<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
DUDUZILE RAMELA: A salient component of global trade \u2013 which is dry-bulk shipping which moves raw materials essential for agriculture, industrial development and steel production, among other things \u2013 has been severely impacted by the closure of the Strait of Hormuz.\u00a0However, a silver lining may be on the horizon. In its Dry Bulk Shipping Market Overview and Outlook for July 2026, Bimco [the Baltic and International Maritime Council] expects the arrival of El\u00a0Ni\u00f1o to bring with it a boost to dry-bulk ship demand during the next 12 months.<\/p>\n
Common dry-bulk cargoes include sugar, salt, iron ore, fertilisers, coal, cement, and more. Dry bulk commodities have naturally gone up so far this year.<\/p>\n
Felipe Gouveia is a shipping analysis manager at Bimco. He joins us now to take a look at the report. Thank you very much, Felipe, for your time this evening.<\/p>\n
Help us understand. Under normal market conditions, what is the volume of dry bulk cargoes that pass through the Strait of Hormuz, compared to what we have seen so far in trying to understand the impact of this closure?<\/p>\n
FELIPE GOUVEIA: Of course. Usually during regular conditions we see that around 4% of dry-bulk cargo sails via the Strait of Hormuz.<\/p>\n
What we have seen so far this year is that, of course due to disruptions, this has essentially plunged.\u00a0I don\u2019t have the exact figure on me, but there have been continuous flows of cargo via the strait, even after the start of the war with Iran.<\/p>\n
However, this has been maybe less than 10% of what we were seeing prior to the start of war. So it\u2019s not really sufficient to meet regional needs, and it is much lower than what we\u2019re used to essentially.<\/p>\n
DUDUZILE RAMELA: Fair enough. The report presents two forecast scenarios. Talk us through the supply-demand dynamics in both scenarios, and introduce them to our listeners.<\/p>\n
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FELIPE GOUVEIA: Yes. We present the scenarios in our report because of essentially what is very high uncertainty for the market.<\/p>\n
We at the moment do not really know when the Strait of Hormuz could reopen. We of course had a three-week window period when ships were more freely sailing through the area, when there was a ceasefire between the US and Iran.<\/p>\n
But these conditions have since deteriorated once again. So as of right now, we do not know what the outlook could be when the strait could reopen. As such we create two different scenarios in this report.<\/p>\n
In one of them, which is what we call the \u2018Open scenario\u2019, we assume that by the end of the third quarter the strait will somehow reopen.<\/p>\n
And this would probably be under similar circumstances to what we saw before.<\/p>\n
But independent of that, that\u2019s the assumption we are making. And in that case we are assuming that we are forecasting that demand for the dry-bulk market would grow 3.5% to 4.5% this year and 2% to 3% next year, which is not a lot. But for the dry-bulk market, this is quite a steady market. It\u2019s pretty good.<\/p>\n
And on the other hand, we have what we call our \u2018Closed Strait of Hormuz scenario\u2019, where we just assume that it will not reopen, neither this nor next year.<\/p>\n
So it\u2019s kind of a worst-case scenario, let\u2019s say. It, compared to the other scenario is of course more negative for demand, and we forecast that demand will grow by one percentage point less in 2026 and 1.5 points less in 2027.<\/p>\n
There is also a slight difference in supply, and this is because part of the dry-bulk split is currently in the Persian Gulf \u2013 so it\u2019s essentially not being operated as per normal. We estimate this is around 0.5% of the dry-bulk fleet.<\/p>\n
So if it reopens this, the ships will be able to re-enter the global market, but otherwise they will remain possibly indefinitely stranded in the Persian Gulf.<\/p>\n
DUDUZILE RAMELA: Okay. I\u2019d like for us to focus on the overarching message of the report, which is that El\u00a0Ni\u00f1o is to act as a new demand shock. How so?<\/p>\n
FELIPE GOUVEIA: What we see with El\u00a0Ni\u00f1o \u2013 I\u2019ll start just by contextualising a little what this phenomenon is.<\/p>\n
