Race To The Bottom: Baltic Dry Index Collapsed To New All-Time Low

Freight rates have fallen to levels never seen before, 60% since August, and are currently 25% below the worst days of 2008.
 The Baltic Exchange’s main sea freight index (BDI), which gauges the cost of shipping cargoes including iron ore, cement, grain,
coal and fertilizer, fell to 551 points yesterday. Historically, the Baltic Exchange Dry Index reached an all-time high of
11,612 in August 2008 and a record low of 498 in November of 2015. Unlike stock and bond markets, the BDI is totally devoid
of speculative content and reflects the real economy, since people don't book freighters unless they have cargo to move.

Shipping Indices Reflecting Real Economy

Baltic Dry Index (HERE)

These days shipping indices like the Baltic Dry Index (BDIY) and the Shanghai Containerized Freight Index (SCFI) are the only real economic indicators not manipulated. They do not implode without larger malfunctions under the surface of the financial system. Oil, exports and manufacturing do not crumble without the weight of greater disaster bearing down.

The BDI is the main sea freight index at the Baltic Exchange for ships carrying dry bulk commodities. The BDI peaked out at 1,222 in early August and continued to drop to 994 points last Friday, mainly due to weak panamax rates. The overall index factors in average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels. 

Shanghai Containerized Freight Index (HERE)

Data from the SCFI shows that shipping freight rates for transporting containers from ports in Asia to Northern Europe also dropped more than 20% since early August down to $ 674.54 per 20-foot container (TEU) last Friday. Freight rates on the world's busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand for transported goods. Rates generally deemed profitable for shipping companies are at about US$800-US$1,000 per TEU.