What is the Baltic Dry Index and why it's important to monitor it

What is the Baltic Dry Index and why it's important to monitor it

For people that are not familiar with the term BDI (Baltic Dry Index), here is brief explaination : "the BDI is a composite of the Capesize, Panamax and Supramax Timecharter Averages. It is reported around the world as a proxy for dry bulk shipping stocks as well as a general shipping market bellwether".

It is important to talk about the BDI, as it reflects the transportation costs of containers within the international trade framework. 

COVID-19 has brought significant changes to our every day lives. Among these changes, the transport and logistics sector has been singnificantly impacted. There has been a clear change in the equilibrium of supply

and demand of merchandise, which consequently has been reflected on the costs of shipping.

"An effective supply chain system ensures higher efficiency rates, quality over control, better customer relationship and service, faster production cycle, reduced production costs and an overall improvement in the

financial performance of a company".

Manufacturers and distributors have experienced difficulties in replacing or stocking up on their inventory, due to global supply-chain disruptions. Importers and exporters have also found themselves

experiencing never before seen problematics, in bringing goods across most international borders. Seaports, which are the main trade routes for exchanging goods, have been significantly impacted by restrictions

and experienced unimagineable bottlenecks with regards to industrial activities. 

Having understood what the actual situation is, in the global supply chain environment, if we closely monitor the BDI data we can slash costs where it is possible. 

Moreover, by leveraging the data provided, we can forecast cost increases in containers global shipping rates and understand when it's more convenient for companies to import and export.

At the moment the trend is positively sloped and looks like we have much more room to grow in terms of prices. Looking at the figure below we can understand that the trend could continue much higher. 



If we also take a look at the price of petrol in terms of dollars per barrel, we can see that it also has a postive correlation with BDI. To make matters worse, we can observe that the price of petrol also has a

positively sloped trend, which is not likely to be anywhere near exhaustion.


Don't find yourself last minute, trying to ship goods at the peak of demand, take the right decisions and protect yourself from these situations. Contact us and we will be glad to provide meaningful insights to 

take the right decisions in an uncertain environment.