Freight Rates


In 2020, shipowners with vast cash reserves will survive the coronavirus recession. Shipowners will be burning cash reserves in 2020 due to the upturn that had been expected in Q2 2020 could be delayed. In dry bulk sector, prevailing time charter rates and FFAs (Forward Freight Agreements) in 2020 looks grim throughout the year. According to our 2020 shipping outlook, shipping companies will be facing a cash burn till unforeseeable feature and many shipowners will not be able to sustain during coronavirus recession. Furthermore, due to the low bunker prices, shipowners with higher leverage, shipowners that opted to install scrubbers will face challenging markets.

In 2020, publicly listed dry bulk companies are in a better financial state than the 2014-2015 downturn. Debt-free shipping companies with healthier balance sheets will easily handle the approaching storm. Small shipping companies with eco-bulk carriers and low overhead costs will be able to survive if the coronavirus recession lasts shorter than expected.

Capesize spot rates averaged $4,500 per day during Q1 2020 and scrubber-fitted capesize bulk carriers averaged $10,500 during the same period. Capesize FFAs (Forward Freight Agreements) are trading at $12,500 per day for Q2 2020. Thus, this expected dry bulk shipping upturn in Q2 2020 might be reversed or delayed due to coronavirus recession.

After opening Wuhan and having normalizing daily life, China’s imports seem to be increasing, but at a very slow pace.

Handysize and panamax bulk carriers could still be challenged by a lack of cargo availability in Q3 2020. On the other hand, capesize bulk carriers will have enough iron ore cargoes from Brazil and Australia. But, coal cargoes will be at risk. There will be a reduction in coal exports from the United States, South Africa and Canada in Q3 2020.

We are expecting weak steel demand in Q3 2020 from importing countries such as Europe and the United States due to slow economic activities during coronavirus recession.


In the first week of September 2019, surging iron ore exports from Brazil will keep Capesize and VLOC (Very Large Ore Carrier) ships in high demand in the Atlantic Ocean which will support the continued surge in dry bulk freight rates. Capesize market is witnessing a festive period with spot rates reaching record highs despite growing concerns of a slowdown in the global economy due to the USA-China trade war. Recent strength in spot dry bulk freight rates are expected to continue over Q4 2019 due to the upcoming IMO (International Maritime Organization) 2020 regulations and Brazil’s iron ore exports.

In January 2019, Vale’s dam accident triggered widespread casualties in Brazil. Hence, iron ore supply from Brazil tumbled in the first half of 2019. In April 2019,  Brazil could export less than 20 million metric tonnes of iron ore. Baltic Capesize Index (BCI) dropped to a historical low values on the first week of April 2019. In Brazil, after an approval from the court, Vale’s iron ore supplies have now resumed. After Vale’s dam collapsed in January 2019, Brazil’s iron ore exports registered a steep recovery.

In July 2019, Brazil exported 34 million tonnes of iron ore which is more than 80% higher than the exports in April 2019. There is a strong demand for capesize bulk carriers in Brazil which created a shortage of capesize tonnage in the Atlantic Ocean. Hence, huge demand for capesize tonnage has been leading to skyrocketing spot capesize freight rates. Brazil exports most of its iron ore to China. China has been accounting for the lion’s share, capesize bulk carrier takes about 90 days to complete a round voyage from ex Brazil to China. Capesize bulk carriers that loaded cargo in June at Brazilian ports for discharge in China would be available again for loading only in September. According to AIS data, not many capesize bulk carriers and VLOCs (Very Large Ore Carriers) repositioned in the Atlantic to meet the surging demand in Brazil which triggered spot rates are on an upward spiral.

Additionally, in the run up to the impending IMO (International Maritime Organization) 2020 regulations, an effective supply of capesize bulk carriers has contracted. In order to avoid using expensive low sulfur fuel and save on bunker costs, many shipowners are retrofitting their capesize bulk carriers with scrubber before IMO (International Maritime Organization) regulation comes into force on January 2020. Scrubber fitting at the shipyard takes about a month, during which time the bulk carriers will be removed from the operating fleet. In total, 45 Capesize bulk carriers and VLOCs (Very Large Ore Carriers) were retrofitted during June-August 2019 which is equivalent to 3% of the Capesize bulk carriers and VLOCs (Very Large Ore Carriers) operating fleet in terms of DWT (Dead Weight Tonnes). As IMO (International Maritime Organization) deadline (January 2020) approaches with almost 10% of the additional Capesize bulk carriers and VLOCs (Very Large Ore Carriers) fleet scheduled for retrofitting at shipyards in the remaining months of 2019. Hence, these two conditions will be taking the spot rates even higher during Q4 2019.


