Dry bulk: from Capesize to Handysize

What dry bulk is

Dry bulk is cargo carried loose in the hold in large quantities, without packaging, and loaded with cranes, grabs or conveyor belts.

• Major bulks: iron ore, coal and grain (including soybeans).
• Minor bulks: among others fertiliser, bauxite, steel, cement, salt and timber.

Container ships carry goods in standard containers, and tankers carry liquids. They are three different markets with their own rates.

The sizes and what they carry

The large ships are cheapest per tonne but need deep ports with equipment to load and discharge. The smaller ships have their own cranes and can call at ports without such equipment, so they can take more kinds of cargo. The names are explained in the guide to the freight market.

The cargoes and routes

The Baltic Exchange reference routes show where the major cargoes go (GMB 8.8):

• Iron ore for steel mills: C3 from Tubarão in Brazil to Qingdao in China, C5 from West Australia to Qingdao, C17 from Saldanha Bay in South Africa to Qingdao and C2 from Tubarão to Rotterdam. All with 160,000–170,000 tonnes.
• Coal for power plants and steel mills: C7 from Puerto Bolívar in Colombia to Rotterdam, and Panamax and Supramax routes via Indonesia.
• Grain and soybeans: S1C from the US Gulf to China and Japan, and S5 from West Africa via the east coast of South America to North China. Harvests in North and South America come at different times of the year, so cargoes shift between ocean basins through the year.
• Minor bulks move in many smaller trades, especially on Supramax and Handysize.

The length of the route matters a lot. Iron ore from Brazil to China ties up a ship much longer than the same amount from Australia.

Round voyages, ballast and position

Many bulk trades run one way only. A Capesize that has discharged iron ore in China often has to sail empty (in ballast) back to Brazil or Australia. The Baltic route C14 is exactly a China–Brazil–China round voyage.

• A trip charter (a time charter for one trip) is paid per day from delivery of the ship until redelivery. Where the ship is redelivered matters a lot for the price.
• A trip from the Atlantic to the Pacific (fronthaul) usually pays more than the opposite direction (backhaul), because the ship ends up far from the next cargoes in the Atlantic. Baltic has separate routes for both directions, for example C9 and C16 for Capesize.

What drives rates

• Steel and construction in China. Steel output drives much of the demand for iron ore and coal.
• Tonne-miles. Where cargoes come from matters as much as how much is carried.
• The fleet. New ships take years to build, and old ships are scrapped when rates are low. Supply reacts slowly, which is why rates swing a lot.
• Weather and seasons. Rainy seasons and storms can stop loading at export ports, and grain seasons move cargoes between ocean basins.
• Ports and canals. Port queues keep ships out of the market. A drought in 2023 left so little water in Gatun Lake that the Panama Canal had to cut the number of transits (Panama Canal Authority).
• Energy policy. The coal trade depends on how much coal countries burn for power.

How to read a news story about the Baltic Dry Index

The BDI is a weighted average of the time-charter rates for Capesize (40 %), Panamax (30 %) and Supramax (30 %) (GMB 8.8). It therefore says a lot about the Capesize market and nothing about tankers or container ships. When the BDI moves a lot, ask:

1. Which size moved: Capesize, Panamax or Supramax?
2. In which ocean basin, the Atlantic or the Pacific?
3. Is it more cargo, longer routes or fewer available ships, for example queues or weather?
4. Is it seasonal or a one-off event?

The BDI is a freight price, not a commodity price. High rates mean ships are in demand, not necessarily that the raw materials are expensive.

The routes on the globe

The “Freight routes and index weights” layer shows all the Baltic routes for Capesize, Panamax, Supramax and Handysize, and how much each route counts in the indices.

Sources

• Baltic Exchange, Guide to Market Benchmarks 8.8 (September 2026), appendix 2 – reference ships, routes, cargoes and BDI weights
• Baltic Exchange: indices and market data
• The driest month of October since 1950 – Panama Canal Authority – drought and fewer transits in 2023
• UNCTAD: Review of Maritime Transport

The guides are written by OESA students to explain concepts and how things fit together. They are not investment advice. Figures that are not definitions carry a source and a date; if you find an error, let us know at styret@oesa.no.