“There are decades where nothing happens, and there are weeks where decades happen.” The rapid pace of global developments over the past six months gives this statement renewed weight. It is clear these events are reshaping the world. Fresh geopolitical alliances and economic deals will be forged, while past ones probably discarded.
As the old saying goes, war is the continuation of politics by other means. Whether through trade wars such as the United States against China/World, or military wars like Ukraine versus Russia or Israel versus Iran. For now, both types of wars are happening, a concoction of confluence, complicating clarity.
For instance, Iran remains vital to China’s Belt and Road Initiative, thanks to its strategic location, vast energy reserves, and logistics potential via ports like Chabahar. Its cooperation deal with China and presence along key trade routes anchor Beijing’s ambitions in the Middle East. Yet, the Israel–Iran conflict highlights the fragility of this vision.
Meanwhile, the US is doubling down on dismantling the ‘China plus One’ supply chain. Unlike previous administrations, Trump’s team shows little tolerance for nations or firms sidestepping the US. To illustrate, the newly announced US-Vietnam trade agreement introduces a 20% tariff (initially 46% on 2 April) on Vietnamese exports to the US and imposes a steeper 40% duty on goods reexported through Vietnam. The latter targets a longstanding loophole used by Chinese exporters to evade tariffs and potentially reflects the lowest tariff level the Trump administration might tolerate in any future arrangement with China, offering little hope for Beijing to secure further concessions.
As of writing, the US had sent tariff letters to its trading partners, including the following consequential dry bulk players (both receivers and shippers):
In essence, it’s a repeat of 2 April, especially for Asia with tariffs now as high as 40%, likely targeting regional supply chains. Malaysia and Japan received increases to 25%, while Laos and Myanmar got modest reductions to 40%. Collection to start on 1 August, with sector-specific tariffs apparently not stacked. President Trump mentioned that these tariff levels are “final, but if they call with a different offer, and if I like it, we’ll do it.”, teasing the possibility of additional negotiations and delays. Yet, real agreements take years, not months, and uncertainty is weighing on confidence.
On the other hand, Beijing has made it known it will retaliate against any deal that undermines Chinese interests. Raising the stakes, in a recent social post, President Trump mentioned put an additional 10% tariff on any country aligning themselves with "the Anti-American policies of BRICS". And just prior publication, Trump threw more curveballs, a 50% tariff on copper imports from 1 August and same rate on Brazilian goods due to political reasons.
Nonetheless, not all is certain. China’s recent rare earth export ban and the US response underscore the growing pain and challenges of a full-fledge decoupling. Rare earths are essential to many high-tech and industrial applications including defense, automobile and semiconductors. Although Commerce Secretary Howard Lutnick announced a rare earth deal with China, it remains conditional, whereby US offered to ease some export restrictions on ethane, chip-design software and jet engine components. The above illustrates the pain and cost involved in decoupling the world’s top two most consequential economies. Moving forward, bilateral trade will likely resemble a cycle of disputes and temporary truces rather than lasting solutions.
Until stakeholders resolve their differences for good, businesses and individuals will remain cautious in putting ‘skin in the game’. A slowdown in global economic activity in the coming quarters appears to be a reasonable conclusion. Meanwhile, shipping will need to navigate through short to medium term pain and uncertainty until a new equilibrium emerges.
This slowdown in economic activity unfortunately comes at a time when overall tonnage deliveries are continue to scale upwards in 2025 and peaked in 2026. From 2021 to 2024, the dry bulk industry was praised for its restraint in placing newbuilding orders. It was widely believed that such discipline would serve as a wide buffer against downside risks in freight rates and, if cargo demand held steady, act as a springboard for future gains.
But that was then, this is now.
With Trump’s return to the Oval Office, there is a clear pivot away from free trade toward fair trade, alongside a visible retreat from green policies. This signaling effect within the US borders represents an uncomfortable but fundamental shift in the global business landscape, one that the shipping industry must once again adapt to.
