# Baltic Dry Index



## Lucky_Country (8 January 2009)

Maybe time to keep an eye on this index as world demand hopefully picks up and so does our resource sector.

Looks like it has got a fair way to recover to previous high but also shows how bad things did get and the worst maybe over imho.

http://i104.photobucket.com/albums/m163/bl82/BDIfrom02123108.gif


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## Aussiejeff (8 January 2009)

Lucky_Country said:


> Maybe time to keep an eye on this index as world demand hopefully picks up and so does our resource sector.
> 
> Looks like it has got a fair way to recover to previous high but also shows how bad things did get and the worst maybe over imho.
> 
> http://i104.photobucket.com/albums/m163/bl82/BDIfrom02123108.gif




Do my eyes deceive me or am I looking at a classic "dead cat" bounce? 


aj


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## BSD (8 January 2009)

Aussiejeff said:


> Do my eyes deceive me or am I looking at a classic "dead cat" bounce?
> 
> aj




Not possible for it to go lower for very long

The owners would be better-off junking the ships at current prices than hiring out at $2,000 a day

They could get better prices organising on-board xmas or rave parties than dealing at those prices !

Shows how much activity collapsed late last year when banks stopped lending. 

It wont last forever


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## Lucky_Country (8 January 2009)

The worst is over stimulus packages will no start economies moving again.

The chart looks to me like it has bounced off the lows and now taking a breather before the next leg up but only time will tell.

Read an article the other day which I will try to find about how cargo ships for oil are now floating storage points. This points to a rally coming at least in oil as speculators cash in on higher prices and how many other commodities are being stored offshore ?


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## Aussiejeff (8 January 2009)

Lucky_Country said:


> The worst is over stimulus packages will no start economies moving again.
> 
> The chart looks to me like it has bounced off the lows and now taking a breather before the next leg up but only time will tell.
> 
> Read an article the other day which I will try to find about *how cargo ships for oil are now floating storage points*. This points to a rally coming at least in oil as speculators cash in on higher prices and *how many other commodities are being stored offshore ?*




Good news for Pirates-R-Us?


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## Temjin (8 January 2009)

Lucky_Country said:


> The worst is over stimulus packages will no start economies moving again.
> 
> The chart looks to me like it has bounced off the lows and now taking a breather before the next leg up but only time will tell.
> 
> Read an article the other day which I will try to find about how cargo ships for oil are now floating storage points. This points to a rally coming at least in oil as speculators cash in on higher prices and how many other commodities are being stored offshore ?




Yep, the chart really can't get any lower when it is now below cost to actually operate those freighters. But then you can't rule out the index could get depressed for a significant amount of time.

And I heard about the oil companies are hiring these freighters to STORE their oil because it is cheaper than delivering it! Goes to show how "depressed" things are. hehe


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## Lucky_Country (8 January 2009)

Temjin said:


> Yep, the chart really can't get any lower when it is now below cost to actually operate those freighters. But then you can't rule out the index could get depressed for a significant amount of time.
> 
> And I heard about the oil companies are hiring these freighters to STORE their oil because it is cheaper than delivering it! Goes to show how "depressed" things are. hehe





Yep things are depressed but the point is the worst is over as the tip of the chart shows.


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## J.B.Nimble (30 January 2009)

Well, there you go... we've broken through 1000. There is hope for world trade yet


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## Lucky_Country (3 February 2009)

The worst is over just want an end to the northern hemisphere winter and rate cuts and stimulus packages to kick in.

Could they be over stimulating the economy ?

Watching the BDI very closely atm.


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## Lucky_Country (3 February 2009)




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## Lucky_Country (3 February 2009)

Didnt seem to work last time try this !


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## Bushman (5 February 2009)

Baltic Dry is showing a pulse again. So we might start to have some shipping volumes again. Lets hope so.

Add it to signs that credit markets are thawing. 

Extract is from The Age website today. Full article can be found on The Age. 


'Shipping index soars, boosting iron-ore hopesFebruary 5, 2009 - 8:16AM 
The Baltic Dry Index, a measure of shipping costs for commodities, rose the most since at least 1985 in London as the number of idled capesizes fell to almost zero, indicating strengthening demand for iron ore.

Capesize rates have risen more than ninefold from a record low of $US2,316 a day on Dec. 2. Steelmakers may be replenishing stocks in China after they fell 22% by mid-January from a record in September. Producers abroad, faced with an oversupply of iron ore, may also be shipping ore to China for storage.'


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## Lucky_Country (5 February 2009)

Well great news maybe China will save the world afterall.

Even the US has had some better than expected results lately in housing and manufacturing although they are still pretty weak.

The early signs are emerging of a turnaround but not pinning too much on the numbers but feel things have bottomed.


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## doctorj (5 February 2009)

Is it possible the increase in the Baltic Dry Index is a product of reduced suppy?  Older ships with high maintainance costs being scrapped, ships converted to hold & store oil to profit from the recent extreme contango...


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## agathos (5 February 2009)

HI everyone on ASF

I have posted on other threads.
I don't have a specific figure, but my relative is working in a company in Singapore that deals with oil refinery (by the way, do you know that Singapore is one of the , if not the larger oil refinery centers in the world) , he says , *some ship owners rather dry dock their ships *due to what you are saying, namely lousy charter rates.

Just some info........agathos. 

(Personally, I would of course like to see some pulse too. But we've got to brace ourselves for this long market winter. Thawing will be slow for some time).


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## wayneL (8 August 2009)

Gloomberg is reporting that the Baltic Dry Index has had its worst week since October . 

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0BMpYTufWpM



> Baltic Dry Index Has Worst Week Since October as Demand Slows
> Share | Email | Print | A A A
> 
> By Alaric Nightingale
> ...




If technicals mean anything on an index as this, there is not a hell of a lot of technical damage at this point, but worth keeping an eye on as a leading indicator.


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## Lucky_Country (8 August 2009)

Well a bit of a breather is not a bad thing and is still way off its lows.

Cannot envisage another week as bad especially with the US payroll data released overnite.

Fundamentals will see the index carry on in its upward trend.


