Bulker newbuilding contracts have seen a dramatic decline, plummeting 92% to their lowest level in decades. This downturn in dry bulk contracting has been progressively apparent since the latter half of 2024. During this time, the prices of second-hand ships that are five years old dropped by 12%, primarily due to weakening freight rates. In contrast, the prices for newbuildings saw a minor decrease of just 1%.
As of February 2025, a five-year-old vessel on average sells for 86% of the value of a newly constructed ship. The situation in the newbuilding market remains complicated, particularly as strong demand in other sectors, such as tanker and container shipping, has kept newbuilding prices elevated. This competition for limited shipyard slots has resulted in extended delivery times. Today, orders for smaller bulkers are facing delivery dates as late as 2027, while larger ships may only become available in 2028.
Gouveia notes that the medium-term market outlook for dry bulk appears uncertain, with weak demand anticipated for iron ore and coal. Additionally, potential changes in Red Sea shipping routes and ongoing trade tensions may further dampen demand. Currently, the dry bulk order book represents 10% of the fleet, which is enough to replace aging vessels in a stable market. Despite the fleet being comparatively younger than the container and tanker fleets, it is gradually aging, with an average age approaching 13 years.
The panamax segment comprises the largest share of the order book at 34% of capacity, albeit with an orderbook to fleet ratio of 14%. However, despite most orders coming from this segment, contracting has decreased by 83% year-over-year. The capesize segment, accounting for 29% of the order book, has the lowest orderbook to fleet ratio at 8%. Though capesize contracting showed signs of recovery in 2024, there have been no new orders in 2025.
Looking forward, fleet renewal and decarbonization are expected to drive contracting. As climate regulations impose stricter limitations on older bulkers, many are becoming less competitive, potentially triggering increased recycling of these ships.