With three quarters of 2024 closed, we review the latest developments in the Dry Bulk carrier market. The first nine months of the year have shown some notable trends, particularly in ordering activity, fleet growth, and demolition rates.

Ordering Activity

The newbuilding market has maintained steady activity since 2021, and 2024 is no exception. So far this year, over 440 bulk carrier orders have been placed, totalling 108.4m MT of deadweight. This represents a slight decline compared to the same period in 2023, when 495 orders were made, but an increase over the 368 orders registered during Q1-Q3 of 2022.

Top Segments by Orders Year-to-Date

Panamax vessels between 68K and 85K MT of deadweight now lead in terms of new orders, having overtaken Ultramaxes (60K-68K MT of deadweight) since the end of the H1 2024. To date, 156 Panamax orders have been placed, maintaining a healthy orderbook-to-active-fleet ratio of 14.6%.

The Ultramax segment follows with 151 orders and holds the highest orderbook-to-active-fleet ratio at 28.2%, representing a large share of the overall orders. Capesize vessels (120K-220K MT), excluding Baby Capes, have seen 48 orders so far in 2024, bringing the total orderbook to 127 vessels, with a ratio of 7.8%. Handymaxes (40K-50K MT), with 35 orders year-to-date, show a solid ratio of over 21%. As is usual, Japanese shipyards hold more than half of the new orders this year, as well. The Supramax fleet segment (50K-60K MT), however, remains quiet, with only 2 ships on order in total and a minute ratio of 0.1%, signalling a lack of demand for new vessels of this type. What's more, these vessels are among the oldest Dry Bulk fleet segments, with an average age of over 14 years.

Orderbook-to-Active-Ships Ratio

Further revealing the strength of the bulk carriers' market is the Orderbook-to-Active-Ships ratio, which currently stands at 10.6%. This ratio is a key indicator of the market’s future trajectory, as it reflects the number of vessels on order relative to the number of active vessels. A ratio of 10.6% suggests that there is a healthy count of new vessels set to enter the market, supporting future capacity expansion. Ultramaxes topping this list with an impressive 28.2% ratio translates into very strong future growth. The Handymax segment also has a strong ratio of over 21%. Supramaxes, on the other hand, have the lowest ratio at just 0.1%.

In terms of shipbuilding nations, China continues to dominate with 68% of the orderbook overall, followed by Japan with 25%. However, Japan holds the majority share in smaller tonnages, particularly for Handy and Handymax vessels, where it accounts for 61% of the market compared to China’s 36%.

Fleet Performance and Growth

The Capesize segment, with 1,625 active ships and a combined deadweight of 303m MT, remains a key player in the market. Growth is projected to be steady, with a 2% projected increase forecasted for 2024 and 1.5% in 2025. Panamaxes, with 2,695 active ships and a total deadweight of 213.4m MT, is the most numerous Dry Bulk fleet segment with the second-highest combined tonnage. There are currently 394 Panamax vessels on order and growth for this segment is expected to outpace the overall market, with a 3% increase forecasted in 2024 and 3.4% in 2025.

Ultramaxes continue their strong upward trajectory, with growth expected to exceed 11% both in 2024 and 2025. Supramaxes, while stable, are showing signs of stagnation, with an aging fleet and a minimal growth forecast.

Ship Deliveries

On the supply side, the fleet is expanding at a slower pace, with new ship deliveries expected to continue their upward trend into 2024. In terms of deadweight capacity, the bulk carrier fleet grew by 2.4% in 2022, and is projected to increase by 2.7% this year. However, this is still lower than the 3.2% growth rate recorded in 2023.

In total, 35.1m and 36.5m MT of deadweight are expected to be delivered in 2024 and 2025. The distribution of the capacity that is about to enter the market includes 31% for Ultramax, 26.6% for Panamax, and 22.5% for Capesize. More than 58% of the current deadweight capacity on order will be delivered from 2026 onwards.

Demolition Activity

Demolition activity for bulk carriers has dropped significantly in 2024, with just 2.5m MT of deadweight scrapped so far this year. This is one of the lowest figures in the past 16 years, surpassed only by the years immediately preceding the 2008 crisis. The contrast is particularly strong when compared to peak demolition years like 2012 (32.3m MT of deadweight) and 2016 (29.5m MT of deadweight). The total scrapped capacity has declined by 52% year-over-year.

The primary reason for this sharp decline is the ongoing strength of the Dry Bulk market. High freight rates, driven by strong demand for commodities and geopolitical factors, have made shipowners to keep older vessels in service rather than retire them. The post-pandemic recovery has further encouraged owners to extend the operational life of their ships, capitalizing on favourable market conditions.

Economic factors, such as newbuilding prices and fuel regulations, also affect demolition trends. For instance, when newbuilding prices rise, shipowners may find it less economical to replace older vessels, which discourages scrapping.

Additionally, stricter environmental regulations, such as the IMO mandates on carbon emissions, would typically prompt owners to scrap less-efficient ships. However, many have opted to retrofit older vessels or use operational efficiencies to delay their scrapping, waiting for either clearer guidance on future regulatory measures, or newer fuel-efficiency technologies. So far in 2024, the pressure from environmental regulations has not yet reached a level that would force widespread scrapping, contributing to the muted demolition activity.

Cyclical industry patterns and market sentiments provide further insight into these trends. The broader demolition market for Dry Bulk carriers has entered a phase of reduced activity after significant peaks during global downturns in the shipping industry, as seen in 2012 and 2016. In 2024, the industry's recovery from earlier crises, coupled with a general optimism regarding future earnings, has resulted in shipowners holding on to their assets longer. While scrapping is an inevitable part of fleet management, many shipowners are delaying this process, expecting continued strength in demand for commodities like Iron Ore, Coal, and Grain, particularly in emerging markets.

Dry Bulk Fleet Outlook

Looking ahead, unless there is a sharp decline in freight rates or significant regulatory pressure, low demolition rates are expected to persist. The demolition levels of 2.5m MT of deadweight registered so far this year are historically low. However, as vessels continue to age and emissions regulations become more stringent, demolition activity could increase beyond 2024.

Our AXSInsights module provides specifically-tailored dashboards, allowing its users to keep a close eye on every aspect of the Dry Bulk fleet, from the purchase of individual vessels, through their operational lives, to their eventual demolitions.