Dry bulk recycling falls to an 18-year low as fleet ages

By Elena Vasquez

Dry bulk ship recycling fell 36% year on year to 3 million deadweight tonnes (DWT) from January through October 2026, the lowest volume in 18 years.

Only 70 ships were recycled during that period, primarily smaller handysize and supramax vessels. Filipe Gouveia, shipping analysis manager at BIMCO, attributes the low total to strong freight rates encouraging owners to keep older ships operating.

Keeping those vessels in service preserves earning capacity that would otherwise leave the fleet. It also means low demolition does not signal abundant spare tonnage: shippers still face a market shaped by tight effective supply, while forwarders have no immediate basis for expecting broad capacity relief.

What kept recycling so low?

Dry bulk recycling has remained at a low level since 2021 because strong freight rates made continued operation more attractive than demolition. BIMCO identifies several disruptions that tightened the supply-demand balance:

• High congestion in 2021 reduced effective vessel availability.
• Sanctions on Russian coal extended sailing distances and rerouted ships away from the Red Sea.
• Growing shipments from the Atlantic to Asia increased demand for dry bulk capacity.

Longer voyages tie up ships for more days, while congestion reduces effective supply, allowing freight rates to remain firm even when little scrap tonnage is available.

More recently, strong investment in artificial intelligence supported electricity demand, coal consumption and global economic growth. BIMCO says those gains helped the market withstand headwinds from changes in US trade policy and disruptions in the Strait of Hormuz.

How large is the aging-fleet overhang?

“Following several years of low ship recycling levels, a significant overhang has built up,” Gouveia said.

If lifecycles had remained in line with 2000-2019, an additional 856 ships totaling 61m DWT would already have been recycled. That equals 6% of current fleet capacity, illustrating how much tonnage extended operations have kept in service.

The average bulk carrier is now over 13 years old, compared with 10 years at the start of the decade. Older ships account for 1,035 vessels and 46.7m DWT, equal to 7% of the fleet by vessel count and 4% by capacity.

The concentration varies by segment. Vessels over 25 years old represent 8% of handysize and panamax capacity, compared with 5% for supramax. Only 11 capesize ships are older than 25 years because capesizes generally have shorter operating lifecycles.

For carriers, the largest pool of aging tonnage sits in handysize and panamax classes. For shippers and forwarders, those ships represent potential future capacity, but the next delivery wave is driven mainly by capesize. The class split means demolition in smaller segments would not immediately offset new capesize supply.

What changes in 2027 and 2028?

BIMCO’s latest Dry Bulk Shipping Market Overview & Outlook forecasts the supply-demand balance to weaken gradually in 2027 and 2028, although market conditions start from a high baseline. Ship deliveries are expected to grow 19% in 2027 and another 4% in 2028, driven by capesize vessels following higher contracting in recent years.

“As market conditions gradually weaken, freight rates could soften, making it less attractive to keep older ships operating,” Gouveia said.

For carriers, weaker rates would weaken the economics of continuing to trade aged tonnage. For shippers, the forecast points to gradual easing rather than an abrupt collapse in freight costs.

BIMCO estimates recycling could rise to 5.5m DWT in 2027 and 9.2m DWT in 2028. The latter would be the highest total since 2020. Even then, demolition would remain below the highs of the 2010s, and the older-vessel overhang would persist.

For forwarders, the expected rise in scrap volumes signals some normalization in vessel availability rather than a full release of capacity. The combination of 19% delivery growth in 2027, further 4% growth in 2028 and higher recycling should push the market toward less constrained freight conditions.

BIMCO’s 2027-28 outlook therefore points to more deliveries, potentially softer freight rates and higher recycling, but not enough demolition to remove the legacy-vessel overhang.