Richard Scott 

Handymax bulk carriers have been a popular choice for shipowners investing in new tonnage during recent years. But this year a distinct lack of enthusiasm is evident, despite expectations of further growth in some trades where these vessels are regularly employed. Continuing severe over-capacity in this sector and adjacent size groups has made a big impact on market sentiment.

Since 2015 began a depressed freight market for bulk carriers of all sizes has prevailed, coupled with greater uncertainty about the timing and magnitude of a sustainable recovery. Fleet growth in the handymax sector, meanwhile, is proceeding at a rapid rate and may continue to do so for some time ahead. Newbuilding deliveries from the huge orderbook accumulated earlier are maintaining a strong flow. Consequently, much less interest in ordering additional Handymax newbuildings is now evident. 

Popularity, until quite recently, of these ships was based on ideas about extended employment growth opportunities over many years into the future. Handymaxes in the 40–65,000 deadweight tonnes size group are among the most employable, given their versatility within a very broad range of dry bulk commodity trades around the world. While that view may still be valid in the longer term, weak market conditions currently, and implicitly in the near term future at least, have changed perceptions.

The typical Handymax bulk carrier is a geared (cargo-handling gear) vessel, with cranes and grabs for loading and discharging cargo. Sub-categories within the group are Supramax and Ultramax ships. Installed cargo-handling equipment enables efficient operation in trades where shore equipment is either unavailable or inadequate. Handling cargo offshore, from or into barges, at an anchorage is also facilitated. Together with a size range acceptable at an extensive range of ports and berths, on the majority of trade routes, while still offering some economies of scale, the result is often an extremely varied employment pattern.

Coal, and grain and soya are commodity trades where Handymaxes are frequently used, and there is sometimes involvement in the iron ore trade. A very wide range of minor bulk trades is also a big category of cargoes for these ships. Minor bulks including steel products, ores and minerals such as nickel ore, other industrial cargoes, fertilizers and agricultural commodities including oilseeds and meals all feature prominently.


Although expansion in the world fleet of Handymax bulk carriers has been decelerating over the past five years, it remains brisk. As shown in the table, growth in 2015 may pick up compared with last year’s increase, and another twelve months of further substantial enlargement is expected in 2016 as well.

During the past five years fleet growth averaged 12.4% annually, raising total capacity by almost four-fifths. According to figures compiled by information providers Clarksons Research, Handymax capacity reached 165.8 million deadweight tonnes at end-2014, compared with 92.8m dwt five years earlier. However, annual growth rates diminished from almost 20% in 2010, to 5% in 2014. Last year the number of vessels in the fleet passed the 3,000 mark, reaching 3,114 at year-end.

By the beginning of September this year, an estimated further 5% deadweight capacity had been added in just eight months, boosting the total to 3242 ships amounting to 174.1m dwt.

Within the entire world bulk carrier fleet of all ship sizes, totalling 769m dwt, Handymax tonnage forms a large part, at well over one-fifth.

Focusing on key influences determining fleet capacity, Handymax newbuilding deliveries declined in the past two years, accompanied by substantial scrapping of older or uneconomical tonnage, as the table reveals, causing decelerating fleet expansion rates. However, even last year’s relatively slow growth added a net 123 ships, resulting from 194 newbuilding deliveries partly offset by 70 scrappings (recorded demolition sales to scrap yards).

Shipyards around the world completed just over 11m dwt of new Handymaxes in 2014, after much higher levels of over 14m dwt in the preceding twelve months and 19–22m dwt annually in the previous three years. Scrapping was within a 3–5m dwt range in the past three years, compared with much lower volumes previously.

The deadweight tonnage of new Handymax bulk carriers delivered in 2015 as a whole probably will jump sharply to about 15m dwt or more. This estimate is based on figures for the first eight months, showing over 10m dwt already delivered (subject to revision), and ideas about what could happen during the remaining period. Scrapping in the January–August period reached 2m dwt and may approach 3m dwt in the full year, although scrapping predictions essentially are often quite speculative. Consequently, fleet enlargement this year may be about 7%, about two percentage points above last year’s growth rate.

Looking ahead to next year, 2016, there are signs that a slightly less rapid increase may be seen. The new vessels flow entering the world fleet may ease moderately, while another substantial scrapping period may be ahead. But much depends upon (particularly for demolition sales) how freight market conditions evolve, and also the state of market expectations and sentiment, a big element of which is difficult to predict.

An indicator providing a rough guide to future capacity evolution is the newbuilding order book at shipyards. Following heavy ordering of new Handymaxes in the past two years (especially for the new Ultramax designs of around 60,000dwt), the order book reached a high 49m dwt volume, comprising 810 ships, at the end of 2014. Although deliveries from that total had reduced overall outstanding orders to 38m dwt at the beginning of September this year, according to Clarksons Research calculations, scheduled 2016 deliveries totalling almost 19m dwt are shown, implying another large capacity addition.

