As the dry bulk shipping industry steps into 2025, uncertainty looms over the sector, shaped by global economic shifts, trade disputes, and evolving environmental regulations. Market actors are grappling with a challenging backdrop, where the weakening demand from China, geopolitical tensions, and supply-side imbalances are setting the stage for what could be a defining year for the industry.
The Baltic Dry Index ended 2024 at 1,099 points, marking a staggering 57% drop year-over-year, with freight rates across all vessel classes suffering under sluggish demand and oversupply pressures. It continued its decline also until the end of January reaching the threshold of about 700 points. With the advent of the new month the trend seems to have changed course; slight increases were recorded day by day, which total +100 points since the beginning of February.
Meanwhile, global trade policies are injecting additional volatility into the market. The anticipated return of aggressive tariff measures by the United States, including a 10% blanket tariff on Chinese imports and 25% duties on goods from Mexico and Canada (currently pending again), threatens to further disrupt supply chains. Furthermore, Trump also announced that he would impose additional new 25 percent duties on all imports of steel and aluminium, along with reciprocal duties to all countries that imposed and currently have duties on the US.
Retaliatory measures from China and other affected nations could lead to shifts in trade routes, as importers and exporters seek alternatives to avoid punitive levies. Given that the US accounts for 11% of global tonne-miles in bulk trade, the potential for cascading disruptions is substantial.
Yet, amid these challenges, certain regions are emerging as bright spots. India continues to solidify its role as a key driver of demand, with GDP growth projected at 6.9% in 2025. The country’s rising energy needs and infrastructure investments are fueling demand for coal, iron ore, and agricultural commodities, helping to counterbalance China’s slowing appetite. Precisely, the Chinese economy, long the backbone of dry bulk trade, is showing persistent signs of deceleration, with GDP growth expected to slow to 4.7% in 2025. The downturn in the country’s real estate sector, which consumes vast amounts of steel and construction materials, is weighing heavily on iron ore and coal imports, both crucial to dry bulk volumes.
Similarly to India, south and north Asia, led by Vietnam and South Korea relatively, are showing steady demand growth, particularly for metals used in renewable energy transitions.
On the supply side, an expanding fleet threatens to further weigh on freight rates. The global order book now represents nearly 10% of the active fleet, with new vessel deliveries expected to outpace scrapping activity. Owners have been reluctant to retire older ships, despite persistently weak earnings, exacerbating the oversupply problem. Meanwhile, regulatory shifts, including the European Union’s carbon pricing mechanisms and tightening IMO emissions rules, are pressuring shipowners to accelerate their decarbonization strategies; although the engines and fuels of the future remain unknown. Compliance with new environmental mandates will likely lead to increased operational costs, favoring more fuel-efficient vessels while pushing older, less efficient ships toward obsolescence.
As the industry navigates these turbulent waters, adaptability will be the key to survival. The dry bulk sector has weathered cyclical downturns before, but the interplay of economic, political, and environmental factors in 2025 presents a uniquely complex challenge. Whether this year marks a painful correction or a strategic turning point for the industry will depend on how market participants respond to the shifting tides of global trade.
