A weaker Chinese economy and shifting US trade policy are expected to dampen dry bulk shipping demand through 2026, according to London-based BIMCO, the Baltic and International Maritime Council.

The dry bulk market is projected to weaken in 2025 and 2026, with demand growth slowing due to global economic uncertainty and US tariff changes, BIMCO said. China's slowdown, compounded by deflation and a struggling property sector, is expected to weigh heavily on tonne mile demand. Front-loading ahead of tariffs boosted first-half growth, but the second half is forecast to soften, reported Italy's Il Nautilus.

Ship demand is forecast to grow just one per cent in 2025 and up to two per cent in 2026, driven by longer sailing distances and increased iron ore and bauxite shipments from the South Atlantic to Asia. However, coal and iron ore volumes are expected to decline, limiting overall cargo growth.

Ship supply will grow faster than demand, with fleet expansion of 1.9 per cent in 2025 and 2.6 per cent in 2026, led by panamax and supramax deliveries. Recycling will rise gradually, targeting older vessels. Slower sailing speeds may temper supply growth.

Freight rates have softened across all segments, with the Baltic Dry Index down 28.2 per cent year-to-date. July saw a brief rebound in capesize and panamax rates, supported by Brazilian iron ore and East Asian coal shipments.

Forward Freight Agreements suggest panamax and supramax rates will weaken further in 2026. Capesize vessels are expected to outperform, buoyed by Chinese bauxite demand and South Atlantic iron ore expansion. Capesize fleet growth is forecast at just 3.9 per cent from 2024 to 2026.

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