On 2 September 2019, Baltic Capesize Index (BCI) reached 4,659 points, its highest level since 17 May 2010. Baltic Exchange’s five capesize routes (5TC) reached $36,101 per day today which is the highest in 9 years. In the last three weeks, capesize benchmark routes have increased by 27%. On 22 July 2019, Baltic Exchange’s five capesize routes (5TC) reached $32,963 per day. Capesize spot rate increase caused by cargo supply especially Brazil’s iron ore exports continues to outstrip the list of available capesize ships in the Atlantic Ocean. Brazil’s healthy iron ore demand struggled to find capesize tonnage. According to market veterans, capesize spot rates might potentially reach $50,000 per day over the next few months.

In April 2019, Brazilian iron ore exports dropped to 18 million tonnes, but in July 2019 Brazilian iron ore exports reached 34 million tonnes which is predicted to stay at this level till the end of 2019. Baltic Exchange’s capesize Brazil-China (C3) benchmark reach to $28.73 per tonne. On the other hand, capesize spot rates for Trans-Atlantic (TA) round-trips continue to trade at around an $8,000 premium to those for round-voyages across the Pacific Ocean where capesize vessel supply is greater. On 2 September 2019, Baltic Exchange Capesize Index (BCI) Gibraltar-Hamburg (C8_14) for Trans-Atlantic (TA) round voyage reached at $39,725 per day. Baltic Exchange Capesize Index (BCI) China-Japan (C10_14) Trans-Pacific round-trips round voyage reached at $31,688 per day. Baltic Exchange’s Forward Freight curve still points to a bearish trend in rates for the rest of 2019. Current capesize spot rates reflect strong momentum in the physical shipping market.

Baltic Exchange’s Capesize Forward Freight assessment for September 5TC contracts rose to $32,058 per day and October 5TC contracts rose to $28,708 per day. Baltic Exchange’s Capesize Forward Freight Contracts for the fourth quarter (Q4) 2019 also rose, but are still lower than those seen for the third quarter (Q3) 2019.


The struggling panamax segment is bouncing back as ship operators raise the bidding for longer employment. Panamax operators are chartering in tonnage as the period market tries to catch up with a peaking spot market. Panamax spot market is near a three-year high. Last week of August 2019, Japanese kamsarmax newbuilding has been fixed this week straight out of shipyard at $16,000 per day for 12 months. The latest fixture represents a significant increase as the previously lackluster segment continues to improve. Furthermore, Kwang Ming-controlled 2014 built kamsarmax bulk carrier 80K DWT KM Shanghai was fixed at $14,500 per day for 12 months.

On the other hand, Athens based Olive Shipmanagement’s 2010 built panamax bulk carrier 79K DWT MV Elinda Mare was fixed $14,000 per day for 7 to 9 months. Copenhagen based Dampskibsselskabet NORDEN A/S was caught long on cargo when Norden fixed in the 2019 built kamsarmax bulk carrier 81K DWT JY Hongkong at $15,400 per day for 7 to 9 months. Currently, all period tonnage that was taken in 2018 is trading very profitably now.

Last year, German bulker giant Oldendorff and Norwegian Klaveness as players that had acted in time to catch the wave. Panamax and kamsarmax market is generally firming and will keep on as long as you can do period deals at a discount to spot. Panamax FFA (Future Freight Agreement) curve is standing at $16,000 per day for 2020’s trading would be worth it due to long-haul grain cargoes to the Far East.

Currently, in the panamax market grain is key cargo. Besides, coal cargoes to China from Australia and Indonesia are just stable now, but China has been sourcing grain from long route East Coast South America which will be pushing panamax market up. End week of August 2019, kamsarmax bulk carriers are fixed at some $18,000 per day in the Pacific spot market. Kamsarmax bulk carriers are fixed around $20,000 per day for East Coast South America to Singapore and India range. First week of September, we might see some corrections in panamax spot market because panamax rates jumped too fast. There are about 250 newbuilding panamax bulk carriers on order in shipyards. Total orders include 75 kamsarmax newbuilding orders for delivery before the end of 2019. Shipowners are discouraged by the newbuilding order book.

United States-China trade war is the second reason that triggered panamax bulk carrier spot market. United States-China trade war has increased tonne-miles by moving China’s grain and soybean sourcing from the United States Gulf to Brazil and Argentina.

In the panamax and kamsarmax segment, speculative shipowners seem like winners of the market, if panamax and kamsarmax segment remains bullish. In previous years, kamsarmax bulk carriers have been one of the most popular financial investment plays in the dry bulk sector. Bank of Communications Financial Leasing, AVIC International Leasing, ICBC Leasing, and China Development Bank Leasing have unchartered bulk carriers on order in panamax and kamsarmax segment. AVIC International Leasing alone has a reported 12 kamsarmax bulk carriers on order.