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## dhukka (8 August 2009)

wayneL said:


> Gloomberg is reporting that the Baltic Dry Index has had its worst week since October .
> 
> http://www.bloomberg.com/apps/news?pid=20601087&sid=a0BMpYTufWpM
> 
> ...




Calls into question all the cheery numbers coming out of China, early days yet but worth keeping an eye on.


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## Uncle Festivus (9 August 2009)

Lucky_Country said:


> Well a bit of a breather is not a bad thing and is still way off its lows.
> 
> Cannot envisage another week as bad especially with the US payroll data released overnite.
> 
> Fundamentals will see the index carry on in its upward trend.




Um...it's been going down for the last 2 months? You can't get much more fundamental than global trade still woefully sick - obviously not one of the 'green shoots' that the Lemmings like to follow?


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## Edwood (12 August 2009)

*Re: International Index Trading*

Link to the BDI >> Baltic Dry Index 
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

(not to be confused with Beck Depression Inventory altho the two are probably correlated if you own a load of ships )


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## Edwood (12 August 2009)

*Re: International Index Trading*

important to note for the Aussie market, scrolling down is the relationship between BDI & the CRB index, with BDI clearly leading


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## wayneL (12 August 2009)

*Re: International Index Trading*



Edwood said:


> important to note for the Aussie market, scrolling down is the relationship between BDI & the CRB index, with BDI clearly leading



....with $BDI still taking a whopping.

"If" T/A applies on an index like this, it's broken downwards from that triangle consolidation.


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## Uncle Festivus (12 August 2009)

China’s statistics bureau said exports slid 23 percent in July from a year earlier, and the central bank reported that new loans plunged to less than a quarter of June’s level.


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## Timmy (12 August 2009)

Yep, lots of economic stats out of China yesterday.  On balance (gross oversimplification coming up, read articles for fuller picture and DYOR) showing growth but a little below expectations, and lending fell sharply from June.

Reuters: China's economy takes a breather; recovery intact

BBC: China economy shows improvement

Bloomberg: China May Delay Monetary Tightening as Exports, New Loans Drop

Back on topic, BDI should be an indicator for global growth, appears very closely correlated with oil too.  Useful part of the picture.


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## Uncle Festivus (17 August 2009)

> The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany's Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.



http://www.spiegel.de/international/business/0,1518,641513,00.html



> Over the course of the current crisis, investors have had their vocabularies enhanced with terms such as “credit default derivatives,” “quantitative easing,” and the “Baltic Dry Index,” terms that previously were used only by a very small cadre of _cognoscenti_.
> 
> The latter, which takes measure of global shipping activity, is viewed as a quick way to gauge the robustness of global economic health. Logically, as empty ships don’t wander the world like _Flying Dutchmen_ looking for a load, they remain parked when business is bad. On the other hand, if the pistons of global commerce are pumping madly, then so will the engines of the multitude of ships on the Seven Seas.
> 
> ...


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## Aussiejeff (18 August 2009)

Uncle Festivus said:


> http://www.spiegel.de/international/business/0,1518,641513,00.html






> Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties.
> 
> "There has never been a crisis like this before," says Reinhard Lange, the CEO of KÃ¼hne + Nagel, the world's largest sea-freight forwarder. Shipping line operators alone are expected to suffer combined losses of $20 billion in 2009.
> 
> Drewry Shipping Consultants, the world's top consultant to the industry, warns: "The industry is looking at the edge of a deep abyss."




Oh. Don't green shoots like sea water?






Oh. Only THOSE green shoots, huh? *Sea WEED*.

Hmmm...


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## aarbee (18 August 2009)

While studying the BDI for clues towards the future of world economy a few things should be considered:

The shipping market is very cyclical. Newer ships get built and the older ones get scrapped and of course, the shipping freight and time-charter rates adjust according to supply and demand. However, due to it's very nature, raising finance, ordering, building of ship's introduces a lag in the supply of ships. Over the last 100 years the same pattern gets repeated time and time again. In boom times, ships are ordered way in excess and that then leads to a bust and the story repeats itself. Greed and Fear I hear you say - of course!!

In the few years before the last bust in 2008, there was a frenzy of shipbuilding. Not just ship's were shipyards were ordered to build more bulk carriers in a hurry. Workers in the major shipbreaking yard like Alang were basically unemployed. Any old junkbucket that could float was pressed into service and attracted good hire rates. Bulk carrier hire rates went up by a 1000 percent.  Just when the rate of new vessels from brand new shipyards hitting the water hit an all time high, the GFC came around. It was a perfect storm for dry shipping.

No surprise, the BDI dropped by 94% or thereabouts. Hundreds of ship's on order were cancelled. Shipyards went bankrupt and so did some very big names in the ship chartering community.  

Now there is a long waiting time to have your ships scrapped!!!

The anchorages in places like Singapore are choking with ships just lying idle awaiting employment at breakeven rates.

The shorter term movements of the BDI are very susceptible to things like short term policy changes by the Chinese government, the Chinese stockpiles of ore or surge in thermal coal requirements in India. One of the major reasons for BDI spikes in 2007-2008 was the sudden decision by Chinese to raise their stockpiles of iron ore. This by itself would have an effect but what compounded it was the inadequacy of ports infrastructure. There were upto 150 ships waiting long periods of time at Newcastle and Haypoint to load coal and similarly there were large nos of ships waiting at Chinese ports to discharge iron ore. This takes a sizeable chunk of tonnage from active service and puts severe upward pressure on shipping freight and time-charter hire rates. 

China has built many new deep ports and we are in the process of building new port infrastructure in Oz albeit, too little, too late and too slowly.

The shipping market is still depressed and who knows what tomorrow holds. Shipping is a derived demand and the dry bulk shipping is a good indicator of the world economy. With more and more old tonnage being scrapped, there would be a balance and the BDI would be that much more accurate in reflecting the actual state of world economy. In the meantime, the short term movements of the BDI should be only seen in the larger context. 

Cheers


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## Mofra (18 August 2009)

Excellent summary aarbee.

Just a question if you can provide some idea, but are the "holding costs" (ie the cost of waiting for a ship to be scrapped) exhorbanent? If they are high, surely there is a economical way to put excess shipping to use for bulk storage, scuttled to protect vulnerable coastlines, or some other purpose?


