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Maritime Logistics Professional

February 9, 2015

Commodity Shipping Costs Hit 28-Year Low

The Baltic Dry Index (BDI), the leading measurement of commodity shipping costs, hit a 28-year low on Friday. 
The index, named after an 18th century London coffee-house where shipping merchants gathered, fell to 554 points on Friday, the lowest it's been since August of 1986. 
Industry experts have blamed the slide in shipping costs on a sharp drop in demand for Chinese coal. Ship owners ordered three-times more dry bulk ships in 2013 than 2012 in anticipation of a growing demand for Coal in China, Jeffrey Landsberg, managing director of New York-based Commodore Research, told Bloomberg. Bloomberg reported that in spite of predictions of increased coal use, China's seaborne coal imports dropped by 10 percent in 2014.
The increased supply of ships and capacity coupled with the low demand for Chinese coal has pushed shipping costs down to nearly historic lows. The Baltic Dry is down almost 30% year-to-date and nearly 50% in 12 months. 
The BDI is seen by many experts as a valuable real-time economic indicator and a predictor of global growth, noted the Financial Post, since it is recalculated daily. The Post noted that the BDI dropped throughout the summer of 2008, "presaging the global recession that officially kicked in later that year."


Baltic DryBloomberg