Within the entire global Handymax newbuilding order book, the Supramax sub-category of 50-60,000dwt ships became dominant until, a couple of years ago, the newer, larger Ultramax 60-65,000 dwt vessels were introduced. Currently, over four- fifths of the Handymax orders deadweight capacity is comprised of these Ultramax vessels.

Contracts for new Handymaxes were greatly boosted in 2013 and 2014 by a remarkable ordering spree. Renewed interest reflected perceptions that a freight market recovery might be on the horizon. Coupled with attractive prices quoted by shipbuilding yards, shipowners saw a strong incentive to invest. During those two years 787 Handymax ships in this size group were ordered, totalling over 48m dwt.

Recently a dramatic change in newbuilding ordering dynamics has been seen, one of the most striking in the modern era.This change, a virtual collapse in new orders placed, has affected all bulk carrier size groups. Within the Handymax sector ordering is now minimal, just 21 ships of 1.2m dwt in the 2015 first eight months, from 292 in the whole of last year. The decline reflects very low current freight rates and modified, less optimistic views of potential for a market recovery amid signs that trade growth prospects have deteriorated while the fleet continues to grow briskly.

This change will eventually affect the pace of capacity additions a couple of years ahead. In the meantime, deliveries from the large orderbook which is still equivalent overall to 22% of the current world Handymax operating fleet, will continue enlarging capacity markedly.

Another influence which may prevent, or at least restrain, any sharp slowing of fleet growth in the immediate future is the apparent limited potential for scrapping of old tonnage. The Handymax fleet is relatively young. Only about 15% is over 14 years old, and within that volume less than half is over 19 years old, mostly in the 40–50,000dwt size sub-group. Thus it seems difficult to foresee greatly expanded scrapping emerging over the next twelve months.


Typical features offered by a Handymax bulk carrier ensure wide employability.At least some parts of all dry bulk commodity trade sectors are accessible and in most, large or all parts. In practice, however, major proportions of iron ore and coal movements do not normally employ Handymaxes, because the bigger Panamax, Kamsarmax and Capesize bulk carriers can be accommodated on many trade routes. Preference for these larger unit sizes reflects greater economies of scale and thus, usually, cheaper transport.

One of the most prominent employment sources for Handymaxes is coal trading. Both main parts, steam and coking 

coal trade, often use bigger ships, but Handymax size cargoes amount to huge volumes. Seaborne coal trade overall is the second largest global dry bulk commodity trade after iron ore, amounting to a massive volume of just over 1,200mt (million tonnes) last year, and comprising over one-quarter of all global dry bulk cargo movements.

A significant aspect, which has emerged recently, is a much more pronounced impact from negative influences affecting coal import demand around the world. After growing at strong annual rates, a decline in global coal trade looks likely during 2015 as a whole. Movements of both steam coal (used chiefly in power stations, but also in cement manufacturing and for other industrial processes), and coking coal (used in the steel industry) could be lower than last year’s volumes. Steam coal is the largest category, comprising over three-quarters of the total.

Among coal trades employing Handymaxes extensively, shipments of predominantly steam coal from Indonesia rose to become the world’s largest coal export volume for an individual country in 2013. But this top position was not maintained, and shipments fell by 7% to 356mt last year. That annual volume is the equivalent of about 6800 Supramax size cargoes, although many larger ships are employed. Short-haul shipments to China form a large part of Indonesia’s exports.

Weakness in China’s coal import demand has been adversely affecting Handymax usage. Last year China’s overall coal imports (including lignite), a major part of world trade in this commodity, declined by 36mt or 11%, to 292mt. This year a greater percentage decline may be seen. In the first nine months of 2015, the total reportedly was down by almost 30% compared 

with last year’s same period, at 156.4mt.
The grain (including soya) trade also provides extensive

Handymax bulk carrier employment, featuring highly variable and unpredictable changes in geographical patterns and quantities. During the past crop year ending mid-2015, global trade in wheat and coarse grains, and also in soyabeans and meal, increased robustly, but over the current year ending mid-2016 some negative factors are likely to weaken global import demand.

Contributing to recent strength in grain and soya movements were higher imports into many countries, facilitated by abundant export supplies around the world and lower international prices. According to International Grains Council calculations, global trade in wheat plus corn and other coarse grains increased by 12mt (4%) in crop year 2014/15 ending June, reaching 322mt. Global trade in soyabeans and meal was 12mt (7%) higher in marketing year 2014/15 ending September, at over 181mt, based on US Dept of Agriculture estimates.