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## aarbee (20 August 2009)

Mofra said:


> Excellent summary aarbee.
> 
> Just a question if you can provide some idea, but are the "holding costs" (ie the cost of waiting for a ship to be scrapped) exhorbanent? If they are high, surely there is a economical way to put excess shipping to use for bulk storage, scuttled to protect vulnerable coastlines, or some other purpose?




Well once the shipowner has decided to scrap the ship, it is sold to the buyer at scrap value and delivered to him at the scrapyard. The buyer's loss during waiting is basically the cost of his funds tied up for the duration of waiting period. The ship's machinery etc is salvaged and has some residual value. I don't think the ship can be used for other purposes you outlined especially with unclean bunker tanks. 

As for bulk storage, in the very early eighties the oil market had crashed and during the worst period, a lot of tankers were used for storage but there were others including a few brand new tankers which ended being scrapped because even the layup costs were too high. Those were crazy times for the tanker market. The dry bulk market is nowhere close to that situation.

Cheers


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## Timmy (21 August 2009)

This is great stuff thanks aarbee.


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## Timmy (12 November 2009)

Just updating this thread, chart attached of the BDI.  Strongly coming off the late Sept. lows.  Sign of confidence in global recovery?

Source of this chart is Stockcharts
http://stockcharts.com/charts/

and more at 
http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm
(Thanks for link Edwood)


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## Lucky_Country (12 November 2009)

The BDI chart looking alot healthie lately and with Australian Resources a centrepiece of its activity one must think the good times are not far off.

The US and UK are a drag but slowly improving whereas China is surging ahead and kickstarting the global economey.


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## Timmy (28 January 2010)

Again, updating this thread with a chart of the Baltic Dry Index (from Stockcharts.com).  Tried to keep the scale roughly the same as prior update ... reasonably unsuccessfully unfortunately .


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## wayneL (4 July 2010)

Just  keeping us informed on the BDI (weekly chart).

Interesting? Yes? No?


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## satanoperca (4 July 2010)

The old triple nipple formation, this is never a good sign.

Cheers


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## Garpal Gumnut (4 July 2010)

wayneL said:


> Just  keeping us informed on the BDI (weekly chart).
> 
> Interesting? Yes? No?




Very very interesting, thanks.

gg


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## drsmith (8 July 2010)

It's now at its lowest level in 14 months.


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## Temjin (8 July 2010)

http://www.zerohedge.com/article/ba...secutive-loss-6-years-refutes-australian-opti



> Baltic Dry Index Dropping 4%, Posting Longest Consecutive Loss In 6 Years, Refutes Australian Optimism
> 
> Submitted by Tyler Durden on 07/06/2010 08:43 -0500
> 
> ...




So much for the trade surplus recently reported eh? 

This is why I am betting on the AUD to fall further. With the Chinese mills are now reporting to be destocking steel inventories and lowering production, how much more "lucky" can this country gets? 

I'm always surprised at how uninformed most people are in regards to the recent massive over stockpiling of resources by the Chinese has on the Australian economy. They haven't heard stories about pig farmers speculating on copper prices by stock pilling them in their own warehouses?


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## nulla nulla (8 July 2010)

satanoperca said:


> The old triple nipple formation, this is never a good sign.
> 
> Cheers




could be worse.


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## sam76 (8 July 2010)

You'd never know that a key marine freight index was plunging by looking at Asian shipping shares' year-to-date performances, and some analysts remain upbeat on freight rates in the long term. 

Most Asian shipping shares extended their gains Thursday, as broader markets rallied in the wake of a strong advance on Wall Street. 

But the Baltic Dry Index, which tracks sea freight rates to ship dry commodities, fell for the 30th straight day through Wednesday to its lowest level since May 2009. According to the Baltic Exchange, which compiles the index, the BDI fell 5.1% to 2,018 points --down to less than half of its May 26 peak of 4,209. 

"It is the longest decline in six years," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "The main driver seems to be concerns about the cooling of China's steel sector. Steel is the biggest user of iron ore. Iron ore and coking coal account for more than a third of the Baltic dry freight." 

Economists still view the index as a barometer of global productivity trends, but "it appears there are some growing concerns about its usefulness today versus its usefulness, say, two years ago. And it's all down to shipping supply," Izabella Kaminska at FT Alphaville wrote on Wednesday. 

TAL International is seen as attractively valued and leveraged to a recovery. 
Freight rates could remain low in the third quarter, "as steel mills shut for maintenance, grain shipping ends and concerns over China's falling import demand looms," said J.P Morgan shipping analyst Corrine Png in a research report this week. 

"However, we do not expect freight rates to collapse to distress levels [seen] in late 2008, which was exacerbated by trade-finance issues," she said. "The container shipping experience in the past 1.5 years has taught us that pricing at marginal cost is unsustainable, as vessels start getting laid up before long." 

As the industry continues to take delivery of new vessels, "this will lend support to longer-term freight rates," she said.

http://www.marketwatch.com/story/asia-shipping-shares-belie-baltic-dry-index-drop-2010-07-07


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## Timmy (9 July 2010)

sam76 said:


> Economists still view the index as a barometer of global productivity trends, but "it appears there are some growing concerns about its usefulness today versus its usefulness, say, two years ago. And it's all down to shipping supply," Izabella Kaminska at FT Alphaville wrote on Wednesday.




Aarbee wrote some really good stuff in post number 27 regarding the peculiarities of the BDI (especially as relates to new ship supply entering the market ... sort of like an increase in open interest!).

Anyone done any investigation of the HARPEX index?  Looks at container-ship rates.  Link: http://www.harperpetersen.com/harpex/harpexVP.do

Attached is a description of the HARPEX, pdf format.
https://www.aussiestockforums.com/forums/attachment.php?attachmentid=37834&stc=1&d=1278643096

Would put up a chart but the link not working for me at the moment.


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## Timmy (9 July 2010)

Link now working, chart of the HARPEX index, measures a different aspect of global shipping to the BDI and obviously looking very different.