Capesize dry bulk carrier freight rates have plummeted below operating costs of $5,000 per day last week. Capesize dry bulk carrier owners are planning to idle their vessels because of the weak capesize dry bulk freight market. Experienced shipping market veterans believe that capesize market has bottomed out and is set for a rebound. Capesize dry bulk carrier freight rates can’t go much lower before ship owners start idling vessels.

Capesize dry bulk carrier freight rates reached bottom and that an upturn should materialize very shortly. Capesize to panamax dry bulk market ratio is now is the lowest level since early 2016. Previously, when capesize dry bulk carrier freight rate was at such low levels, market rebound followed. Current capesize dry bulk carrier freight rate weakness represents the intra-year low for 2019, and forecast the Baltic Dry Index to average around 125% higher in Q2 2019. Currently, capesize dry bulk carrier freight rate costs around 40% less to hire a vessel and having 125% more cargo capacity. Soon, panama dry bulk charterers to pool cargoes into capesize dry bulk carriers.

United States – China trade negotiations are expected in late March could also trigger a rally in dry bulk rates. Capesize dry bulk operators are turning towards slow steaming amid the weak earnings. Capesize dry bulk carriers optimal speed for was lower at 11 knots at the beginning of 2019.


Analyst Clinton Webb at AXIA Capital Markets released dry cargo rate forecasts for 2018 and 2019. According to analyst Clinton Webb demand will continue to outpace supply growth and that will trigger capesize, panamax and supramax dry bulk carrier rates. Analyst Clinton Webb believes that 2017 was just the first part of a dry bulk market recovery.  AXIA Capital Markets’ report explains that in Q1 2018 dry bulk shares have been flat due to new building deliveries and Chinese New Year. Analyst Clinton Webb at AXIA Capital Markets raised its dry cargo rate forecasts by 20% on average for 2018. Analyst expects the upward trend to continue in 2019 due to the current order-book-to-fleet ratio at 9.6%.

2016 2017 2018 (AXIA Forecast) 2019 (AXIA Forecast)
Capesize $7,403 per day $15,128 per day $17,500 per day $23,000 per day
Panamax $5,573 per day $9,766 per day $13,000 per day $16,000 per day
Supramax $6,262 per day $9,168 per day $12,500 per day $15,500 per day



Dry bulk charterers are looking to keep or increase period and time-charter coverage for capesizes in 2018 after the extreme volatility in spot freight rates seen in 2017. Charter coverage demand comes as the capesize markets fall below the record highs seen in Q4 2017 and as forward rate expectations also weaken. Dry bulk shipowners are said to be holding out for better rates on expectations of a tighter capesize market in 2018.

Main dry bulk charterers and operators Oldendorff Carriers, Cargill, SwissMarine, and Koch Shipping are keeping existing chartered in tonnages and potentially entering new charter deals. In December 2017, one-year period rates for capesizes were $18,600 per day are on the rise. For example, giant iron ore producer and one of the biggest dry bulk charterer Rio Tinto took Zodiac Maritime’s 2016 built capesize 179K DWT MV Buccleuch for a year at $20,000 per day. Cargill Ocean Transportation chartered in 2007 built capesize dry bulk carrier 178K DWT MV Pontotriton and 2011 built capesize dry bulk carrier 180K DWT MV New Shanghai at floating rates linked to the BCI (Baltic Exchange’s Capesize Index).

2017 was one of the most volatile years for spot capesize rates, which swung between $4,600 per day and $30,500 per day. Volatility continued into the new year of 2018. This volatility triggered to more demand for long-term charter coverage. Capesize operators would like to charter in more tonnage but shipowners are greedy and reluctant to fix at today’s low levels. Capesize spot rates are at $16,600 per day ahead of the seasonal slowdown due to the Chinese New Year.

Baltic Exchange’s Forward Freight Assessment (FFA) for capesizes dry bulk carriers at $17,150 per day for 2018. FFA market does not fully reflect better fundamentals in the dry bulk market. After the end of the Chinese New Year (February 16) steel mills are expected to increase production again and so spot rates to strengthen again by March 2018. Furthermore, China’s construction activity should also grow in May 2018. There is going to be a supply deficit in 2018 due to capesize order-book stands at between 10 and 15 dry bulk carriers in 2018 which is creating further tightening of supply. Capesize dry bulk carriers should reach $25,000 per day levels by the beginning Q3 2018.