It\u2019s essentially a weather phenomenon that can emerge, depending on the water temperatures in the Pacific. Essentially, if they are a certain amount above normal, it leads to the emergence of El\u00a0Ni\u00f1o, which leads to specific weather patterns possibly emerging across different geographies in the world.<\/p>\n
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Keep in mind that this is not a guarantee, it\u2019s just an increased likelihood, and it tends to be associated with this phenomenon.<\/p>\n
So for dry bulk specifically, one of the perhaps most impactful patterns that can emerge is a decrease in rainfall in Panama and in the surrounding area.<\/p>\n
Why this is interesting to us is that the Panama Canal is structured around its central water body, which is Gatun Lake, and under decreased rainfall this can compromise the water levels of the canal.<\/p>\n
So if there\u2019s typically a rainy season starting around this time of year and going on for some months, during this period water levels rebound. Then during the drier season this water gets used up.<\/p>\n
Whereas this year, if El\u00a0Ni\u00f1o brings lower rainfall to the Panama Canal, it can compromise the water levels in the canal and therefore limit how many ships can transit.<\/p>\n
Why this is interesting to us is that we are already seeing that the Panama Canal Authority has been taking measures to limit water consumption. That is, by decreasing the maximum \u2018draft\u2019 in some of its docks, and also by already limiting the daily number of transits that they carry through.<\/p>\n
DUDUZILE RAMELA: Okay. Gotcha.<\/p>\n
FELIPE GOUVEIA: Of course, there are multiple shipping sectors that try to use the canal, and dry bulk is one of them.<\/p>\n
When ships auction for these transit slots, there will be an increase in competition and therefore it will be increasingly more expensive to transit this waterway.<\/p>\n
What we\u2019ve seen in the past is that when this happens, boaters tend to start rerouting away from the canal, which increases sailing distances for voyages and therefore demand.<\/p>\n
DUDUZILE RAMELA: So the potential for return of shipping to the Red Sea poses a downward risk. According to the report for the outlook, you have not factored this into the scenarios. Is there a particular reason?<\/p>\n
FELIPE GOUVEIA: Of course. Thank you for asking.<\/p>\n
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Essentially this is something that, much like with the Strait of Hormuz, there has been very high uncertainty \u2013 although in this case it\u2019s something that dates back much, much earlier.<\/p>\n
I believe it was at the start of 2024 \u2013 so that\u2019s already two years back \u2013 that we started seeing ships evading the Red Sea, following the start of attacks by Houthis.<\/p>\n
Ever since then, at least for the bulk sector, there has a been kind of steady transit through the area \u2013 at around half of what there used to be prior to 2024.<\/p>\n
And ever since then we have, of course, been monitoring essentially the perceived safety conditions of transiting the Red Sea and so on, and trying see whether dry bulk would return to the area.<\/p>\n
However, until now we have not really seen much of a movement. And currently, with an increase in threats by the Houthis, this is at the moment tied to Saudi Arabian efforts, but we are unsure of how the industry as a whole will react.<\/p>\n
It appears that this uncertainty is not really dissipating, at least not in the near term.<\/p>\n
As a result we have chosen not to present this as a scenario of whether ships could return to the Red Sea.<\/p>\n
Of course it is a possibility, but we are effectively letting our readers know that if shipping does fully return to the area, that is equivalent to a 2% decrease in demand.<\/p>\n
And this is because ships will stop sailing around the Cape of Good Hope, and they will instead be able to access shorter routes by sailing via the Red Sea and therefore the Suez Canal, for example voyages between Europe and South Asia.<\/p>\n
DUDUZILE RAMELA: Philippe Gouveia is a shipping analysis manager at Bimco, the Baltic and International Maritime Council.<\/p>\n
Thank you very much.<\/p>\n
#Fresh #risks #shipping #global #trade<\/p>\n","protected":false},"excerpt":{"rendered":"
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