Source: http://www.harperpetersen.com/harpex/harpexVP.do


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## Timmy (9 July 2010)

Here's a 10 year view:
http://www.harperpetersen.com/harpe...tright=0&exponleft=0&exponright=0&indicator=0


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## wayneL (9 July 2010)

Timmy said:


> Link now working, chart of the HARPEX index, measures a different aspect of global shipping to the BDI and obviously looking very different.
> 
> Source: http://www.harperpetersen.com/harpex/harpexVP.do




Interesting, 

Thanks Timmy


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## jonojpsg (9 July 2010)

Timmy said:


> Link now working, chart of the HARPEX index, measures a different aspect of global shipping to the BDI and obviously looking very different.
> 
> Source: http://www.harperpetersen.com/harpex/harpexVP.do




The differences between the two make sense though - given the massive stockpiling that China has undertaken over the last 6-12 months in IO (don't know about coal?) and the uncertainty about whether that volume of intake can continue  VS  the rebound in container freight from the massive low of the GFC which was due to credit issues.

I guess it's a matter of which one bears the more weight in determining the overall flow of economies - raw materials or finished goods?


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## professor_frink (16 July 2010)

Have spent a bit of time having a look at this index, basically came to the conclusion that it's way too complicated for me to follow closely.The only conclusion I've been able to come up with in regards to this thing is that if you aren't an expert at analysing the shipbuilding industry and forecasting future trends in both it and the demand side for commodities, then the index basically has no use 

Found this commentary written last year that explains most of the problems I've found in my limited research:

http://researchreloaded.com/content/baltic-dry-index-reliable-forward-indicator-nonsense



> But essentially one problem with using the BDI for economic forecasting is that the BDI could feasibly go up in an environment where commodities demand was shrinking, if the supply of ships was shrinking even faster. These would be negative economic factors. This is because the BDI's value is not solely driven from the demand side. To me, it makes far more sense to just look at nominal demand for commodities rather than the BDI since the BDI has the complicating factor of vessel supply growth one needs to consider. The other thing is that the BDI is a measure of spot rates for dry bulk commodities consumers who, generally, are in the near term forced to pay whatever it takes to get their raw materials shipped (A steel plant needs to keep operating despite some higher ore transportation cost). On the flipside, vessel owners are in a similar boat (no pun intended), and in the near term are generally forced to take whatever rate they can get to fill their ships. (A ship sitting around is just a cost, ie. fixed costs are high, thus using a ship at a loss is usually better than not using it at all)
> 
> Because of these inelastic characteristics of supply and demand, and since the BDI is a measure of spot rates, the BDI is thus absurdly volatile. I can explain why via the following simplified example, which I used to use frequently at Citi.
> 
> Imagine you have 10 loads of iron ore and 9 ships, and that every load of iron ore must be sent no matter what while every ship must be filled no matter what. Imagine the bidding war between those 10 iron ore consumers fighting over just 9 ships. Shipping cost would skyrocket since they all need to ship regardless of cost. Now imagine if a week later two more ships enter the market. Now imagine the bidding process. Suddenly the tables have completely changed. You have 11 ships, that all need to be filled no matter what, and only 10 loads of ore. Shipping rates would plunge, despite a period of just a week passing by. This is, in a simplified nutshell why the BDI is so volatile.




And just on the supply side of things, and reason for my post today:

http://www.bloomberg.com/news/2010-...longest-slump-in-15-years-on-vessel-glut.html



> *Commodity Shipping Index Extends Longest Slump in 15 Years on Vessel Glut*
> ...............
> Fleet capacity of vessels able to carry commodities shipped in bulk, such as iron ore and coal, will grow 16 percent this year, according to Clarkson Plc, the world’s biggest shipbroker. Imports of iron ore by China, the world’s biggest user of the commodity, will decline this year for the first time since 1998, Mysteel Research Institute forecasts.
> 
> “We’re faced with oversupply,” Nigel Prentis, director of research and consultancy at HSBC Shipping Services Ltd., said by phone today. The fleet of capesize vessels, three times the size of the Statue of Liberty, expands by about one every two days, he said.




Add in addition to the supply side problem, throw in a few port bottlenecks like we have been seeing at Newcastle over the past few years that can further skew any supply side analysis and all of a sudden you have to be a dry bulk shipping expert just to be able to keep up with one side of the index.  Thanks, but no thanks


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## Timmy (17 July 2010)

A fair and reasonable point Prof.

I keep harping back to aarbee’s post (#27) where he introduced to this thread some of the challenges with using the BDI to gain clues about the strength or otherwise of the global economy.  Sam76 reiterated in post #40.  Essential reading.

On aarbee’s and Sam76’s points:


> in the first half of this year the global fleet increased by 23% as new vessels came into service at the rate of 16 a month. There are now 23 such vessels arriving each month, adding to oversupply.



From The Economist of July 14, 2010:
http://www.economist.com/blogs/newsbook/2010/07/shipping_rates_slump


On a back-of-the-envelope calculation from this info:

If 16 bulk-carrier vessels were added per month in the first half of 2010:
16*6 = 96 new vessels.
So, if this was a 23% increase in the global fleet size then the global fleet must be around 500 or so vessels now, & with 23 new ships being added per month, that’s about a 5% increase per month.  Yikes.

Probably the best thing about learning about the BDI is discovering its weaknesses and then searching for alternative sources of info to improve understanding.  Hence, looking at:

the HARPEX, see my post #41 for info
rail shipments in the US, http://pragcap.com/carloads-decline-rail-traffic-moderates-from-highs 
air freight measures, http://mjperry.blogspot.com/2010/07/international-air-travel-rebounds-in.html 
the performance of shipping-related stocks, etc. 







> such as DryShips (DRYS), Diana Shipping (DSX), Genco (GNM), and Eagle Bulk (EGLE),.



From http://www.businessinsider.com/glob...x-is-absolutely-nothing-to-worry-about-2010-7
And there are more sources of info re global shipping/freight.

These are all inputs (to my head, anyway), all data points to consider, independent of the more widely read (and, usually, much slower to be released official government data on growth).


