Strong and volatile freight earnings are likely to continue into next year, supporting owners’ investment appetite in new tonnage.
Dry bulk vessel demand growth, underpinned by market disruptions has continued to outpace supply in 2026, creating exceptionally firm market balances that should carry forward into 2027.
In its Q3 report ‘Excess All Areas’, MSI notes that dry bulk earnings and asset values have risen to multi-year highs through 2026, supported by exceptionally firm market balances, and this strength has generated a significant supply response.
In MSI’s Base Case, seaborne dry bulk trade is forecast to expand by 2.2% yoy in 2026, while the continued shift towards longer-haul trades has lifted tonne-mile demand growth to 3.5%. Once slower steaming, longer port stays, congestion, and other reductions in fleet productivity are incorporated, required deadweight demand growth rises further to 4.9% yoy. In absolute terms, this equates to approximately 40 million dwt of additional vessel demand.
On the supply side, MSI expects 43.9 million dwt of deliveries in 2026, alongside just 3.9 million dwt of scrapping. Handymax and Panamax vessels account for the bulk of deliveries this year, although Capesize deliveries are expected to accelerate towards year-end. After accounting for fleet additions and removals, as well as inactive capacity, MSI expects the available fleet to grow by 2.9% yoy, equivalent to around 25 million dwt of additional effective supply capacity.
“With demand growth materially outpacing supply, MSI expects the dry bulk fleet employment rate to rise to 91.3% in 2026, leaving market balances exceptionally firm. Conditions are expected to remain firm in 2027, although the balance begins to soften marginally as fleet growth accelerates,” said MSI Director Will Fray.
Dry bulk trade in 2027 is forecast to expand by around 2.0% yoy, while continued growth in long-haul Capesize trades and only a gradual normalisation in the operational inefficiencies currently supporting the market leave required dwt demand growth at around 3.7%.
On the supply side, around 50 million dwt of new capacity is expected to be delivered, lifting effective supply growth to approximately 4.0%. Supply therefore begins to marginally outpace demand, causing the fleet employment rate to ease to 91.0%.
“Nevertheless, this still represents a firm market and strong and volatile freight earnings are likely to continue supporting owners’ investment appetite. MSI now forecasts dry bulk contracting of 75.6 million dwt in 2026, the highest annual total since 2013, followed by a still substantial 58.1 million dwt in 2027, with risks on the upside,” added Fray.
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