Optimism continues as bulk carrier market enters a new phase

After years of volatility, shaped by pandemic-driven disruptions and geopolitical uncertainty, the sector is entering a phase of cautious optimism. Demand for iron ore, bauxite, and agricultural commodities continues to underpin tonne-mile growth, while infrastructure projects, like Simandou in West Africa, signal long-term opportunities.

Global economic momentum and dry bulk trade

Despite geopolitical uncertainty and inflationary pressures, global economic growth has supported steady demand for raw materials. Dry bulk trade surged in 2024, driven by iron ore and grain shipments, before moderating in 2025 due to declining coal demand and weaker steel production. Still, tonne-mile expansion persists, driven by new and longer trade routes, most of them originating from West Africa.

“Global dry bulk commodity demand growth may be modest, but it’s consistent enough to underpin relatively strong demand for larger tonnage,” says Morten Løvstad, Vice President and Global Business Director for Bulk Carriers at DNV.  “This reflects a shift toward supply security and infrastructure-led projects rather than broad-based industrial expansion. Energy transition and fleet renewal will play only a minor role in newbuild demand over the next two to three years.”

Bulker market on cusp of major change

For well-established bulk carrier market trade routes, such as Australia to China, and South America to China, markets are in a state of relative balance. Soybeans remain the fastest growing commodity at around 6% annually, shipped mainly from the US, Brazil, and Argentina to China using Ultramax and Kamsarmax vessels. Kamsarmax vessels also increasingly serve as back-haul carriers for deck cargo, such as large wind-turbine blades. Freight rates for these segments hover near the 10-year average, with no major spikes expected in the short to medium term.

“Agricultural commodities such as soybeans and grains continue to inject seasonal volatility, while minor bulks like bauxite are gaining traction thanks to aluminum demand and renewable energy supply chains,” adds Løvstad. “This is offsetting declines in coal exports, creating a relatively balanced total market. However, new forces are reshaping the game.”

Bauxite trade a game-changer for capesize tonnage

Bauxite exports from Guinea have surged dramatically over the past decade, transforming global trade flows. From just 20–30 million tonnes exported in 2015, Guinea shipped nearly 175 million tonnes in 2025, overtaking Australia as the world’s leading supplier. Most of this volume heads to China – where demand for bauxite is being driven by the electric vehicle and renewable energy infrastructure markets – generating three times more tonne-miles than Australian shipments.

Crucially, since 2015 – and even more so since 2020 – a structural shift has taken place with this commodity, with bauxite transport shifting away from smaller Supramax and Kamsramax vessels towards larger vessels such as Capesize, Newcastlemax, and VLOCs.

“Guinea’s rise as a bauxite powerhouse is reshaping the bulker landscape,” says Morten Løvstad. “Once a marginal contributor to Capesize demand, bauxite accounted for around 16% of Capesize tonne-mile demand in 2025, equivalent to around 250 additional vessels compared to 2015 levels, marking one of the most profound shifts in bulk trade dynamics this decade.”

Iron ore shipments from West Africa driving more future growth

Iron ore flows are also set for a major shake-up as Guinea’s USD 20 billion Simandou project comes online. Forming another part of China’s Belt and Road Strategy which aims to increase supply security, this project is expected to gradually ramp up iron ore production to 120 million tonnes per year over the next two to three years, servicing the mechanical and construction industries in China. This will reduce China’s dependence on imports from Australia and Brazil, while also displacing lower-grade domestic production in China.

“Simandou is a game changer. Like the bauxite trade, most of this ore will sail to China on Capesize, Newcastlemax, and VLOC vessels via routes three times longer than Australia–China, injecting significant tonne-mile growth into the market,” explains Løvstad.

“As this project ramps up from 20-40 million tonnes in 2026, it aims to reach the steady volume of 120 million tonnes per year by end 2027-mid 2028. A standard Capesize with a capacity of 180 k DWT is capable of making four round trips from Guinea to China per year, on average. So, the tonne-mile addition from Guinea iron ore alone could tie up almost 200 Capesize vessels.”

