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Dry bulk freight rates surged around 36 per cent between February and July 2026, reaching their highest level in three years, amid higher international oil prices, geopolitical tensions and robust demand for commodities, according to a report by Bank of Baroda Research.
The report said freight rates across dry bulk carriers witnessed significant upward pressure during the period of the US-Iran war, with the Baltic Dry Index rising about 36 per cent between February and July. "Baltic dry index has risen by ~36% to reach levels highest in past 3 years," the report said.The sharpest increase was recorded in the Supramax index, which rose around 44 per cent during the period. Supramax carriers are primarily used for transporting bulk commodities such as grains, coal, fertilizers, cement, clinker, steel products and alumina. The Capesize index, which tracks freight rates for the largest dry bulk ships, also increased around 38 per cent, while the Panamax index rose about 22 per cent. Capesize vessels are typically used for transporting commodities including coal and iron ore, while Panamax carriers transport commodities such as coal and grains. The report attributed the rise in dry bulk freight rates to higher operating costs arising from elevated oil prices and geopolitical tensions, along with strong demand for agricultural and infrastructure-related goods. "There are 2 key drivers of this trend. One, rise in international oil prices, and geopolitical tensions, which increase operating costs, and second, robust demand for agricultural goods, infrastructure goods and electricity," it said. The increase in freight costs has also started feeding into global commodity prices, with the report noting that commodity prices were rising partly because of higher freight expenses and input costs. "As a result, global commodity prices are also inching up, partly due to freight cost and partly due to higher input costs," the report said. The Bank of Baroda Research report also highlighted significant changes in tanker freight rates since the outbreak of the US-Iran conflict. The report said tensions around key shipping routes, including the Strait of Hormuz and Bab-al-Mandeb, have forced some vessels to take longer routes via the Cape of Good Hope, adding pressure on freight rates. Domestic road freight rates have also increased since February, with truck freight rates from Delhi to Chennai and Delhi to Dehradun rising 5.3 per cent and 15 per cent, respectively, between February and July. The report said rates in several major cities were at their highest levels in five years. The report further noted that air cargo volumes were affected by the conflict and elevated aviation fuel prices. International air freight volumes fell 53 per cent between February and June, compared with a 13 per cent decline in domestic freight volumes, as international airline routes were curtailed. Going forward, the report expects freight and commodity prices to remain elevated in the near term as oil price volatility persists. (ANI)
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