Low freight rates are helping global grain exporters in 2025, but the shipping market remains clouded by tariff threats, oversupplied fleets, and shifting trade flows – especially China’s pivot away from U.S. corn and soy. Despite a temporary US-China truce, exporters face uncertainty from geopolitical tensions, Red Sea disruptions, and demand declines in wheat and maize markets.
The global dry bulk shipping market, particularly for agricultural commodities like grains, is navigating through a paradoxical environment in 2025. On one hand, exporters are enjoying some of the cheapest freight rates in years, thanks to excess vessel capacity and subdued coal demand. On the other, geopolitical instability, unpredictable tariffs, and shifting trade alliances have created significant uncertainties – threatening to overturn any gains made by low shipping costs.
In early 2025, dry bulk freight rates saw a marginal recovery compared to the first quarter but remained well below year-ago levels. According to the International Grains Council (IGC), its Grains and Oilseeds Freight Index (GOFI) stood at 131 in late May- down 15% from the previous year and sharply lower than its 52-week peak of 163 in July 2024. Though slightly above the January low of 115, this index underscores the continued weakness in freight pricing.
A report by World Grain says grain exporters, especially those dealing in bulk crops like soybeans, corn, and wheat, have found some relief. The abundance of panamax and supramax vessels in the market has translated into reduced transportation costs. These two vessel classes carry a significant share of global grain volumes. Panamaxes are favored for longer voyages from the Americas to Asia, while supramaxes often serve routes from the U.S. Gulf and the Black Sea into Latin America and the Mediterranean.
BIMCO, one of the world’s largest international shipping associations, forecasts that freight rates for bulk vessels will remain soft throughout 2025 due to weak demand and expanding vessel supply.
Yet, this apparent advantage comes with significant caveats, particularly for U.S. exporters. The long-running trade tensions between the United States and China have left exporters vulnerable to sudden shifts in tariff policy. While a 90-day truce was announced in May 2025, lifting the highest tariffs temporarily, analysts remain divided on its durability and effectiveness. Its impact on freight levels may be short-lived if the trade détente collapses or fails to address structural shifts in China’s grain import strategy.
China has been steadily reducing its reliance on U.S. grains, especially corn, in favor of South American suppliers like Brazil. China’s emphasis on self-sufficiency slashed its corn imports by nearly 50% in 2024, a trend likely to continue. This is expected to result in realignments in trade flows, with the U.S. share of global grain exports potentially falling from 22% in 2024 to just 12%.
A similar pattern is emerging with soybeans. In early 2025, U.S. shipments to China surged as traders rushed to beat tariff deadlines. But by the second quarter, China had effectively stopped all U.S. soybean imports, turning instead to Brazil, which is expected to export a record 107 million tonnes in its 2025 marketing year.
The report says, even in cases where freight routes are similar in distance – like the U.S. to China versus Brazil to China – the difference in pricing and political risk tilts demand toward Brazil. That, in turn, limits any boost to shipping demand that might have arisen from U.S. exports.
Meanwhile, overcapacity remains the elephant in the cargo hold. Experts project that panamax supply will grow by 2.8% in 2025, while demand is only expected to rise by 3.5%. For supramax vessels, demand growth (3.6%) barely outpaces supply (2.8%). While this may look favorable at first glance, the reality is more complex.
One factor absorbing vessel capacity is the ongoing rerouting of ships around the Cape of Good Hope to avoid the Red Sea and Suez Canal, due to security threats from Houthi rebel attacks. These diversions have temporarily eased oversupply, but a return to Suez routes could flood the market with effective tonnage again. If Suez Canal transits fully resume, it could act like a 2% boost in vessel supply, putting further pressure on freight rates.
Another brewing concern for the grain trade is regulatory pressure. The U.S. has proposed new surcharges on Chinese-built and operated cargo ships calling at its ports. While recent revisions have narrowed the scope of the measures – exempting many bulk carriers – early reports suggested vessel owners were already avoiding U.S. calls, and charterers were offering premiums for non-Chinese ships.
Even outside the U.S.-China tensions, the global grain market is experiencing a soft patch. The IGC estimates that global wheat trade will decline 10% in 2024-25, reaching a four-year low. This is primarily due to large domestic harvests in major importing countries like China, Turkey, and Indonesia. Though maize demand has been buoyed by a weather-induced spike in African imports, the overall trade environment remains sluggish.
The soybean sector shows marginal promise, with global trade forecast to grow 1% in 2024-25 and hold steady into the following year. However, this slight uptick will do little to offset the challenges faced by U.S. exporters who have lost critical access to China – the world’s largest soybean importer.