Dry bulk freight rates have been in the doldrums for eight years. Dry bulk shipping has grown up on the premise that world trade will increase that the trick to maintaining healthy earnings lies in keeping the supply equilibrium in check. Shipowners restraint in new orders, restraint in leveraging, restraint in keeping vintage tonnage trading, but shipowners actually over-order, shipowners love leverage, and vintage tonnage has been known to be a cash cow. Shipowners are subjected to repetitive and even conflicting vetting, inspections, surveying by a multitude of regulatory bodies, charterers, insurers, financiers, and others. Shipowners allowed to be manipulated by lesser groups with special interests. In the dry bulk shipping sector, if shipowners continue recycling this year at the pace of 2016 over the next 12 to 18 months and don’t shoot themselves in the foot with new orders, then even with the lackluster demand equation and scheduled deliveries, we should be poised for a return to a robust freight market in late 2017 and 2018.


Shipping outlook stays negative in 2017. Overcapacity in the shipping sector in 2017 putting pressure on freight rates and driving further consolidation and defaults. All segments will be under pressure but tanker shipping will face slightly less stress than dry bulk and container shipping. Funding is more critical for companies that are not able to cover their upcoming maturities. In 2017, shipping companies defaults are likely to be concentrated among companies with weak liquidity.


In the second week of September 2016, Baltic Dry Index (BDI) punched through the 1,000-point mark and hitting highs not seen for nearly 2 years. Capesize rates at least have shown signs of life after a terrible year. Panamax rates have been on a steady upward trend helped by the recent rebound in Asian coal markets and seasonal demand from the US Gulf and Black Sea grain trades. Ship values at lows not seen since the 80s. 5-year-old capesize ships are now worth only around $24 million, panamax and supramax ships only $14 million to $15 million. Dry Bulk Shipping market’s recent rebound can be attributed to the usual seasonal bounce and shipping analysts believe the market is in for around another two years of poor freight rates as new deliveries and weak trade growth slows any rebound. In 2016, 44% of expected new dry bulk deliveries have been delayed which helped the market. Strong and bold shipowners who would be able to sustain at least another 18 months flat rates, then today looks like a good time to invest.


Due to higher iron and steel prices pushed upward trend in capesize bulk carrier spot rates in the first quarter of 2016, dry bulk shipping should remain cautious about speculative housing boom in China and economic growth signals. It is obvious that China’s housing boom is more speculative than substantial. Mostly, the housing boom and housing price gains inexpensive high rise buildings in big cities. In order to lower the steel demand, China’s government would tighten the credits. Steel prices almost entirely government-driven instead of market-driven demand. Underperforming loans in China are still a major economic risk. Furthermore, the Chinese economy is not growing steadily with consumers demand.

China’s heavy industries and shipbuilding is another major problem. China’s socialist government might withdraw support for inefficient domestic miners that could trigger Brazilian and Australian iron ore imports. China’s coal imports also affects the dry bulk shipping market. Coal imports are in long-term decline due to the greater use of natural gas. Predicting that coal will continue to maintain a negative trend and so on dry bulk shipping. Chinese government’s agricultural policy is unclear. China has been the biggest consumer of surplus grain produced in the US and Europe. China’s government wants to favor domestic grain production. In sum, all these factors in commodities markets affect freight rates. The dry bulk shipping market will soon find a proper equilibrium point for demand and supply.


Confirmation of 30 more Valemax 400K DWT, i.e. $85 million per ship, bulkers shows China intends to enforce control of the iron ore freight market. For the next ten years, there is no chance of a spike in profits for capesize owners like in 2005. 30 Valemax mega bulkers will be built at Chinese domestic yards to carry iron ore from Brazil to Chinese mills. Order total $2.55 billion. China’s long term strategic aim of carrying 50% of its seaborne trade on its own vessels.


Besides coal and iron, seaborne grain markets may provide little comfort to failing dry bulk companies. Worldwide grain surplus has sent export shipments falling to three-year lows. Senior Economist Jay O’Neil explained that there are too many ships and not enough demand from the grain trade. US Department of Agriculture (USDA) estimates world grain stores stand at 3.027 billion tonnes and estimated world trade for 2015/2016 to be at 361 million tonnes. Senior Economist Jay O’Neil explained that US soybean exports to China have remained healthy but corn and wheat exports are lagging and likely not going to meet current projections. Freight rates reflect that weakness. Supramax rates from the US Gulf to China and south Japan destinations have fallen from $19,800 per day in August 2015 to $8,000 per day as of January. Besides the USA there is growing competition from other exporters like Argentina. Argentina’s combination of a devalued currency and relaxed export duties, cut a soybean export tariff and several crop taxes, brightened Argentina’s export outlook