HONG KONG minor bulks specialist Pacific Basin Shipping outperformed market indices in the traditionally slower first quarter but still saw daily time-charter equivalent rates for Handymax and Supramax fall 1% and 10% respectively year on year.
Releasing Q1 results late last week PacBasin said the freight market followed historical seasonal patterns with reduced market activity leading up to the Lunar New Year at the end of January and a recovery in freight rates as activity picked up in February.
“Global dry bulk loading volumes were lower in the first quarter than a year ago, as stockpiling in China in 2024 led to high inventory levels which has undermined Chinese demand for dry bulk commodities early this year. As usual, the market improved after Lunar New Year, albeit with the near-term outlook being uncertain, clouded by the ongoing tariff and trade conflict.
“Disruptions in the Red Sea continued to contribute to greater tonne-mile demand. Looking ahead, a resolution to the conflict in Ukraine would support a recovery of Black Sea trade volumes, and tariff-related changes in global trade could increase tonne-miles, helping to counteract the potential economic fallout of the tariff conflict,” the company said.
In the first quarter of 2025, market spot rates for Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) vessels averaged US$8,000 and US$7,900 net per day respectively, marking a decrease of 24% and 36% compared to the same period in 2024.
“Our core business achieved average Handysize and Supramax daily TCE earnings of US$10,940 and US$12,210 per day in the first quarter of 2025. Supported by solid cargo coverage entering the year, we outperformed the Handysize and Supramax spot market indices by US$2,940 and US$4,310 per day or 37% and 55% respectively in the period.
“Our owned fleet, with substantially fixed costs, remains the main driver of our profitability. Our cash break-even levels including general and administrative overheads, finance costs and operating expenses (US$5,780 and US$6,200 per day for Handysize and Supramax owned vessels respectively in 2024) continued to support healthy cash generation at prevailing market freight rates in the first quarter.”
PacBasin has covered 77% and 95% of core committed vessel days in the second quarter of 2025 at US$11,390 and US$12,400 per day for Handysize and Supramax respectively and for the second half of 2025, 25% and 37% of core committed vessels days at US$10,150 and US$12,090 per day.
“Our operating activity continued to expand, with margins improving compared to the same period last year. Our daily operating activity margin increased 61% to US$820 per day and our operating activity days increased to 6,950 days in the first quarter of 2025,” the company said.
“Looking ahead, we are prepared for increased macroeconomic and industry uncertainty and volatility. We closely monitor risks associated with the current tariff and trade conflict and its impact on the global economy and shipping.
“We remain hopeful that negotiated concessions will help to de-escalate tensions, we anticipate further Chinese policy support to partly mitigate the impact of US tariffs and retaliatory measures, and we expect any disruption to trade flows to reduce the efficiency of the global fleet which would lend support to market freight rates.
“The longer-term market outlook is positive due to favourable supply fundamentals.”
