Dry bulk freight rates surge this year, led by large vessels

Korea Ocean Business Corp. published a special research note Thursday reviewing trends and the outlook for the dry bulk shipping market — vessels that carry unpackaged raw materials such as iron ore, coal, grain and cement in large volumes.

According to the report, dry bulk freight rates this year have risen sharply compared with last year, though the extent of the increase varies between large vessels and smaller ones. The report also projected that if seasonal cargo volumes recover to a certain degree between September and December following a recent slowdown in shipments, rates are likely to remain above last year's levels through year-end — though growing vessel supply will continue to drive divergence across ship sizes.

Average freight rates from the start of this year through mid-August rose across all vessel classes compared with the same period last year. By vessel type, Capesize ships — vessels of 100,000 tons or more that primarily carry iron ore and coal — posted the largest gain at 64.0 percent, followed by Panamax (mid-to-large) at 52.1 percent, Supramax (mid-size) at 45.9 percent and Handysize (small) at 38.3 percent.

However, the high year-on-year gains partly reflect a base effect from depressed rates last year. Freight rates in the same period last year were roughly 19 to 26 percent lower than in 2024, depending on vessel class. Even measured against 2024, this year's average rates remain elevated — up 31.6 percent for Capesize, 13.2 percent for Panamax, 9.2 percent for Supramax and 11.6 percent for Handysize.

The rate increases this year were therefore driven by a combination of a rebound from last year's low base and genuine improvement in market conditions. Rates across all vessel classes also stood above their long-term averages, with Capesize in particular running at more than double its long-term average.

The report forecast that dry bulk rates would remain above last year's levels through year-end, with divergence by vessel size and cargo type likely to persist. Capesize vessels were expected to perform best among the major classes, as sustained demand for long-haul iron ore transport is accompanied by a relatively limited influx of new ships entering the market.

For Panamax, grain and coal demand is expected to provide support, but the arrival of new vessels will cap further rate gains. Supramax stands to benefit from rising grain shipments, though fleet growth and sluggish minor bulk cargo volumes are seen as headwinds.

Korea Ocean Business Corp. identified four key variables that will shape the direction of the dry bulk market: iron ore shipments from Brazil, Australia and Guinea; grain exports from the United States and South America; coal demand from China and India; and changes in actual available vessel capacity as newbuilds are delivered.

"The dry bulk market is currently in a phase where cargo demand, trade route composition and supply growth are acting differently across vessel classes, rather than all moving in the same direction," the report said. "Market participants need to look beyond near-term rate strength and also consider next year's newbuild deliveries and shifts in long-haul cargo flows."