Baltic Dry Index Slips To Rock Bottom

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The index has plummeted 75 points below the recent record of 504, which was the lowest since the index began in 1985.

Experts and related sources talk about some substantial grounds for the all-time low of Baltic Dry Index  They are as follows:

  • The Baltic Dry Index sees a new low of 429 points due to the fall in demand rate in the modern shipping industry.
  • According to Omar Nokta, Analyst at the Research Division of Clarkson Capital Markets, ‘The first part of the year is typically the weakest point for dry bulk freight rates, which have been even weaker considering the low base at which they ended 2015’.
  • A technical paper: ‘The Freight Rate Mystery’ explained that this record holds fears that the overcapacity seen in the industry could be worsening the impact on restoring the industry’s supply-demand imbalance, which Drewry argue is pulling down freight rates and accelerating losses.
  • Drewry has recorded a containership capacity growth of nearly 20 million compared to the 19.8 million seen in 2015, with the average size new-build on order reaching more than 10,000 TEU.
  • Lines are scrambling to cut capacity on key routes to lessen the impact of the mega-class of containerships on key trade routes, which Drewry believe may be the best solution for restoring the balance between supply and demand.

Source: Reuters

 

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