Bulk Shipping Faces New Era of Change
The dry bulk shipping industry is navigating a transformative phase marked by both opportunities and challenges. Driven by robust commodity demand and shifting trade patterns, particularly from China, the sector is adapting to new regulatory pressures and sustainability goals. As the market stabilizes after years of volatility, industry experts express cautious optimism about the future of bulk shipping.
Shifting Trade Dynamics and Demand Growth
Despite ongoing geopolitical tensions and inflation, global economic growth has bolstered demand for raw materials, particularly in the dry bulk sector. In 2024, dry bulk trade experienced a significant surge, primarily fueled by iron ore and grain shipments. However, projections indicate a moderation in 2025 due to declining coal demand and reduced steel production. Nevertheless, the expansion of tonne-mile continues, largely driven by new and longer trade routes originating from West Africa.
Morten Løvstad, Vice President and Global Business Director for Bulk Carriers at DNV, notes that while global dry bulk commodity demand growth may be modest, it remains consistent enough to support strong demand for larger tonnage. This shift reflects a focus on supply security and infrastructure-led projects rather than broad industrial expansion. Løvstad emphasizes that energy transition and fleet renewal will play a minor role in newbuild demand over the next two to three years.
Established trade routes, such as those from Australia and South America to China, are currently balanced, with soybeans emerging as the fastest-growing commodity at approximately 6% annually. These shipments primarily utilize Ultramax and Kamsarmax vessels. The freight rates for these segments remain stable, hovering near the 10-year average, with no significant spikes anticipated in the near term. Løvstad adds that agricultural commodities like soybeans and grains introduce seasonal volatility, while minor bulks like bauxite are gaining traction due to aluminum demand and renewable energy supply chains.
Emerging Opportunities in Bauxite and Iron Ore Trade
Guinea’s bauxite exports have surged dramatically over the past decade, transforming global trade dynamics. In 2015, Guinea exported only 20–30 million tonnes, but by 2025, this figure skyrocketed to nearly 175 million tonnes, surpassing Australia as the leading supplier. Most of this volume is directed towards China, where demand is driven by the electric vehicle and renewable energy sectors. This shift has resulted in a significant increase in tonne-miles, with Guinea’s bauxite generating three times more tonne-miles than Australian shipments.
Løvstad highlights that since 2015, and particularly since 2020, there has been a structural shift in bauxite transport, moving from smaller Supramax and Kamsarmax vessels to larger Capesize, Newcastlemax, and VLOCs. This transformation has made bauxite a key player in the Capesize market, accounting for approximately 16% of Capesize tonne-mile demand in 2025, equivalent to around 250 additional vessels compared to 2015 levels.
In addition to bauxite, iron ore shipments from Guinea are poised for significant growth with the development of the USD 20 billion Simandou project. This initiative is part of China’s Belt and Road Strategy, aimed at enhancing supply security. The project is expected to ramp up iron ore production to 120 million tonnes annually over the next few years, reducing China’s reliance on imports from Australia and Brazil. Løvstad describes Simandou as a game changer, predicting that most of the ore will be transported to China on larger vessels, significantly increasing tonne-mile growth in the market.
As the bulk shipping industry adapts to these evolving dynamics, the future appears promising for those who embrace innovation and sustainability in this new era of bulk shipping.
