News in English

THE GREAT TONNAGE SQUEEZE The Structural Tightening Driving Ultramax & Handysize Freight Markets Higher

By Iakovos (Jack) Archontakis

Senior Maritime Strategy Consultant - Chartering Executive & TMC Shipping  Commercial Director

Global Strategic Perspective

The dry bulk arena is entering a phase of increasingly synchronized strength, with positive momentum now visible across virtually every major trading basin. The Atlantic continues to set the pace of recovery, benefiting from a combination of tightening vessel availability and persistently healthy cargo demand, while the Pacific is gradually transitioning from caution to confidence. Meanwhile, the Indian Ocean and South African regions remain among the most robust markets worldwide, supported by strong commodity movements and an increasingly constrained tonnage environment.

The defining characteristic of the current cycle has been the rapid contraction of prompt vessel supply, particularly for June and the opening weeks of July. This tightening has significantly enhanced owners’ negotiating leverage, further reinforced by improving freight derivatives sentiment and renewed interest in period employment. Although the speed of improvement varies from region to region, the broader market structure increasingly suggests a rebalancing process that is steadily shifting in favour of vessel owners.

Atlantic Basin

South Atlantic — Ultramax

The South Atlantic Ultramax market delivered another week of notable gains, with freight levels advancing across the majority of trading routes as available tonnage tightened considerably. Scarcity of prompt vessels, especially for June and potentially July positions, has enabled owners to steadily raise their expectations. Cargo demand remained resilient throughout the basin, with both transatlantic and fronthaul employment outperforming competing routes.

East Coast South America (ECSA) continues to act as the principal catalyst behind the recent rally. Market sentiment has accelerated sharply despite only moderate growth in cargo volumes. An exceptionally restricted vessel list remains the primary pillar supporting freight values, while stronger FFA performance and longer booking horizons continue to reinforce bullish expectations. Atlantic destinations retain a premium over Far East alternatives, although China remains the dominant destination for long-haul cargo movements.

South Atlantic — Handysize

Following the conclusion of Posidonia, the Handysize market reopened at a measured pace, with activity returning gradually and neither side showing urgency. Supply and demand remained largely in equilibrium, allowing rates to trade sideways through the middle of the week as charterers resisted higher numbers and owners refused to concede lower levels.

A key market feature was the absence of meaningful fresh tonnage entering the basin after Posidonia, effectively eliminating any significant downside risk despite weaker cargo demand from North Brazil. Sentiment shifted materially during the latter part of the week as strength originating in the Panamax segment filtered progressively through the Ultramax and Supramax sectors before ultimately reaching Handysize vessels. The result was a swift improvement in market confidence, enabling owners to test higher levels and compelling charterers to recalibrate expectations.

The market closes the week on considerably firmer ground, with both prompt and end-June positions becoming increasingly difficult to secure. Larger Handysize vessels continue to outperform smaller counterparts, widening earnings differentials as grain traders and operators extend their forward coverage.

US Gulf — Ultramax

The US Gulf Ultramax market continues to display considerable resilience, supported by a substantial clearance of June cargoes across its four principal trading routes. Only 21 vessels remain listed within the 30-day position window, highlighting the extent of the current supply restriction.

Voyages toward the US West Coast continue to attract a significant premium over traditional fronthaul business, largely due to ongoing Panama Canal limitations. This dynamic is particularly evident in North Coast South America (NCSA) cargoes, where demand remains exceptionally strong.

Although market momentum moderated slightly toward the end of the week following the cargo clearance, underlying fundamentals remain highly supportive. Forward demand for grain and petroleum coke cargoes remains robust, while speculation surrounding potential Chinese restrictions on high-sulphur petcoke imports beyond mid-August has provided additional market support. Owners remain unwilling to offer meaningful discounts for forward employment, preserving a constructive market tone as the summer season approaches.

US Gulf — Handysize

The US Gulf Handysize market opened quietly but gradually gathered pace as fresh business emerged. Inter-Caribbean activity remained the most reliable source of fixtures, while transatlantic demand continued to lag. Freight levels were broadly stable throughout the week, with neither owners nor charterers able to establish a decisive advantage.

Despite a slowly expanding vessel list, a healthy flow of fresh enquiries maintained market balance. Looking ahead, July cargo volumes continue to underpin confidence, while growing participation in period discussions signals an increasingly optimistic longer-term outlook.

West Coast South America — Ultramax & Handysize

Trading activity along the West Coast of South America remained subdued, characterized by limited cargo availability and low levels of time-charter business. Most market participants appear content to wait for stronger indications of directional movement before increasing commitments.

