A post-pandemic recovery in volumes is proving more elusive than we expected, but a constrained fleet-growth outlook still means the underlying market balance looks set to improve until 2025e. Along the way, roughly 5% excess congestion needs to be ‘consumed’, aided by higher fuel costs and regulations capping sailing speeds. Rates should stay elevated in a historical context, paving the way for solid shareholder returns.

Dry bulk supply growth constrained to 2.0% for 2022–2025e. We forecast fleet growth to average 1.8% in our forecast period, as the orderbook-to-fleet ratio remains at a record low of 6.9% and contracting is subdued. However, we expect congestion – at close to 10% in 2022e – to revert towards the historical 5% over the next 12 months, albeit partly offset by increased fuel costs and lower speeds. Hence, we forecast dry bulk shipping supply to average 2.0% in 2022–2025.

Demand growth of 2.2% for 2022–2025e. The expected recovery in demand volumes post-pandemic has been muted due to the ongoing conflict in Ukraine, further Covid-related lockdowns in China, a generally deteriorating macro-outlook and recession fears. However, we still expect demand to outpace the limited supply growth and see a strong H2 2022 and 2023 as drivers of continued strength.