Escalating attacks on Iran by the United States and Israel have begun to disrupt vessel movements through the strategically vital Strait of Hormuz, with knock-on effects emerging for the dry bulk sector.
According to Filipe Gouveia, Shipping Analysis Manager at BIMCO, around 4% of global dry bulk cargo volumes and tonne-mile demand are linked to transits through the Strait. While the corridor is more critical for the tanker market, ongoing tensions are beginning to weigh on bulk carrier activity.
Traffic through the Strait has already declined sharply. During the first three days of March, bulk carrier sailings dropped to less than one-third of the levels recorded in the previous week. At least five ships have reportedly been attacked, and Iranian forces have threatened further action against vessels operating in the area. The United States has advised ships to avoid the conflict zone.
Although former President Donald Trump announced potential financial guarantees for shipowners and naval escorts for merchant vessels, these measures have yet to materialise and are not currently influencing market dynamics.
Sub-Capesize Segments Face Higher Exposure
Gouveia noted that sub-capesize segments are particularly vulnerable. Approximately 7% of supramax demand and 5% of both panamax and handysize demand depend on voyages transiting the Strait. Despite the reduction in sailings, dry bulk freight rates have so far remained relatively stable, as vessels continue to transit at reduced capacity.
Key Commodities at Stake
Grains, iron ore and steel dominate dry bulk imports into Persian Gulf ports via the Strait, accounting for 59% of inbound volumes and 70% of inbound tonne miles. Brazil and Argentina are key suppliers of iron ore and grains to the region, while China is a major exporter of steel.
On the export side, limestone, sulphur and urea make up 69% of outbound volumes and 63% of outbound tonne miles from the Persian Gulf. Notably, 52% of global limestone shipments originate from the UAE through the Strait, largely destined for India and Bangladesh for cement and steel production. The region also accounts for 45% of global sulphur shipments and 27% of global urea exports.
Risk of Broader Market Weakness
“If disruptions in the area remain for an extended period, and especially if ships stop transiting the Strait altogether, the dry bulk market could weaken, particularly in segments other than capesize,” Gouveia cautioned.
Sustained disruptions could curb import demand from Persian Gulf nations, as overland alternatives would likely be inadequate to meet existing requirements. Meanwhile, replacing critical exports such as limestone could prove challenging in the medium term due to limited alternative suppliers.
For now, the dry bulk market remains resilient—but prolonged instability in the Strait of Hormuz could significantly alter trade flows and freight fundamentals.