Within the Handysize segment, conditions largely mirrored those seen in Ultramaxes, with sparse cargo availability and highly selective fixing activity. While Panama Canal delays could eventually tighten regional supply as the month progresses, this effect has yet to fully materialize.

Continent — Ultramax

The European Continent Ultramax market began the week under mild pressure amid limited activity and only a marginal reduction in vessel supply. Conditions gradually improved as demand strengthened across several core routes.

Scrap cargoes dominated market discussions, with negotiations increasingly gravitating toward the USD 24,000–25,000 range. While overall activity levels remain relatively subdued, sentiment has undoubtedly improved.

Owners continue to defend firm ideas, particularly for scrap movements originating from the Eastern Mediterranean, while demand into West Africa remains selective rather than broad-based.

Continent — Handysize

The Continent Handysize sector benefited from a consistent stream of cargo opportunities, especially for second-half June loading positions. Although activity slowed somewhat on Thursday, overall demand remained healthy.

A notable impasse has emerged between market participants, with owners seeking premiums of approximately USD 2,000–3,000 per day above last week’s levels while charterers continue to resist such increases. Additional concluded fixtures will be required before a sustained upward trend can be fully confirmed.

Mediterranean / Black Sea — Ultramax

The Mediterranean and Black Sea Ultramax market continued its gradual recovery, supported by a healthier equilibrium between vessel supply and cargo demand. Fresh business successfully absorbed excess tonnage, allowing freight levels to edge higher, albeit at a measured pace.

Market reports indicated approximately nine to ten active stems during the week, while stronger transatlantic demand and continued clinker exports toward West Africa provided additional support.

Mediterranean / Black Sea — Handysize

Handysize fundamentals across the Mediterranean improved further, supported by stronger cargo demand and a reduced vessel count compared with recent weeks. Grain movements into West Africa have increased as pricing becomes increasingly competitive relative to Baltic and ECSA origins.

Meanwhile, vessels positioned in the Western Mediterranean have been securing stronger returns to ballast toward Brazil, further reducing regional vessel availability.

In the Black Sea, activity improved modestly, though freight rates continue to face pressure due to an abundant vessel supply. Approximately 90 geared vessels remain available in the region, with many owners prepared to discount aggressively for Russian employment. Ukrainian cargoes continue to dominate visible trading activity.

Russian wheat production for the 2025/26 season is now projected at 91.4 million tonnes, compared with 82.6 million tonnes in 2024, preserving Russia’s competitive position within global agricultural markets.

Indian Ocean / Middle East / South Africa

Middle East Gulf / West Coast India — Ultramax

The MEG/WCI Ultramax market remains fundamentally stable, supported by a steady stream of cargo opportunities and limited prompt vessel availability. Operational delays at Fujairah and Dibba continue to affect voyage efficiency.

Trade from West Coast India to China remains well supported, aided by expanding demand linked to South African cargo programs. Several vessels have recently fixed DOP positions from WCI for South African loading, reinforcing positive sentiment.

On India’s East Coast, market conditions remain firm, particularly within coastal employment. Continued demand from Indonesia and Western Australia is providing additional support to regional tonnage.

Owners carrying substantial bunker inventories are increasingly evaluating South African opportunities.

Period activity is gradually strengthening, with Ultramaxes reportedly fixing in the upper USD 19,000 range for four-to-six-month commitments, while owners increasingly target the USD 20,000 threshold. Oman–WCI voyages are securing mid-to-high teen returns, WCI–ECI runs are transacting in the upper teens, and salt cargoes from WCI to China continue to fix in the low teens.

South Africa — Ultramax

South Africa remains firmly positioned among the strongest dry bulk markets globally. Expanding demand for coal and manganese cargoes continues to tighten vessel availability throughout the region.

Limited ballast inflows from India, combined with attractive Pacific employment alternatives, further constrain available supply.

Recent fixtures have seen Ultramaxes achieving returns in the USD 29,000 range plus ballast bonus for Pakistan/WCI redelivery. South Africa–Far East employment has advanced from approximately USD 22,000 plus USD 200,000 ballast bonus last week to around USD 23,000 plus USD 230,000 ballast bonus.

Charterers seeking Atlantic redelivery options are increasingly struggling to identify suitable candidates and have begun exploring short-period alternatives in the upper-teen range.

Middle East Gulf / Indian Ocean — Handysize

The regional Handysize market experienced a relatively uneventful week, characterized by balanced cargo demand and vessel availability. However, OHBS-capable units attracted stronger interest amid limited supply, resulting in firmer earnings for this niche segment.

