The impact of fewer VLOCs on the bulker market

The Very Large Ore Carriers (VLOC) (vessels over >220,000 Dwt) segment have seen volumes steadily increase since the dry bulk market hit a low point in 2015.

This bulker segment went from carrying 281 mln mt in 2015 to 335 mln mt in 2023, at a per annum growth rate of 2.2%. During this period, newbuilding orders for VLOCs hit a high of 31 and 39 in 2016 and 2017, respectively. Thereafter, ordering activity collapsed quickly in the following years, despite the ups and downs in spot rates. There has been no VLOCs ordered between 2021 and 2022, despite both these years being characterized by exceptional spot rates. Today, the VLOC orderbook stands at 16, with the earliest delivery expected in 2026.

The bulk of the orders placed in 2023 and 2024 came from Winning Shipping (to transport Guinean bauxite) and from Shandong Shipping (to transport Brazilian iron ore). Since no new ships were delivered in 2023 and 2024, any improvement in long-haul, large-sized parcels could not be mitigated by any additional tonnage supply. The specialized 325,000 Dwt ore carrier, classified as “WinningMax” and has a 329.99m LOA by 60m beam, and possesses a structural draught of 22 metres, with claims that the energy consumption of the WinningMax is almost half that of a standard Capesize.

It is expected that VLOC cargo volumes for the entirety of 2024 will surpass that of 2023. Since no additional vessels will hit the water by year-end, this suggests that freight rates should be supported for as long as demand holds up.

The average age of the VLOC fleet has increased from 6.5 years in 2021 to 9.3 years in 2024. However, it remains significantly below the maximum average age of the fleet of 14.6 years old posted in 2007.

The market pointer by the senior Dry Bulk analyst was part of the BRS Shipbrokers Dry Bulk Weekly Newsletter (issue #129), which was reported in the following articles.

Splash: https://splash247.com/vacuum-of-vloc-deliveries-expected-to-prop-up-rates-for-dry-bulks-biggest-ships/ Dazhong Daily: https://www.eworldship.com/html/2024/ship_market_observation_0821/205599.html

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