More evidence is trickling in from US-listed dry bulk executives as to how trade disruptions from Russia’s invasion of Ukraine are contributing to a near-term lift in rates. However, the longer-term fallout from potential demand disruption in a global recession and closer-term damage from China’s recent upsurge in Covid-19 cases are also factors being monitored by management of New York-listed Genco Shipping & Trading and Pangaea Logistics Solutions.

Genco chief executive John Wobensmith told hosts with cable network CNBC Asia that the bulker owner is witnessing the twin benefits of longer trade routes and slow steaming because of higher bunker prices. “The freight rates have moved up, there’s no doubt about it,” Wobensmith said, adding that numbers were up about 30% so far in March. “There are really two things that have happened here. You have the tonne miles that have grown, but we also have slowed vessels down because of the high price of bunker fuel. And when you slow the fleet down overall, rates do tend to go up.” Europe is sourcing more coal from South Africa and Indonesia while a shutdown of grain from the Black Sea region is causing cargoes to be sourced from places like the US and Colombia, Wobensmith said. “[It’s affecting} the large ships, the capesize vessels, all the way down to the minor bulk vessels, which would typically carry cargoes out of the Black Sea area,” he said. “We have seen almost a scramble to bring more coal and petcoke into Europe because of the shortages, and we’re also seeing grain shipped out of the US from stored inventories going all around the world right now.”

Pressed on the effects of renewed lockdowns in China after the Covid surge, Wobensmith conceded it’s a development that bears watching. But he said the duration should be limited. “I might equate it slightly to what we saw in 2020, where there were lockdowns and we saw a slower period for a short period of time. It was no more than a month or two and then you saw fairly large stimulus and pick-up in China, particularly in the steel industry,” Wobensmith said.

At Newport, Rhode Island-based bulker operator Pangaea Logistics Solutions, managers said dislocations appear to be accelerating what was already a strengthening market ahead of Russia’s invasion. “The overall market is in a state of disruption and reset, and it is happening quickly,” chief executive Mark Filanowski told analysts on an earnings call. “Shipping markets evolve with disruption, and they change with demand.” He said that over the next few months, the market should gain in strength thanks to the disruptions. Filanowski added: “When all this disruption gets sorted out. … I don’t know what’s going to happen to overall worldwide demand … if it will put us into a worldwide recession or not. We’re certainly hoping not, and so we think that overall, it will be good for shipping.” Pangaea is largely insulated from rising bunker prices by heavy hedging and escalation clauses in its contracts of affreightment, said newly appointed chief operating officer Mads Boye Petersen.