Pacific Basin

Far East / Southeast Asia — Ultramax

The Far East Ultramax market opened the week on a stable footing before tightening considerably as vessel availability contracted during midweek trading.

Backhaul demand remains the principal support mechanism, with Ultramaxes securing rates in the low-to-mid USD 20,000s on a DOP basis. A 63,000 DWT vessel was reportedly fixed at USD 23,000 DOP for a voyage to West Africa.

NOPAC enquiry improved noticeably, with charterers offering figures ranging from the upper teens to approximately USD 20,000, while owners continued to pursue higher levels. Indonesia–Southeast Asia coal employment fixed around USD 20,000 for Supramax tonnage.

Destinations within India and Bangladesh continue to command a premium, highlighted by a Supramax reportedly fixing at USD 25,000 DOP for a clinker cargo to Chittagong.

Period activity remains relatively limited, although sentiment is improving, with a 63,000 DWT Ultramax reportedly fixed at USD 20,000 for a one-year commitment.

Far East — Handysize

The Far East Handysize market remains firm. Larger vessels continue to secure earnings around USD 18,000 per day, while units within the 28,000–32,000 DWT range are generally achieving USD 15,000–16,000.

Vessels capable of carrying both deck and hatch cargoes continue to attract a premium from Chinese operators.

Backhaul employment toward the Continent is fixing in the low USD 20,000s, while voyages toward the West Coast of Central America are assessed in the USD 19,000 range. Period levels for larger Handysize vessels are currently estimated between USD 18,000 and USD 20,000.

Southeast Asia / Australia — Handysize

The Southeast Asia–Australia Handysize market experienced a sharp acceleration during midweek trading as a surge of Western Australian mineral and alumina cargoes encountered exceptionally limited vessel availability.

Round voyages from Australia on 38,000 DWT vessels positioned in Singapore increased from the upper-teen range to approximately USD 20,000.

Smaller units employed on short Southeast Asian voyages continue to earn between USD 10,000 and USD 12,000.

Short-period values are also trending upward, with 38,000 DWT Japanese logging vessels assessed between USD 20,000 and USD 21,000 for two laden legs, while 32,000–34,000 DWT vessels are evaluated between USD 17,500 and USD 18,000.

Market sentiment remains constructive heading into next week, supported by tight vessel supply and a healthy Australian loading program extending into late June and early July.

Period Market Overview

The Atlantic Ultramax period market continues to strengthen, led primarily by Mediterranean activity and reinforced by firmer spot fundamentals in the US Gulf, ECSA and West Africa.

Handysize period levels remain broadly unchanged, as owners continue to favour exposure to fronthaul employment amid stronger Pacific opportunities. Bid–offer gaps remain relatively wide across both sectors.

Strategic Outlook: The Road Into Q3

As the market moves deeper into the second half of June, the overall landscape continues to evolve in a constructive direction. Tight vessel availability remains the dominant theme across several key trading regions, most notably in the Atlantic basin and South Africa, where limited prompt tonnage continues to support owners’ leverage. At the same time, forward cargo demand is showing encouraging signs of expansion, creating a healthier balance between supply and demand than was evident only a few weeks ago.

The Pacific, while still trailing the Atlantic in terms of momentum, is beginning to exhibit the early characteristics of a tightening market. Vessel availability is gradually being absorbed, backhaul demand is improving, and market participants are displaying a growing willingness to commit beyond the spot horizon. This renewed confidence is also becoming increasingly visible in the period market, where enquiries have started to build as operators seek to secure coverage ahead of what many anticipate could be a firmer third quarter.

Several underlying indicators continue to reinforce this positive narrative. The scarcity of June and July positions remains pronounced across multiple regions, forward freight curves have strengthened noticeably, South African and ECSA loading programmes continue to expand, and demand for backhaul employment in the Pacific is steadily gaining traction. Together, these developments point toward a market that is becoming progressively more balanced and, in many cases, increasingly supportive of owners.

That said, the path ahead is unlikely to be entirely linear. Geopolitical uncertainties remain an ever-present variable, operational constraints at the Panama Canal continue to influence trading patterns, and commodity flows across certain regions remain uneven. Nevertheless, when viewed through the lens of current supply dynamics, forward cargo visibility and improving market sentiment, the broader outlook continues to favour further strengthening as the industry approaches the opening stages of the third quarter.

Legal Disclaimer : This report is provided solely for general informational purposes and does not constitute investment or commercial advice. The information herein is based on sources believed to be reliable but is not guaranteed for accuracy or completeness. Any actions taken based on this content remain the sole responsibility of the reader.