Global Supply Demand Driving Growth of Dry-Bulk Shipping Market
The global dry bulk shipping market is anticipated to increase at a CAGR of 10.10%, rising from US$257.554 billion in 2020 to US$505.242 billion by 2027.
Dry Bulk shipping refers to ships that transport commercial dry materials in ‘loose’ bulk format. A bulk carrier is a seagoing ship designed primarily to transport unpackaged bulk cargo such as grains, coal, ores, and so on. Its cargo holds have a better tolerance for heat and cold. Dry bulk carrier holds are typically free of obstructions. This enables quick and easy freight cutting and stowage. They also have relatively big hatch openings, which aids in faster loading and unloading operations. Because the transportation of dry cargo does not necessitate the same particular procedures as the transfer of liquids and gases, dry bulk carriers lack onboard temperature control systems. Today, thousands of dry cargo vessels convey commodities to ports all over the world, accounting for the vast majority of global trade. Transportation is closely monitored because to the potential environmental consequences of a dry bulk freight incident. These products are unpackaged, making them extremely difficult to clean up in the event of a spill. This results in environmental degradation and could put humans and wildlife in danger.
Urbanization leads to demand for raw materials that are shipped by dry bulk shipments.
The demand for dry transportation materials is primarily driven by urbanization, industrialization, and economic expansion. According to a WHO report due out in October 2022, cities house 56% of the world’s population (4.4 billion people). This trend is predicted to continue, with the urban population more than doubling by 2050, when roughly seven out of ten people will live in cities. With cities accounting for more than 80% of global GDP, urbanization can contribute to long-term growth through greater productivity and innovation if properly managed. However, the speed and scale of urbanization pose challenges, such as meeting the accelerated demand for affordable housing, and viable infrastructure, including transportation systems, basic services, and jobs. The massive amount of construction being done in the industrial, residential, and non-residential sectors is what drives the demand for steel. Due to a rise in the shipping of steel and coal, the market share for dry bulk shipping significantly will change.
Investment in the dry bulk shipping business is required to enhance global supply networks.
The Review of Marine Transport 2022, an annual comprehensive review of worldwide maritime transport, published by UNCTAD states that container spot freight costs reached five times their pre-pandemic levels in 2021, reaching a record peak in early 2022 and dramatically boosting consumer prices. Logistics supply limitations and a spike in demand for consumer goods and e-commerce also contributed to this increase. Due to the protracted COVID-19, supply chain delays, and accompanying economic measures, dry bulk freight rates soared. Higher grain prices and dry bulk freight rates, according to a UNCTAD projection, may result in a 1.2% increase in consumer food prices, with increases being greater in middle- and low-income countries. Therefore, nations have the opportunity to carefully evaluate prospective changes in shipping demand, construct and modernize port infrastructure, and connect to the hinterland while involving the private sector. Additionally, they should improve port accessibility, increase storage and warehouse capacity, and lessen labor and resource constraints. Trade facilitation, particularly through digitalization, which reduces waiting and clearance times in ports and speeds up documenting processes through e-documents and electronic payments, can also help to mitigate many supply chain disruptions. For instance, Abu Dhabi is continuing to expand its involvement in the marine industry. AD Ports announced increased investments in a container and dry bulk transportation in two different agreements through its Safeen Feeders, which debuted in 2020. One of the contracts calls for the establishment of a new dry bulk transportation company. Safeen will spend around $126 million on five bulkers in collaboration with Invictus Investment. The five ships are of varied sizes and are slated to be deployed within six months, which began in September 2022, according to the firms.
Technological development in the Sector keeps the supply chain going
As stated by According to the International Chamber of Shipping, in November 2020, up to 90% of global trade was transported on ships, effectively meeting the growing demand for food, fuel, raw materials, and merchandise because sea transportation is the least expensive mode of transportation. To keep this supply chain going, a highly complex, connected, and the regulated sector is required. With the promise of autonomous shipping, digitalization, and commitment to decarbonization, the shipping industry continues to develop. For instance, Stena Bulk, a tanker shipping business, has become the latest to showcase a radical new ship design in March 2021, which the company claims defies conventional thinking about shipping efficiency and carbon reduction. InfinityMAX, a revolutionary hybrid bulk carrier concept, will be powered by hydrogen and built to carry both dry and wet goods in self-contained modular compartments. All of the electricity required for internal systems will be generated by wind turbines and solar panels. One of the design’s guiding ideas is the development of standardized and modular cargo modules capable of transporting dry bulk, liquid bulk, or liquified gas items. The units can be dropped off outside of ports and picked up by tugs, avoiding congestion and significantly reducing call times. While shipping continues to provide wealth for all of us, its complexity is increasing. Increased technical advancements, such as the monitoring of shipping materials and the assignment of an identification number to each object, are expected to move the dry bulk shipping market size forward.
COVID-19 Insights
COVID-19 shifted the value of the bulk shipping industry significantly. As a result of the COVID-19, there was a manpower shortage as well as a material shortage. However, the requirement significantly raised the demand for the resources. Due to the considerable demand for electricity due to the strict constraints imposed by the COVID-19 and the execution of the lockdown, demand for seaborne coal has increased significantly. COVID-19 also influenced the economy’s import and export markets. After the government took some serious steps, such as providing vaccination, the rate of COVID-19 cases decreased day by day. As a result, there was some relief, and manufacturing companies began to reclaim their market position.
