The Baltic Dry Index is an index covering dry bulk shipping rates and managed by the Baltic Exchange in London. According to Baltic Exchange, the index provides:
“
…an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.
”
—The Baltic Exchange, in BalticExchange.Com
The index is made up of an average of the Baltic Supramax, Panamax, and Capesize indices. These indices are based on professional assessments made by a panel of international shipbroking companies. The index can be accessed on a subscription basis directly from the Baltic Exchange as well as from major financial information and news services such as Thomson Financial Datastream, Reuters and Bloomberg L.P..
Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. However, since the demand for shipping varies with the amount of cargo that is being traded in the market (supply and demand) and the supply of ships is much less elastic than the demand for them, the index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as cement, coal, iron ore, and grain.
Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as a good economic indicator of future economic growth and production, termed a leading economic indicator because it predicts future economic activity.
The BDI factors in the four different sizes of oceangoing dry bulk transport vessels:
Ship Classification
Dead Weight Tons
% of World Fleet
% of Dry Bulk Traffic
Capemax
100,000+
10%
62%
Panamax
60,000-80,000
19%
20%
Supramax
45,000-59,000
37%
18% w/ Handysize
Handysize
15,000-35,000
34%
18% w/ Supramax
References
- ^ Data from Wikinvest, “Composition of the Baltic Dry Index”
- ^ This is measured in terms of the tonnage of cargo carried multiplied by the distance traveled
- ^ Lamb, Thomas. Ship Design and Construction. Jersey City: Society of Naval Architects and Marine Engineers. ISBN 0939773406 and CIA World Factbook 2005. Data slightly dated as their has been increased construction in the Capemax size the past three years
External links
- The Baltic Exchange
- Dry Bulk Index
- The best economic indicator you’ve never heard of – Article at Slate.com
- Baltic Dry Index profile at Wikinvest
Ship chartering
Agreement types:
Voyage charter · Time charter · Bareboat charter · Demise charter · Affreightment
Charter-party members:
Ship-owner · Ship-operator · Ship-manager · Ship-broker · Charterer
Freight rates:
Worldscale
Freight derivatives:
Baltic Exchange · Imarex · Baltic Dry Index
Related topics:
Tramp trade · Bill of lading
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