Despite the adjustment in freight rates, the dry bulk shipping market is expected to remain high for a longer period. Ship broker Intermodal said in its latest weekly report that cargo earnings for all bulk carriers have increased significantly in recent weeks, especially Capesize vessels, to more than $50,000 per day. Meanwhile, Panamax earnings hit a record high in 2023, with the P5TC index currently trading at $21,067 per day, up 63 percent since the beginning of the year. In addition, this year's freight rate trend does not follow the seasonal characteristics of the past five years, that is, freight rates are usually higher in the first and third quarters.

Intermodal research analyst Fotis Kanatas said one of the factors driving up rates was the Panama Canal traffic restrictions. The Canal Authority announced restrictions at the end of October, continuously reducing the number of vessels passing through February 2024. The congestion caused by the restrictions is already affecting dry bulk shipments, with the daily number of vessels crossing at a 2023 low, indicating that shipowners have begun to turn to alternative routes, leading to a surge in tonnage-nautical miles and rising yields.

In terms of trade volume, the performance of cereals trade is strong, with steady growth in trade volume over the past five years, and particularly strong in 2022 and 2023. China is the largest importer of agricultural products, while Brazil is the largest exporter, with the vast majority of exports being soybeans and corn, followed by Argentina and the United States, the data show. China imported 13.544 million tonnes of grain in November, its biggest month in five years and not even in the traditional peak season. Among them, the cargo volume of the P7 route from Meiwan to Qingdao has increased by 35% so far this year; The P8 route from Brazil to China grew by nearly 30 percent.

Another factor supporting freight rates is congestion at Brazil's biggest export port. Congestion, which peaked in October, was exacerbated by record Brazilian soybean, corn and sugar production, while Argentine soybean production fell to a record low, putting huge export pressure on Brazil and its ports.

Kanatas said the mid-bulk carrier market has been volatile so far this year, and the market moves over the past few weeks have undoubtedly been positive for shipowners. If port congestion in Brazil continues and problems caused by the Panama Canal drought remain unresolved, freight rates could continue to rise if demand remains strong.