Gearbulk IntegratedReport 2024 Paperturn - Flipbook - Page 44
GEARBULK
OUR OPERATING CONTEXT
INDUSTRY TRENDS
IMPACTING OUR BUSINESS
Gearbulk operates in a constantly evolving industry shaped by global trade
dynamics and shifting market trends. Factors such as consumer behaviour,
economics, technology, and increasingly stringent environmental regulations
continue to in昀氀uence the way we do business.
DRY BULK
The dry bulk market faced signi昀椀cant challenges at the
At the same time, shifting agricultural trade 昀氀ows present new
start of 2025 due to an oversupply of vessels. A surge in
challenges and opportunities. US-China tensions have led to
new tonnage, particularly in the Supramax and Handy-
a reduction in soybean exports from the US, with Chinese
size segments, led to a sharp decline in rates, with some
buyers increasingly turning to Brazil. This has increased
vessels struggling to cover operating costs. Weak demand
tonne-mile demand for bulk carriers, as South American
from China’s industrial sector, geopolitical disruptions, and
grain shipments to China involve longer trade routes. If this
in昀氀ationary pressures further exacerbated the downturn.
trend continues, vessel demand may be sustained despite
broader market headwinds.
A major factor behind the market weakness has been the
rapid 昀氀eet expansion. In the 昀椀rst few months of the year, 37
CONTAINER
new Supramax and Handysize vessels were delivered, with
The container shipping industry has faced signi昀椀cant rate
a total of 227 Supramax vessels expected to enter service in
volatility in early 2025. After an initial rise in January, spot
2025. This growth is outpacing demand, creating a persis-
rates have fallen sharply across major trade lanes, with the Far
tent imbalance that is weighing on freight rates. Addition-
East-to-North Europe route experiencing a 42% drop. Similar
ally, despite low earnings, scrapping activity remains limited,
declines have been seen on US trade routes, worsened by the
preventing any meaningful correction in supply.
recent doubling of US tari昀昀s on Chinese imports.
However, dry bulk freight rates have recently shown signs of
Overcapacity remains a key challenge, as record vessel deliv-
recovery. This improvement has been driven by increased
eries continue to 昀氀ood the market. Fleet growth reached
cargo demand, particularly for coal shipments from Southeast
10.1% in 2024, outpacing demand growth of 9.5%, and this
Asia and steady trade 昀氀ows in the Atlantic. The Supramax
imbalance is expected to persist in 2025. As a result, carriers
and Handysize segments, which were most a昀昀ected by over-
are implementing blank sailings and renegotiating contracts
supply, are now bene昀椀tting from tighter vessel availability and
with shippers, but these e昀昀orts have not prevented rates from
stronger charter interest. Rising demand for Indonesian coal
declining, raising concerns over pro昀椀tability.
in India and increased grain shipments from South America
have provided temporary support for rates.
Port congestion is another escalating issue, with 32% of the
global container 昀氀eet currently tied up in ports—the highest
Outlook
level since late 2023. This re昀氀ects delays and logistical ine昀케-
While the short-term recovery is encouraging, concerns
ciencies at major trade hubs. Adding to the uncertainty, the
remain over long-term sustainability. The global fleet
ongoing Red Sea crisis continues to pose risks, with renewed
continues to expand at a faster rate than demand, with
threats of disruption forcing some carriers to reroute vessels
昀氀eet growth of 2.5% outpacing expected demand growth
around the Cape of Good Hope, increasing transit times and
of 1.5% in 2025. If this trend continues, rates could come
operational costs.
under pressure again later in the year. Moreover, new
tari昀昀s on steel and aluminum, particularly from the US,
Outlook
pose a risk to bulk commodity shipments. Supramax
The container market faces an uncertain future as geopolitical
vessels, which carry a large share of steel products, could
risks, trade wars, and regulatory changes reshape global ship-
see declining volumes if tari昀昀s disrupt global trade patterns.
ping patterns. The shift of manufacturing hubs from China to
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PART 2 – OUR BUSINESS IN CONTEXT