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## Dumdumdumdum (17 July 2010)

BDIY is like a lot of other data in that you need to look beyond the 'headline' figure to gain any real value out of it. 

Similar to GDP figures, but to my mind, far more complicated.

And then once you fully analyse those components and sub-components, you end up making forecasts based on those specific pieces of data rather than the BDIY it's self.


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## Timmy (17 July 2010)

Thanks Dumdumdumdum, must say your post leaves me wanting more.  

Where you say: 







> once you fully analyse those components and sub-components, you end up making forecasts based on those specific pieces of data rather than the BDIY it's self




Can you show us an example of how you have fully analysed the components and subcomponents to make your forecasts?


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## Agentm (20 July 2010)

7/7/10 (DJ) Depressed iron ore demand from Chinese steel mills has been pressuring shipping rates over the last month, with iron ore a key ingredient in steel production and the main product in dry bulk shipping. Chinese spot iron ore prices are near $US125 per tonne, a steep discount to the all-in cost of having it shipped from Australia, which is at $US155 per tonne.

7/14/10 (Economist) FOR most of the past two decades the main measure of shipping costs has been used as a guide to what is happening to world trade. So the fact that the Baltic Dry Index””which measures the rates charged for chartering the giant ships that carry coal, iron ore and grain””has fallen by almost 60% in its longest streak of consecutive declines for nine years (34 days running as of July 14th) has won attention.


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## aarbee (26 July 2010)

Hi all,

While trying to make sense of the BDI please factor in the following relating to the supply side of dry bulk carriers:

Current fleet of vessels is 7,502 (501 million MT Deadweight). The Current Orderbook is 3,006 vessels (260million MT Deadweight), i.e. a full 52% of the existing drybulk carrying capacity is on order. 
In the first half of the current year around 430 vessels (35.3 mil MT Dwt) have been delivered while around 830 vessels are expected to deliver in the rest of 2010 amounting to about 61.8mil MT Dwt carrying capacity. 

At the onset of the GFC and after the BDI crashed, there were a lot of orders  cancelled as the sentiment was really low and the financing became very tight. A lot other newbuildings delivery was delayed. It would take a similar crash for further slowdown, otherwise these new vessels will merrily keep rolling down the assembly line. 

Cheers


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## Timmy (29 July 2010)

aarbee - interested in the source of that info please, wouldn't mind doing some further reading.

Here are 3 other alternative transportation measures:

Note, these are all from the same blog, the source of the info is in the blog posts for those wanting to investigate further.

1. *International Air Travel Shows Continuing Strength in June; Volumes are Above Pre-Recession Levels*




> 1. Passenger volumes are now 1-2% above the pre-recession peak in the first quarter of 2008.
> 
> 2. Freight volumes remain 6% above the pre-recession peak in early 2008.
> It's also interesting that the strongest improvements in both passenger and freight growth have been in Africa, Asia, the Middle East and Latin America, while growth in North America and Europe have lagged behind.



http://mjperry.blogspot.com/2010/07/international-air-travel-shows.html

2.*Shipping Rates for Hong Kong to LA Reach Five-Year Highs*




> The cost of shipping a 40-foot container from Hong Kong to Los Angeles without a contract, or the spot rate, was about $871 in July 2009, a five-year low. This month, that spot rate reached $2,624, a five-year high. That exceeded even the cost before the recession, which was about $2,000."



http://mjperry.blogspot.com/2010/07/shipping-rates-reach-5-year-high.html

3. And some bear food too: *Trucking Tonnage Falls in June But Remains 7.6% Above June Last Year*




> "The American Trucking Associations' advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 1.4 percent in June, although May's reduction was revised from 0.6 percent to just 0.1 percent. May and June marked the first back-to-back contractions since March and April 2009. The latest reduction lowered the SA index from 110.1 (2000=100) in May to 108.5 in June (see chart above)."



http://mjperry.blogspot.com/2010/07/trucking-tonnage-falls-in-june-but.html


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## aarbee (29 July 2010)

Timmy said:


> aarbee - interested in the source of that info please, wouldn't mind doing some further reading.




I work for a drybulk ship chartering business and the figures are part of the shipping intelligence reports we regularly get.

Cheers


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## Timmy (3 August 2010)

aarbee said:


> I work for a drybulk ship chartering business and the figures are part of the shipping intelligence reports we regularly get.
> 
> Cheers




Thanks aarbee, appreciate the info.


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## Timmy (21 August 2010)

professor_frink said:


> Have spent a bit of time having a look at this index, basically came to the conclusion that it's way too complicated for me to follow closely.




Prof - I am having a look at the most recent moves in the BDI and I reckon your comments pretty much sum up how I am thinking about the BDI too.  

Check this out:
*Baltic Dry Index Jumps 36% in Two Weeks ...*
http://www.businessweek.com/news/20...-36-in-two-weeks-as-china-lifts-iron-ore.html



I think we have done a pretty reasonable job on this thread trying to make sense of the BDI and its usefulness (or not) as some sort of indicator of global growth.  The collapse in its value throughout June and early July was massive and I thought we may have nailed this outsized move as being largely in response to the huge increase in dry bulk shipping supply (thanks to aarbee for the figures), and therefore not necessarily due solely to falling demand.

But now how to account for this 36%-odd jump in two weeks?  

A lot of the blogs and market commentators, having readily attributed the plunge in the BDI to plummeting global demand (not mentioning the enormous increase in supply as being a factor) are now silent, no mention of the 36% jump at all.  This commentary attributes the lack of attention being paid to the jump in the BDI as an example of confirmation bias.
*Confirmation bias and what the transports are telling us about sentiment and the US economy.*
http://www.chart.ly/qx64427

It is a conundrum.  At the very least, though, this thread has now sharpened my awareness of measures of freight/shipping apart from the BDI, things such as the Harpex, air freight figures, railroad figures, port figures ... viewing these all together gives a much better picture than any single index can (of course).

Would really like to figure out the BDI, though


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## Uncle Festivus (23 December 2010)

Not sure if this latest (rather pronounced fall) figure is correct, but if so, maybe more of a sign of a glut in new ship production. Also reports that waiting times at Chinese ports have dropped substantially ie less trade?



