Vessel performance is not the only decision-maker in the dry bulk market

News reported last week that the global bulker fleet is experiencing a slowdown in sailing speeds and so could usher in a two-tier market, confirms a position long known by dry bulk market players.

Analysts at Veson Nautical have suggested that the impact of an ageing fleet, stricter emissions regulations, and evolving market dynamics are all factors in the lower average speeds being witnessed.

Two tier market

In fact, the dry bulk fleet is already segmenting between fuel-efficient, eco-designed vessels and older tonnage pushed into more niche trades. This has implications for operators, as access to premium cargoes may increasingly favour those who can meet charterers’ emissions and fuel efficiency expectations.

However, the assumption that charterers always pay a significant premium for eco tonnage still needs scrutiny, since freight rates remain the primary driver of chartering decisions.

Market dynamics and premiums

When the market is strong, the premium for eco ships is quite pronounced, as fuel savings are significant, and charterers are willing to pay for efficiency. Conversely, in weaker markets, the spread narrows, and charterers often opt for cheaper freight, regardless of the vessel’s efficiency.

This cyclical effect means owners must weigh their fleet strategy carefully, as the value proposition of eco tonnage fluctuates with market conditions.

Safety risks

There may also be safety implications that flow from pushing less efficient vessels into niche markets, echoing the impact of the single hull tanker ban which saw an exodus of tonnage from US and European waters.

If older bulkers are relegated to less-regulated markets, safety and maintenance could become concerns, especially if they are operating on tight margins. However, since bulk carriers don’t face the same potential pollution risks as single-hull tankers, the regulatory urgency to tackle this will differ.

Commercial considerations

The real question is whether this shift structurally supports a long-term freight premium for modern ships or if older vessels, despite higher fuel consumption, remain cost-competitive in specific trades. In our view, the assumption that eco vessels will always command a higher rate needs to be assessed within the broader economic cycle.

Image: Thomas Zaidman, Managing Director, Sagitta Marine SA

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Read the article online at: https://www.drybulkmagazine.com/special-reports/05032025/vessel-performance-is-not-the-only-decision-maker-in-the-dry-bulk-market/