high-paying transatlantic and fronthaul fixtures, have supported rates.
- Mixed performance for smaller segments: The Panamax and Ultramax/Supramax markets have experienced more mixed fortunes. While initial weeks saw firming rates, these gains sometimes dissipated as charterers reassessed positions. Demand from Indonesia and Australia for Panamaxes, and strong demand from the US Gulf and South America for Ultramax/Supramax vessels, have provided some support.
Impact of White House Policy
The speed and nature of policy from the White House in the early months of 2025 have indeed been “almost unprecedented” and are having a tangible impact on global shipping, including dry bulk:
- Maritime Action Plan (MAP): On April 9, 2025, President Trump issued an Executive Order aimed at revitalizing domestic maritime industries. This includes a Maritime Action Plan (MAP) to strengthen national security and the U.S. economy by addressing the decline in U.S. shipbuilding (currently producing only 0.2% of global ships).
- USTR Section 301 Actions and Tariffs: The EO references proposed Section 301 actions by the U.S. Trade Representative (USTR) targeting China’s maritime, logistics, and shipbuilding sectors. This could lead to fees, penalties, and restrictions on Chinese trade practices, and potentially tariffs on cargo-handling equipment and cranes of Chinese origin. Such measures could lead to shifts in trade flows and sourcing, impacting dry bulk routes. BIMCO has noted that increased tariffs by the US and China, effective April 25, are estimated to directly affect 4% of dry bulk ton-mile demand, potentially impacting minor bulk cargo volumes.
- Harbor Maintenance Tax (HMF) Enforcement: The EO also directs the Secretary of Homeland Security to require foreign-origin cargo to clear customs at a U.S. port of entry and assess all applicable fees, including the HMF, with a 10% service fee for cargo first arriving by vessel to North America that then transits through Canada or Mexico without substantial transformation. This aims to prevent circumvention of U.S. port fees and could influence routing decisions for certain dry bulk shipments.
- Geopolitical Tensions with China: The U.S. has added major Chinese shipping companies to its list of ‘Chinese military companies,’ escalating trade frictions. This, combined with the prospect of higher tariffs under the new Trump administration, creates significant uncertainty for the dry bulk market, given China’s central role in demand. China, in response, is looking to diversify its sourcing, potentially impacting traditional trade lanes for commodities like grain (shifting from the U.S. to Brazil).
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Source: Lloyd’s List
