Safe Bulkers – Fleet Modernization & Long Term Competitiveness
In this episode of Capital Link’s Trending News Webinar Series, Dr. Loukas Barmparis, President of Safe Bulkers Inc (NYSE: SB), offered updates on the company’s strategy amid ongoing dry bulk market volatility, accelerating regulatory pressure, shifting global trade flows, and initiatives to renew and decarbonize its fleet.
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Discussion Summary
Strategic $650M+ investment in modern, fuel-efficient fleet
Positioned to benefit from long-haul trade shifts and tight vessel supply
Building regulatory advantage with low-emission vessel fleet renewal
Over $300M in liquidity and 38% net leverage—among sector’s most conservative
$159M in contracted revenues ensures short-term cash flow visibility
$150M+ returned to shareholders since 2022 through buybacks and dividends
Demand Trends - Signs of Recovery Beneath the Surface
Signs of structural recovery are emerging in the dry bulk market. According to the IMF, global GDP is projected to expand by 3.0% in 2025 and 3.1% in 2026, led by India’s robust 6.4% growth. While China’s growth is moderating to 4.8%, its energy transition and shift toward long-haul commodity sources—particularly from Brazil—are reshaping trade lanes in a way that increases voyage lengths and boosts ton-mile demand.
Safe Bulkers’ larger, fuel-efficient vessels remain in high demand. Its Capesize ships are earning average period charter rates of $24,500/day, backed by $135 million in contracted revenues (excluding scrubber premiums)—demonstrating strong forward visibility and rate premiums relative to the index.
As Dr. Barmparis emphasized, “cargo flows are shifting, voyage distances are increasing, and inefficiencies in older tonnage are being exposed.” Against this backdrop, Safe Bulkers anticipates dry bulk trade growth of 1.0% in 2025 and 1.5% in 2026. The company’s quality fleet and prudent capital allocation strategy position it well to capture long-term upside.
Supply Trends - Tightening Fleet Supply Dynamics
On the supply side, the global dry bulk orderbook represents 10.3% of the active fleet—relatively low by historical standards. However, only ~9% of the orderbook is alternative fuel–ready, with just 23% ammonia-, 35% methanol-, and 37% LNG-capable. Shipyard capacity remains constrained, leading to long lead times and limited slots for new bulk carrier construction.
Compounding this, 25% of the global dry bulk fleet is over 15 years old, placing a large portion at risk as the result of regulatory obsolescence. Safe Bulkers expects regulatory pressure—including the IMO’s CII and EEXI ratings and the recently ratified Hong Kong Convention—to catalyze a new scrapping cycle. BIMCO estimates as many as 16,000 ships could be recycled over the next decade, double the previous ten-year period.
Safe Bulkers operates a fleet of 47 vessels with an average age of 10.3 years—well below the global fleet average of 12.6 years. Approximately 80% of its vessels are Japanese-built, a quality advantage in both operations and resale value. Six next-generation Kamsarmax newbuilds are on order, including two dual-fuel methanol vessels.
Fleet Decarbonization - The Cost of Decarbonization
The IMO’s upcoming Global Fuel Standard (GFS) is expected to be finalized in October 2025. This regulation, which will take full effect after 2028, will mandate significant reductions in carbon emissions, forcing shipowners to either retrofit their fleets or face steep penalties.
According to Dr. Barmparis, Safe Bulkers is preparing for this by investing in two dual-fuel methanol vessels, set for delivery in 2026 and 2027. These ships will not only comply with future regulations but will also allow the company to participate in emissions pooling a mechanism that may help avoid penalties under the new framework.
A Competitive Edge on Fleet Modernization
Already, Safe Bulkers has taken delivery of 12 Phase 3 ships—vessels that consume 30% less fuel than pre-2008 designs—and expects six more to follow. These vessels command a premium in the charter market, earning roughly $2,500 more per day than conventional ships.
In addition to newly constructed vessels, 26 existing vessels have been retrofitted with environmentally friendly technologies, such as low-friction hull coatings, which reduce fuel consumption by up to 2 tons per day. These upgrades are expected to deliver quick payback periods, sometimes as short as one year, through fuel savings. These combined efforts highlight the company’s strategic $650 million investment in building a modern, compliant fleet.
As of 2024, Safe Bulkers had zero vessels rated “D” or “E” under the IMO’s CII framework, underscoring its proactive decarbonization investments.
Delivering $150M+ in Capital Returns Since 2022
Despite these aggressive fleet renewal efforts, Safe Bulkers maintains a relatively conservative financial strategy. The company’s net leverage stands at a comfortable 38%, with $125 million in cash and $188 million in undrawn revolving credit, bringing total liquidity above $300 million as of June 30, 2025. With net debt of just $9.1 million per vessel and a market capitalization of $431 million, Safe Bulkers continues to operate with one of the most conservatively financed balance sheets in the sector.
It has also secured $159 million in contracted revenues, providing near-term earnings visibility amid market fluctuations. The company estimates its fleet scrap value at approximately $312 million—providing substantial asset coverage and balance sheet flexibility.
In Q2 2025, Safe Bulkers declared its 15th consecutive quarterly dividend of $0.05 per share, representing a 4.7% annualized yield —reflecting management’s commitment to consistent shareholder returns through market cycles. With approximately 48% ownership, management is, according to Dr. Barmparis, strongly aligned with public shareholders, reinforcing disciplined capital allocation and long-term value creation.
Since 2022, Safe Bulkers has repurchased 19.5 million shares—approximately 16% of its outstanding share count—returning $74.9 million to shareholders through buybacks alone. Combined with $78.7 million in dividends over the same period, total capital returns since 2022 now exceed $150 million. While buybacks are not currently active, they remain a strategic tool that can be reactivated when valuation is compelling.
About Safe Bulkers
The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest users of marine drybulk transportation services. The Company’s common stock, series C preferred stock and series D preferred stock are listed on the NYSE, and trade under the symbols “SB,” “SB.PR.C” and “SB.PR.D,” respectively.
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