> Experts said orders for new vessels that were placed around the time  (2008) when liquidity crisis struck have just been or are being  delivered globally. This has created overcapacity leading to this fall,  they said. Cargo off-take from Europe, US and South America has been  muted and a severe winter has only made matters worse, they added. The  only bright spot in volumes has been in the far-east but operators there  don't get good freight rates, said an expert. This leaves China as the  only big mover of dry bulk cargo. Engineering goods were the only items  that saw significant cargo movement, said the expert.






Some mob called Nordea report??



> Cargo stagnation
> 
> We have understood that Chinese cargo ships have been told to proceed at 'wind speed', *because of a collapse in US import demand *-  this is partly visible in the activity amongst Long Beaches shoremen -  hence, is this the final proof that the inventory rebuild that drove the  recovery in the autumn is OVER? Figure 1 shows the average speed  amongst bulk carriers! Bulls - Watch Out!


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## Uncle Festivus (28 January 2011)

Another month, another plunge in the BDI..........too many ships or not enough 'global recovery'?


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## Garpal Gumnut (28 January 2011)

Uncle Festivus said:


> Another month, another plunge in the BDI..........too many ships or not enough 'global recovery'?
> 
> View attachment 41062




Too many ships definitely.
Possibly we are not in a recovery.
A mix of both, but definitely too many ships being produced. A bit like Tulips.

gg


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## Uncle Festivus (20 January 2012)

Uncle Festivus said:


> Another month, another plunge in the BDI..........too many ships or not enough 'global recovery'?




Deja vu, almost 12 months to the day.....

What 'recovery'?


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## pixel (20 January 2012)

too many assumptions, too little attention to changing paradigms:

Baltic baloney... (thanks to nohoper)


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## Uncle Festivus (27 January 2012)

Looks like _the_ banks are gonna have to hide another $100Billion or so off their books somewhere?

HONG KONG (MarketWatch) ”” The warning signs being flashed by the  collapsing Baltic Dry Index (BDI), a leading global economic indicator,  may reflect the folly of misguided expectations during the prior global  economic boom, according to Hong Kong-based shipping analysts.                              
---
Macquarie analyst said Thursday the slump in the broader dry-bulk index  represents “too much capacity in the face of more modest growth of trade  volumes.”                              
---
    However, there could be knock-on effects if the supply glut results in a financial storm throughout the shipping industry.                              
                                 Business Insider quoted Basil Karatzas, the chief executive of Karatzas  Marine Advisors, as saying European banks could face nearly $100 billion  in losses to restructure the $500 billion in shipping loans on their  books. 



Contagion....


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## pixel (27 January 2012)

Uncle Festivus said:


> Looks like _the_ banks are gonna have to hide another $100Billion or so off their books somewhere?
> 
> HONG KONG (MarketWatch) ”” The warning signs being flashed by the  collapsing Baltic Dry Index (BDI), a leading global economic indicator,  may reflect the folly of misguided expectations during the prior global  economic boom, according to Hong Kong-based shipping analysts.
> ---
> ...



 While I thought the claim of BDI being a "leading" indicator had been debunked, I agree that there could be a knock-on effect *if* the loans were still tied up in those inefficient old vessels. If that were indeed the case, and the new Vale-size super carriers had to accept unprofitable rates themselves, the whole house of cards would indeed fall down.
Can't feel sorry for the banks though - as usual, they probably have done as much DD as for those no-doc loans for buildings "safe as houses."

On the T/A side: While the Baltic Dry is still falling, the momentum appears to be slowing to the point where MACD "speed" has bottomed out and crossed above signal. No guarantee for anything, however when that happens, it's often a "leading" indicator suggesting the Low should be in sight.


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## Glen48 (1 February 2012)

Here is the News:
http://www.alt-market.com/articles/540-baltic-dry-index-signals-renewed-market-collapse


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## pixel (2 February 2012)

Glen48 said:


> Here is the News:
> http://www.alt-market.com/articles/540-baltic-dry-index-signals-renewed-market-collapse



The "historical low" mentioned in that article has today come true.
 A lower number has last been seen in August 1986!


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## Glen48 (2 February 2012)

Is that a chart showing the direction  sinking ship's take to collect the insurance?


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## pixel (2 February 2012)

Glen48 said:


> Is that a chart showing the direction  sinking ship's take to collect the insurance?



 LOL Glen,
you're getting confused, methinks.
You're thinking about Italian luxury cruise liners.
The Baltic Dry is far sturdier  ... and far cheaper


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## drsmith (17 August 2012)

Too many ships or not enough cargo ?

It's moving south again.

http://www.dryships.com/pages/report.asp


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## burglar (18 August 2012)

drsmith said:


> Too many ships or not enough cargo ?
> 
> It's moving south again.
> 
> http://www.dryships.com/pages/report.asp




Business is drying up!


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## drsmith (4 September 2012)

In boh the previous two years, the index has recovered from low points during the September quarter.

This year so far, it hasn't.

http://www.dryships.com/pages/report.asp


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## aarbee (26 September 2012)

Here's something to chew on regarding the condition of shipping at the moment. It is worse than what it was after the GFC hit. The main cause of this depressed market is excessive tonnage on the water. 

A Greek panamax bulk carrier has been relet by its previous charterer to Swissmarine for just US$500 a day, the lowest daily rate reported publicly since the credit crunch.     

Yesterday, the Baltic Exchange reported in its daily fixture list – representative of a portion of chartering market activity – that the 2011-built, 81,600 dwt kamsarmax Krousson had been relet by Baumarine for a trip from Dunkirk via the Baltic Sea with redelivery back in the Skaw-Gibraltar area.
Sentiment surrounding the deal is representative of just how weak the market is.

“Regardless of the details, the fact that someone agreed to such a low number is significant,” one broker told Lloyd’s List.

The fixture comes as the Baltic Exchange’s panamax transatlantic time charter rate assessment fell to a record low of US$1544 per day, well below the US$3205 reached in December 2008.

Back then the financial crisis led to the charter market grinding to a halt.

In contrast to four years ago, the fall in rates is not due to access to trade credit being frozen but to the size of the dry bulk fleet.