Over the past twelve months, Handymax grain trade employment opportunities benefited from larger imports into Africa and Middle East countries, while China and other Asian countries raised their purchases. Involvement in the soya sub- sector was supported by China’s continued upwards import trend, as well as increased volumes into other parts of Asia, the European Union and elsewhere.

During the year ahead, 2015/16, the upwards trajectory of world soya movements is expected to persist, as China and others buy additional cargoes. Conversely, global wheat and coarse grains trade could see lower imports into a wide range of countries.

Numerous Handymax size bulk carriers regularly carry minor dry bulk cargoes. Many elements of this group of commodities are large, not small and collectively amount to massive annual volumes. The commodity range is wide and, until last year when the total is estimated to have reached over 1,500mt, growth had been rapid for several years. But in 2014 the overall increase apparently was minimal.

Steel products trade (coil, sheet, plate and other items), and forest products trade, are the biggest individual minor bulk components, although not all quantities are carried by bulk carriers. Bauxite/alumina for the aluminium industry, fertilizer raw materials and semi-finished fertilizers, cement, as well as ores and minerals such as nickel and manganese ore, together provide very big tonnages.

As an example, Handymaxes frequently carry steel products exports from China. This trade has expanded strongly over the past two years, amid slowing Chinese domestic steel consumption and surplus capacity. The annual total of China’s steel exports to all destinations jumped by 51% to reach just under 93mt in 2014, and could exceed 100mt this year. In the first nine months of 2015, reportedly the volume rose by 27%, to 83mt.


Over the past two years, Ultramax bulk carriers of 60–65,000dwt, at the top end of the Handymax size range, became the principal focus of attention for shipowners investing in new Handymax tonnage. Despite the abrupt downturn in contracting activity seen this year, Ultramaxes continue to dominate the global order book and future delivery schedules, as a result of the heavy ordering seen in 2013 and 2014.

A typical Ultramax provides a 63,000 or 64,000 total deadweight capacity, and is equipped with the standard cargo-

handling gear of cranes and grabs for loading and discharging at a berth or anchorage. These new designs also offer another attractive economic advantage, which was even more valuable when fuel costs were much higher up to almost the end of last year: improved fuel efficiency is a key feature.

The advantage possessed by an Ultramax is clearly seen in trades where a cargo of around 60,000 tonnes — often coal, or minor ores or other bulks — needs to be lifted from barges at an offshore transshipment terminal and then discharged at a similar installation at the other end of the voyage. This employment pattern occurs in many shorter haul trades within the Asian region and elsewhere. The Ultramax can self-load and self-discharge, but if an older gearless vessel is used, such as a panamax of similar capacity, a floating crane is required, significantly raising transportation costs.

Chinese shipbuilding yards in particular marketed standard Ultramax designs which have proved popular. The ‘Crown 63’ of 63,000dwt and the ‘Dolphin 64’ of 64,000dwt were seen by shipowners as likely to prove efficient and potentially profitable, resulting in the yards obtaining many orders.

Expectations of expanding cargo volumes available for Ultramax size bulkers underpins interest in these vessels. In some trades, individual cargo sizes commonly lifted have been increasing. The Supramax, typically 52–57,000dwt, was the preferred sea transport unit until quite recently, compared with small Handymaxes up to 50,000dwt. But a ship able to carry a somewhat larger cargo volume while remaining within other size restrictions is now seen as widely employable. Commodity trades to Asian destinations, often intra-Asian trading, are a particular focus of attention.


Freight rates for Handymax bulk carriers have been weak this year, reflecting continuing surplus capacity in this and other vessel size groups. Sustained rapid enlargement of the world Handymax fleet, amid slowing growth in some key bulk trades employing these ships, has resulted in generally subdued market conditions.

During the first quarter of 2015 Handymax freight rates fell steeply to very low levels. The Baltic Supramax Index dropped below 500 points. In subsequent weeks a modest revival ensued, gaining momentum after mid-year when the index remained above 800 for several weeks. Renewed weakness was seen during September and, by mid-October the BSI had declined to below 700 points.

What is the outlook for this market sector over the next twelve months? Although the Handymax category is a distinct market sector, it is not isolated from the bulk carrier market as a whole, where considerable over-capacity looks set to persist for some time. There are signs of further slowing in overall world bulk carrier fleet growth during 2015 (although not in the Handymax category), bringing it more into line with previous expectations of trade expansion. But indications now clearly suggest that trade is not increasing as expected earlier, and is actually decelerating markedly.

Slowing global seaborne trade development recently, and few convincing signs of a robust pick up next year, has intensified uncertainty about the future freight market trend. Also, it is not altogether certain that a further slackening of bulk carrier fleet growth will be seen in 2016. For the Handymax sector individually, deadweight capacity may continue expanding quite rapidly next year. So a sustainable solid improvement in freight rates may remain elusive in the near term future.