Strong bulker newbuild market ahead, boosted by freight rates

With as much as 25–30% of the Capesize fleet projected to be absorbed by bauxite and iron ore trades from West Africa, a structural imbalance is emerging in the market. This could be setting the stage for a major newbuild cycle, to offset a potential imbalance between demand and supply of Capesize, Newcastlemax, and VLOC vessels over the next few years.

This is being reinforced by freight rates: Capesize earnings surged in late 2025, lifting the Baltic Capesize Index above 5,000 points in December 2025. With undercapacity persisting into 2026, freight rate strength is expected to endure well beyond the short term, although at more modest levels than the December 2025 spike and with seasonal variations.

Scale and flexibility driving vessel selection

The choice of vessel size increasingly reflects each owner’s strategic priorities. While Newcastlemax has dominated recent orders thanks to economies of scale and faster turnarounds, a shift is underway.

“We expect ordering to rebalance in 2026, with Capesize and Newcastlemax ordered in tandem, as many owners value the Capesize’s greater flexibility and broader port access, thanks to its narrower 45 metre beam,” explains Løvstad.

Demand for larger, more specialized VLOCs is also emerging. “Traditionally optimized for iron ore, VLOC designs are now being adapted for bauxite carriage as Guinea’s exports surge. This trend enhances efficiency and lowers carbon footprint per tonne mile,” adds Løvstad.

Yard space constraints impacting bulk carrier newbuild cycles

The pace of newbuild activity will hinge on owners securing yard capacity, particularly because shipyards tend to prioritize higher-margin projects, such as container vessels and gas carriers.

“While the current container vessel cycle might be starting to stabilize, this market is likely to remain solid throughout 2026,” says Løvstad. “This may delay the ordering of smaller bulk carriers, probably until 2028 or later. Larger Capesizes, however, are less exposed to these constraints since they are typically built in different yards, and the profitability gap compared to container ships is less pronounced than for smaller bulkers.”

Looking further ahead, a second wave of demand may emerge. “After this surge, from around 2028, we are also likely to see a strengthening newbuild market for smaller bulk carriers, especially Handysize vessels of around 40–45,000 DWT, driven by the need for fleet renewal,” adds Løvstad. “However, this remains unpredictable and will depend on freight rates and regulatory developments.”

What will the new Capesize vessels look like?

With the wider maritime industry pushing for emissions reduction, newbuilds in the bulk carrier market will reflect this trend.

“We expect these new vessels to be highly energy efficient,” says Løvstad. “Shaft generators and hull optimization are becoming standard, complemented by a wide range of energy-saving devices. Larger Capesize vessels are also well suited for wind-assisted propulsion systems and may be prepared for these technologies, driven by cargo owners’ involvement.”

However, alternative fuels largely remain a longer-term play. “While some larger vessels on fixed trades could adopt dual-fuel engines, uptake will be limited in the near term,” Løvstad notes. “Conventional engines will dominate, supplemented by biofuels when necessary. Longer term, operators may reserve space for onboard carbon capture and shore power solutions. Methanol, LNG, and ammonia could become strategically important on specific trades, but until there is clarity on the IMO Net-Zero Framework, or its revision, there are few incentives to be a first mover.”

Chinese owners and yards shaping bulk carrier markets of the future

As global trade routes evolve, the bulk-carrier market is poised for strong growth in the coming years. This will be heavily shaped by the growing presence of Chinese owners – now representing about 50% of the DWT of new bulker orders in 2025, compared to just 5% a decade ago – and the concentration of orders in Chinese yards.

 “China remains the epicenter of the global bulk carrier market and at DNV we are strengthening our presence there. Last year we established a dedicated bulker expert team in China, providing localized expertise to our customers there,” says Løvstad.

With shifting trade flows, regulatory pressures, and emerging technologies driving transformation, those who embrace innovation and sustainability will be best positioned to thrive in this new era of bulk shipping.