From FT Alphaville:
The forward freight market gets ever tighter.
The latest numbers from Sempra Metals show the forecast freight queues outside Australia’s Newcastle coal loading terminal, based on projected ship arrivals, remaining high for the remainder of the year and likely to rise in the short term - taking more vessels out of circulation.
Activity is at a high - the Baltic Dry Index, a key measure of commodity shipping costs, has more than doubled in the past year.
But China to the rescue? At least seven Chinese shipbuilders are planning share offerings, underlining the country’s efforts to build up its domestic fleet and branch out into the construction of more advanced vessels....MORE
From Slate, four years ago:
The best economic indicator you've never heard of.
Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes—150,000 tons of iron ore going from Australia to China or 150,000 tons of coal from South Africa to Taiwan. Brokers are also asked to consider variables such as the type and speed of the ship and the length of the voyage.
The answers are melded into the BDI, which appears in shipping publications such as Lloyd's List and on the screens of information vendors such as Reuters and Bloomberg. Because it provides "an assessment of the price of moving the major raw materials by sea," as the Baltic puts it, it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade.
The BDI is a good leading indicator for economic growth and production. After all, it doesn't deal with container ships carrying finished goods. It deals with the precursors to production: bulk carriers carrying building materials, cement, grain, coal, and iron. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. People don't book freighters unless they have cargo to move....MORE