The dry bulk shipping sector might not sound like the most exciting corner of finance, but a recent Capital Link webinar brought together industry heavyweights who painted a surprisingly nuanced picture of where things are headed. The panel featured Aristides Pittas, Chairman and CEO of EuroDry Ltd. (EDRY) and Euroseas Ltd. (ESEA), Mads Petersen, COO of Pangaea Logistics Solutions Ltd. (PANL), Hamish Norton, President at Star Bulk Carriers Corp. (SBLK), and William Fairclough, Managing Director at Wah Kwong Maritime Services. Moderated by Liam Burke from B. Riley Securities, the discussion revealed how these companies are navigating a market where geopolitics increasingly matters more than traditional supply-demand fundamentals.

Playing the Charter Game

Each company approaches the market differently, reflecting their unique risk appetites and customer bases. Fairclough explained that Wah Kwong Maritime Services operates across Ultramax, Kamsarmax, and Capesize vessels with a flexible strategy. "Our choice of strategy between spot and the time charter would be very much linked to our view of the market and our risk management and overall exposure," he noted.

Pittas described how EuroDry focuses on mid-sized segments including Supramax, Ultramax, Panamax, and Kamsarmax vessels while deliberately avoiding both the smaller Handysize category and the large Capesize ships that typically haul single commodities. Meanwhile, Star Bulk Carriers, with its fleet roughly split between Capesize, Kamsarmax/Post-Panamax, and Supramax/Ultramax vessels, operates primarily in the spot market. Norton cited two compelling reasons for this approach: shareholders want spot market exposure, and with a strong balance sheet, the company believes spot markets deliver higher returns over time. After merging with Eagle Bulk Shipping, Star Bulk expanded its Supramax and Ultramax exposure while selling older, smaller ships to create a more balanced fleet.

Pangaea Logistics Solutions takes a different tack entirely, organizing around customer needs in the sub-Cape segment. "We are pragmatic. It all depends on what the customer's needs are at a certain time," Petersen explained. The company relies mainly on voyage charter contracts and long-term Contracts of Affreightment (COAs), blending spot market activity with contracted cargoes in niche markets.

The Goldilocks Approach to Debt

When it comes to balance sheet management, the consensus leaned toward conservative leverage. Pittas advocated for a medium leverage strategy targeting approximately 50% loan-to-value. "Enough debt to remain resilient through a downturn," he explained, while maintaining sufficient leverage to enhance equity returns in an industry that historically generates returns above the cost of debt. Fairclough echoed this view, describing 50% net group leverage as very comfortable and noting the availability of attractively priced debt from aggressive Chinese leasing companies, particularly for newer vessels with long-term contracts.

Petersen said Pangaea's debt to fair market value sits around 40-45%, a level the company finds comfortable. Star Bulk isn't leveraging up despite attractive debt terms available in the market. With net debt below scrap value, the company is preserving its debt capacity to renew the fleet when ship prices become more attractive, currently using cash flow for stock buybacks instead.

Forecasting Through Fog

The conversation turned to 2026 prospects, with executives acknowledging the year's inherent unpredictability. Petersen pointed to manageable growth expectations and encouraging customer discussions, settling on a cautiously optimistic stance without anticipating dramatic market swings.

Pittas acknowledged the challenge of forecasting, noting that Clarksons' projections suggest a modest market correction. However, he emphasized a crucial shift in the market. "In the current environment, it's increasingly about geopolitics rather than the traditional supply-and-demand calculus," he said. His base case assumes freight rates broadly aligned with current levels, with potential variance of plus or minus 20-25%.

Norton struck the most optimistic tone. "We are pretty optimistic, actually," he said, anticipating continued strong volumes for coal, grain, and minor bulks. For iron ore, he expects increasing ton-miles driven by longer haul routes from Brazil and Guinea, even if Chinese steel production moderates.

On coal's trajectory, Fairclough noted that current warm weather has suppressed demand and built up stockpiles. "A weaker coal market will definitely have a more negative impact on the market next year," he cautioned. Still, while expecting the market to trade within a range, he anticipates seeing positive months in 2026.

Order Books That Don't Terrify

The newbuild order book emerged as a source of confidence rather than concern. Pittas highlighted that order book levels sit at approximately 14% for Kamsarmax and 11.5% for Ultramax, remaining well within historical norms. This stands in stark contrast to the near-100% order book levels that preceded the previous market downturn, suggesting the industry learned something from past excesses.

China's Evolving Appetite

Perhaps the most interesting dynamic discussed was China's changing demand profile. Norton pointed to Chinese steel exports and power demand from AI data centers as supportive factors for iron ore and coal, respectively. This represents a fundamental shift where steel exports for global infrastructure projects are offsetting weakness in domestic real estate, a development Petersen emphasized as creating beneficial long-haul shipping demand for both raw materials and finished steel.

The transformation matters because it changes shipping economics. Longer routes mean more ton-miles, which translates to better utilization of existing vessel capacity even if absolute volumes don't surge. It's the kind of nuanced shift that doesn't make headlines but materially impacts freight rates and company profitability.

Disclosure: Capital Link is the investor relations advisor to EuroDry Ltd. (EDRY)/Euroseas Ltd. (ESEA) and Star Bulk Carriers (SBLK). This content is for informational purposes only and not intended to be investing advice. The article includes statements made by company management during the sector webinar.