In the last two years alone, the size of the dry bulk fleet – that is, vessels larger than 10,000 dwt – has grown from 7469 vessels of 500m dwt in September 2010 to 9227 ships totalling almost 669m dwt this month, according to Lloyd’s List Intelligence.

As I posted earlier, the BDI numbers are not a faithful reflection of the world economy though there would be some correlation between the two. First and foremost, BDI reflects the supply and demand for ships. In the last few years this has been skewed by the very large numbers of ships that have been built and continue to be built though at a reducing rate. 

Cheers


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## CanOz (26 September 2012)

Thanks Aarbee, interesting stuff!


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## dgcruzing (26 September 2012)

Yes, interesting..
Economic equalibiums coming in to effect perhaps..

Following that thought pattern..

More ships, chasing less work..having to be manned by crews that will work for less..i.e philipinos..

I can only see more stress come on to this transport market as I am seeing some solid gearing up of engineering here in China able to push ever more tonnage of ships out into the shipping channels..

Actually I can also see airfrieght rates dropping over the next 5 years as the amount of planes...Airbus, Boeing and large Chinese cargo planes come online..

sent from yet another MikG HTC Evo


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## Joules MM1 (3 August 2021)

spoke to two sales reps from two diff wholesalers today, both share  same story,
"it's like a sharemarket with competing prices" 
one experience was that an agreement to ship stock from China at 2200 container but by the time the ship had left the cost had gone to 6k

inflation, what inflation ?


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## divs4ever (3 August 2021)

yes there is a lot of essential data we are being distracted from watching


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## wabullfrog (9 October 2021)

Baltic Dry was at about 3300 when the last posts were made, it's now about about 5500. Heard an example where daily vessel charges that were about 8k per day earlier in the year are now about 30K

Images below are for YTD & 5 Year


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## tech/a (9 October 2021)

WOW 
explains a lot with imports.


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## mullokintyre (11 October 2021)

One of the  more trajic consequences f the turmoil in shipping transport is the ever increasing number of marooned seafarers as a result of vessel owners and lessees simply abandoning old ships cos they are too costly to repair.
From WSJ


> "Abandonment cases are counted when shipowners fail to pay crews two or more months in wages or don’t cover the cost to send crew members home, according to the International Maritime Organization, a United Nations agency."
> The UN agency recorded a doubling in the number of abandonment cases for 2020, with the number expected to grow once again for 2021 particularly after a noticeable surge in cases now getting media attention.
> _*Some governments require sailors to remain aboard as guarantors until shipowners pay port authorities for berth fees and other charges.* More often, sailors refuse to disembark, convinced they will never recoup months or years of lost wages if they leave. Seafarers stuck on board generally borrow money from friends and family to feed themselves and crewmates.
> 
> Many say they will stay put until the ship is sold for scrap, *which can take years*, rather than go home empty-handed._





> Abandoned seafarers have described the ships as turning into a *"prison" and a "slave ship"*. One ongoing saga off Romania in the Black Sea involves four crewmembers awaiting the resolution of a high level Romanian court case to determine who is responsible for payment of debts involving the ship's owner. Legally they simply aren't allowed off the vessel. In some instances the WSJ documented stories of unpaid workers contemplating suicide. Some of them *literally face starvation, and in these instances sometimes attract the help of local charities*.
> Moored ships hit by storms with crew aboard - yet not able to disembark - is another example of some of the more dramatic and immediate threats to safety these workers face. And then there's this instance noted in the WSJ report: "Off the coast of Yemen, one of the world’s largest oil supertankers, laden with 1.1 million barrels of crude, *sits decaying in a war zone*. An errant rocket or the ship’s corroding steel hull could trigger an explosion and massive spill."
> Currently, there are efforts underway among a handful of large nations - namely China, Indonesia and the Philippines - whose ships make up the bulk of international sea freight traffic, to establish an 'abandonment fund' to help with emergency assistance for stranded crew. However, it could encourage companies to continue shrugging off responsibility, as is still continually happening according to the report.



As they say in the classics, good luck with that.
Can't see any of the nations mentioned above as the main nations involved in sea freight contributing anything to an abandonment fund.
Mick


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## mullokintyre (12 October 2021)

According to The Capitalist ,the big US retailers are chartering their own ships rather than relying third party logistics companies to ship their christmas goods.

With the shipping crisis now in full bloom, retailers like Walmart and Home Depot are taking matters into their own hands. Retail companies are now chartering cargo vessels themselves. The move aims to get imports moving faster and get them to store shelves.


> With the shipping crisis now in full bloom, retailers like Walmart and Home Depot are taking matters into their own hands. Retail companies are now chartering cargo vessels themselves. The move aims to get imports moving faster and get them to store shelves.
> 
> “Chartering vessels is just one example of investments we’ve made to move products as quickly as possible,” said Joe Metzger, U.S. executive vice president of supply-chain operations at Walmart, which has hired a number of vessels this year.
> Walmart recently hired a dry bulk cargo ship to help with the retail chain’s supply chain woes. The company began chartering cargo vessels as it tries to get its orders to the US as soon as possible. Disruptions in the delivery of goods are currently threatening supplies for the upcoming holiday season.
> ...



It does not explain how hiring your own ship will allow them to get past the biggest bottleneck, namely the conga line of ships waiting to be unloaded at LA and Long Beach terminals. Indeed they may just add to the conga line.
Mick


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## Craton (12 October 2021)

Joules MM1 said:


> spoke to two sales reps from two diff wholesalers today, both share  same story,
> "it's like a sharemarket with competing prices"
> one experience was that an agreement to ship stock from China at 2200 container but by the time the ship had left the cost had gone to 6k
> 
> inflation, what inflation ?



So that inflated price is passed on to the end buyer and not absorbed/written off?


