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January 2023
Despite hopes that a quick economic recovery in China would boost iron ore demand, 2023 has so far been a disappointment for the dry bulk shipping sector. During the first three weeks of the year, iron ore shipments fell 13.1% y/y, the lowest volume since at least 2019, worsening conditions for capesizes. In this period, the Baltic Dry Index (BDI) declined by almost 500 points to 763 on 20 January, its lowest point since June 2020.
The airline industry has been hit hard during the COVID-19 pandemic and seaborne jet fuel cargo volumes suffered along with it. In comparison to pre-pandemic levels, available seat kilometres dropped nearly 90% in early 2020.
Weak economic activity, a 10.5% increase in domestic coal mining, and a recovery in coal imports from Mongolia via rail alleviated coal shipments to China in 2022.
The bad news for liner operators appears to have no end. In a normal year, the weeks leading up to Chinese New Year (CNY) bring an increase in volumes and freight rates. So far, however, the lead-up to CNY in 2023 has been the worst in 13 years.
December 2022
What a difference a year makes! At the end of 2021, container ships were enjoying a historically strong market and freight and time charter rates had yet to peak. At the same time, dry bulk ships were seeing multi-year high rates slipping away, although still enjoying better returns than in previous years. However, tanker ships were seemingly still stuck in a COVID market rut without any immediate hopes for a strong comeback.
Despite floods in November, the Australian wheat production estimate for the 2022/23 marketing year (July 2022 to June 2023) has been increased by the United States Department of Agriculture (USDA). Australian wheat exports could rise 9.8% this marketing year driven by strong harvests and strained global supplies.
From mid-2020, global container export volumes saw strong growth, and combined with increasing port congestion it caused supply chain challenges and historically high liner operator financial results which have been the norm since. In September 2022, however, container volumes dropped below volumes recorded in the same month in 2019 for the first time since mid-2020 and statistics just released by Container Trade Statistics have confirmed the trend.
On 18 November, India’s government removed export tariffs on iron ore and some intermediary steel products. However, this was not enough to keep domestic ship demolition prices from dropping to USD 525 per Light Displacement Tonnage (LDT) at the end of November, 7.9% lower than at the end of October.
November 2022
On 8 June 2022, the European Union (EU) decided to impose a ban on seaborne imports of Russian crude oil and oil products. The ban on crude oil will take effect on 5 December and by then the EU must have found new suppliers and Russia must find new buyers.
According to BIMCO estimates from the upcoming Dry Bulk Shipping Market Overview and Outlook report, deliveries of bulk carriers should drop to 23.8 million DWT in 2024. The sector’s orderbook currently adds up to 66.7 million DWT, a mere 6.9% of the bulker fleet, the lowest ratio since at least 1996.