The dry bulk market, while experiencing f luctuations in freight rates, saw an unprecedented volume of commodities shipped in 2023, setting a new record of 5.37 billion metric tonnes, according to the Xinhua-Baltic International Shipping Centre Development Index (ISCDI).The Baltic Dry Index (BDI), however, found that freight rates for dry bulk cargo remained at a lower level for most of the year, although there was a slight recovery in December.According to the BDI, rates fell to their lowest level in the year in February. “The reason behind this level of activity was a significant shift in commodity patterns seen in 2023, exacerbated by a difficult economic environment in China and geopolitical tensions in Europe. A slowdown in Chinese economic growth impacted infrastructure and construction activity, which inf luenced iron ore prices and demand for raw materials,” reads the report.Rates were also impacted by China’s implementation of environmental policy measures aimed at reducing steel production capacity and decreasing reliance on coal. This aligns with broader trends across the Asia-Pacific region, where countries like Japan and South Korea are diversifying their energy portfolios.Oil tanker and gas carrier freight rates, on the other hand, have been elevated from a historical perspective over the recent past, fuelled by significantly longer travel distances. According to the ISCDI, very large crude carrier (VLCC) laden voyage counts saw a 5% year-on-year increase (y-o-y) in 2023. This was primarily fuelled by record China-bound voyages. “China's seaborne crude oil imports surged by 14% y-o-y to 10.4 million barrels per day, driving VLCC employment up by 16% y-o-y, as Chinese refiners ramped up refining run rates and bolstered onshore crude inventories throughout the year. However, VLCC demand has been under pressure since the fourth quarter, following the cessation of China's robust crude import momentum.”The bulk sector is expected to remain robust as the volume of maritime cargo movements continues to increase. Geopolitical instability that has been seen around the Red Sea, and environmental events like the Panama Canal drought, have not only significantly impacted shipping patterns and extended voyage distances this past year, but will continue to do so in the foreseeable future, ultimately boosting demand for extra tonnage and freight rates across the board.