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## Joules MM1 (12 October 2021)

ramble:

mums n dads bare the brunt of a free market gone slightly troppo, it booms  while it can, input any excuse, a pandemic is a good one,

 we arent hearing about it because its the quiet bull overshadowed by crypto, traders make the market in shipping in the same way traders make a market in oil, governments have little control over crude prices

we can have a finely focused market that makes up part of the goods n services yet to have a real impact on the CCPI (core cpi)
automation is playing a big role in keeping prices in other sectors down

the dichotomy is clear in the CRB index, gold in USD$ is sagging, we're in a mania for sure across multiple markets, so strange things are
occurring that are at odds with what historically have usually transpired, not that the markets are different, what is different is where the capital is being focused, in the digital age

shipping is an aggressive pricing game but a quiet bull in the same cheap capital debt rise ....and rise...and rise, shipping is old school entrepreneurship and is a very confident picture for a continuing bull cycle

as far as inflation can influence the prices CB's take notice of,
its a series of decisions so i suspect when inflation finally shows up it is going to be extremely aggressive as
major players want to get their protection before the following contraction comes

i think we have a ways to go before the punch in the face comes, if you turn on social media and the news it's easy to think the world is
going to hell in  a handbasket but in reality we have not reached the new plateau sentiment,

we're just travelling thru the very odd age of negative interest rates, the credit debt has to be applied somewhere

statista is a top trader resource








						Global container shipping rates 2022 | Statista
					

Container freight rates oscillated dramatically between January 2019 and November 2022.




					www.statista.com
				




in this chart we start 2019, prices make a nice bull cycle lift well before the (fill in the blank) reasoning, 
there is a clean correlation of credit debt issuing and applied causality, those allow prices to rise, but who can prove
a mechanical extent versus what traders say  ....i would like to see that analysis!

excerpt: "The values are an average of the five business days of the last full week in each month."


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## Value Collector (12 October 2021)

I have a theory that the prices are also being inflated to some extent by the Chinese banning Australian coal.

1, there have been some ships full of coal sitting idle, waiting to unload, this ties up some of the supply.

2, China is now importing more coal from USA instead of Australia, which again ties up more ships, because the round trip to the USA takes a lot more time, so each 1 shipment delivered from the USA ties up a ship for 2.5 times as long as a shipment delivered from Australia.

if China begins importing coal from Australia again, we might see more supply of bulk carriers becoming available, as each load requires less sea days.


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## divs4ever (12 October 2021)

both Mongolia and North Korea have coal  deposits  however  there are some hurdles  to huge amounts from each source , and given time and incentive  those hurdles might be overcome ( say ignoring sanctions  on North Korean exports  , and improving logistics in Mongolia )

i hold Australian coal producers ( WHC , NHC  , S32 and BHP )  but  suspect this coal-boom to be short-lived  , simply because Australia  has let become the meat in the sandwich  in a global power-struggle  and China will veer toward  diversity in suppliers


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## mullokintyre (28 October 2021)

The BDI index has come down from its highs of 5650 early this month and is sitting at 3808 today.
Still 300 % above the lows back in December last year.
Bit it could be more of a case that there are just so few ships available.
There is a still a massive backlog of goods.
The ports Authority in LA are going to start charging for containers left in storage for more than 9 days.
From San pedro ports Authority


> In an effort to improve cargo movement amid congestion and record volume, the ports of Long Beach and Los Angeles will begin assessing a surcharge to ocean carriers for import containers that dwell on marine terminals.
> 
> Under the new policy, the ports will charge ocean carriers for each container that falls into one of two categories. In the case of containers scheduled to move by truck, ocean carriers will be charged for every container dwelling nine days or more. For containers moving by rail, ocean carriers will be charged if the container has dwelled for six days or more.
> 
> ...



So many ships at anchor in the San Fran bay that the backlog could take months rather than weeks to  eliminate.
And its only going to get worse.
from Freightwaves


> American Shipper is reporting another wrinkle facing the Port of Los Angeles as it tries to clear the massive congestion. Thousands of additional empty containers are en route to the Port of Los Angeles from East Coast and Gulf Coast ports.
> 
> Over the last couple of weeks, up to 2,000 empty containers originating from the ports of Charleston, South Carolina; Savannah, Georgia; New Orleans and Houston were headed to the Port of Los Angeles to be loaded onto vessels. These containers were requested by the carriers and will create more burden for the port terminals to receive local trucks trying to unload their own empty containers.
> 
> ...



So the greight companies cannot pickup if they in turn cannot unload empty containers.
And now we have palletgate.
A worldwide shortage of pallets  is adding to the woes.
Fromtodays OZ


> Coles boss Steven Cain has labelled the global shortage of wooden pallets used by suppliers around the world to ship their goods as “pallet gate” and revealed a task force has been assembled by retailers and suppliers in Australia to work on the growing challenge.
> Supermarkets including Coles and Woolworths along with the Australian Food and Grocery Council, the peak body for the nation’s food, as well as grocery and supermarket manufacturers, have formed the pallets task force to help address the pallets shortage that is threatening the smooth running of the supply chain for not only food but other non-food products.
> 
> “Across the nation there is a bit of a pallet gate going on at the moment,” Mr Cain said.
> The shortage and higher price of wood, labour shortages, some retailers sitting on pallets through lockdowns and huge disruptions to global supply chains have all conspired to create a shortage of pallets.



Can only get messier.
Mick


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## Dona Ferentes (12 October 2022)

Twelve months ago it cost $15,000 to send a 12-metre container from Australia to China. This was now $6,000, which is still much higher than pre-COVID costs of about $2,000.
Previously cost up to $US20,000 [$31,894] to send a 12-metre container from China to the United States. This had fallen to $US3,000 or $US4,000,









						Global shipping costs falling at rates not seen 'in decades' in lead up to Christmas
					

Extra capacity in global sea freight due to rising interest rates across the world is reducing costs for exporters, enabling them to access markets lost due to major price hikes during the pandemic.




					www.abc.net.au


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## moXJO (12 October 2022)

Dona Ferentes said:


> Twelve months ago it cost $15,000 to send a 12-metre container from Australia to China. This was now $6,000, which is still much higher than pre-COVID costs of about $2,000.
> Previously cost up to $US20,000 [$31,894] to send a 12-metre container from China to the United States. This had fallen to $US3,000 or $US4,000,
> 
> 
> ...



It was insane. It was about $18000 from Australia. It's still pretty high considering.


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