Freight Fatigue
During the 12-Day Israel – Iran conflict, the dry bulk market remained largely unaffected by this abrupt development, aside from a brief spike in bunker prices that temporarily impacted voyage rates. After two months of low-range trading (around $16,000/day), Capesize C5TC spot rates surged to a yearly high of $30,944/day on 16 June. However, the rally quickly faded, with rates falling back to $17,510/day by 30 June. This volatility was absent in the first five months of 2025, a period unusually stable for a segment known for sharp swings.
Since 2023, the $30,000/day level has acted as a psychological and market ceiling for C5TC. The last sustained break above this level was in 2021 and 2022, driven by fleet inefficiencies and strong demand, both missing in 2025. Despite June’s brief rally, the year-to-date average stands at $15,794/day, up from $12,249 in 2023 but far below 2024’s $23,482/day.
Sub-Capesize rates saw modest gains from May to June, but first-half averages remain below 2023 levels. Panamax P5TC/day averaged $10,701/day in 2025 versus $11,772/day in 2023. Supramax S10TC posted $9,209/day versus $10,457/day, while Handysize HS7TC averaged $9,813/day versus $10,047/day.
This lackluster performance in 1H25 is a combination of various headwinds facing the dry bulk market, including a y-o-y improvement in Panama Canal laden transits, persistent higher fleet deliveries and muted demolition activity relative to earnings, while facing feeble demand for coal (-8.3% y-o-y) and grains (-6.9% y-o-y). Moreover, the absence of a consistently strong Capesize market meant limited to nil spillover effect to the mid-sized tonnage segment which subsequently increased its competition with geared bulkers like supramaxes.
In addition, delving deeper, there’s been disproportionate decline in tonne-days growth relative to ton growth (see above table), despite vessel speed slowing down this year. This meant that for the 1H25, laden distance of voyages on averages, in particular sub-capes have shrunk massively, due to improvement in 1) Panama Canal laden transits (as mentioned above) and 2) US grains increased shipments to other (shorter haul) markets in the Latin America and Mediterranean as opposed to China.
What to Expect Down the Road?
According to World-Grain, since 10 April, US soybean exports now face a combined Chinese tariff rate of 44%. Since 2021, the trend for the monthly grain shipments from the US to China, has experienced lower highs (in Octobers) and lower lows (in Junes). As we approach the US harvesting season, would any unexpected developments in the US-China relationship provide a silver lining to Kamasarmax/Panamax prospects in the USG? Or will things goes south, putting a stronger dampener instead?
The spending bill which won final approval by the House of Representatives last Thursday forms the bedrock of Trump’s various presidential campaign pledges, to be implemented in the following three and a half years. More importantly, the passing of this bill meant the US will be steadfast in collecting tariff revenues in lieu of other revenues cuts. Hence, even if we finally move past this tariff saga, we will eventually be living in a world that is facing higher friction when moving goods from one corner to another.
While one episode closes in the Middle East, others have flared. On 6 July, Houthis attacked and sunk a bulker, MV Magic Seas (built 2016) in the Red Sea, the first such attack since December 2024. The Houthis claimed the aforementioned bulker was being targeted for its owner sending other ships to Israeli ports. Another unit, MV Eternity C (built 2012) sank this Wednesday. Magic Seas and Eternity C will be the third and fourth casualty after MV Rubymar (built 1997) and MV Tutor (built 2022), all bulkers. In response, the Israeli Air Force hit additional targets in multiple Houthi-controlled ports and cities, including the captured car carrier MV Galaxy Leader. According to a Argus report, the additional war risk premium for vessels transiting this High-Risk Area more than doubled, up from 0.25-0.4% to at least 0.7% of the hull & machinery value. This development reminds us of the fragility of the road towards full resumption of freedom of navigation in the Red Sea.
It appears once again the dry bulk market will need to delicately play tango between the deleterious impact of trade tariffs on cargo volumes and the cushioning effect of voyage diversions.