Tight fleet supply and rising Atlantic cargo volumes are beginning to reshape the outlook for Capesize bulk carriers, traders from Cargill Ocean Transportation and Mercuria Shipping said during a panel at the 9th Capital Link Cyprus Shipping Forum in Limassol.

The discussion was attended by Tim Barrett, Capesize global trading manager at Cargill Ocean Transportation, and Carl Dacombe, head of Capesize trading at Mercuria Shipping, with Polys Hajioannou, founder and chief executive of Safe Bulkers and president of the Cyprus Union of Shipowners (CUS), serving as moderator.

Barrett and Dacombe described a market where fundamentals appear stronger than current freight levels, with limited fleet growth, ageing vessels and increasing cargo flows pointing to a tightening balance, as mentioned in Newmoney.

Barrett said European environmental rules, including the EU Emissions Trading System, are now materially affecting voyage economics.

“On some voyages, 10 – 15 per cent of the total cost is now related to regulatory burdens that did not exist a few years ago,” he said.

The impact favours newer tonnage, although older ships remain necessary. A significant portion of the fleet is more than 15 years old and over 15 per cent of conventional Capesizes exceed 20 years, yet they continue to serve trades such as West Africa where age limits are more flexible.

“We need a balanced portfolio. There is room for both younger and older ships,” he added.

Dacombe said supply growth remains constrained, with the orderbook accounting for less than 5 per cent of the existing fleet in the coming years while replacement needs are increasing.

“Fundamentally, we have limited supply and we expect demand to increase, particularly from West Africa and Brazil,” he said, adding that the market could be “in the early stages of a new upturn.”

The panel also examined competition between the standard Capesize and the larger Newcastlemax design. Barrett noted the latter’s structural efficiency advantage due to higher carrying capacity and only marginally higher fuel consumption, although port limitations can periodically allow Capesizes to command premiums.

“We want a balance of the fleet. Each type of ship has its role,” he said.

Barrett also referred to growing use of digital voyage-assessment and route-optimisation systems to manage compliance and commercial risk, stressing that “They are decision support tools, not autopilots.”

Explaining the sharp rise in freight rates late last year, Dacombe cited three drivers: tightening capacity in the North Atlantic, increased cargo flows from West Africa and heightened activity in forward freight agreements.

Finally, Dacombe said that “derivatives now influence trading behaviour more strongly as operators increasingly manage both physical and financial exposure simultaneously.”