Dry bulk shipping freight rates – as reflected in the Baltic Dry Index (BDI) – hit a new low on Nov. 20, 2015. The BDI slumped below the 500 mark on shipping’s Black Friday, its lowest point since the original Baltic Freight Index was launched in 1985. By comparison, back in May 2008, prior to the global financial crisis, the BDI was sailing high at 11,793 points. For vessel owners and operators, it has been a horrific few years for revenues and stock prices. For some it has meant pulling out of the business or declaring bankruptcy.
The BDI is compiled by London-based Baltic Exchange and pulls together separate indices covering the Capesize, Panamax, Supramax and Handysize sectors (see chart, page 72) based on regular input by route from shipbrokers from around the world. Because of the structure of the global dry bulk shipping fleet, which in terms of capacity is dominated by the larger vessel classes, the BDI’s performance is heavily loaded to reflect the fortunes of the power and steel sectors which consume the dominant cargoes shipped in larger bulkers – iron ore and coal.