The Baltic Dry Index is at an All-time Low

This is an accompanying post to last week’s article on declining commodity demand. All manner of transport statistics are in decline. I shall here focus only on the Baltic Dry Index (“BDI”), which I have posted about previously. In 2014 I argued that the BDI is not necessarily a leading economic indicator, contrary to the view of many economists. It is a complex index that reflects supply and demand, read more here.

However, by early 2015 the BDI had slumped to then record lows. Too many new ships and dramatically declining international trade, read more here.

This week the BDI hit an all-time low. While frantic ship building over recent years has led to an oversupply of ships, with the index at this level it is clear that demand is rapidly evaporating.

There are many other transport indicators that tell the same story.  This includes declining container traffic and increasing stocks of unwanted, empty containers. Crude oil in storage is at near record levels. The Shanghai Containerised Freight index is also plumbing lows.

The evidence all points to a contracting global economy. A meaningful rebound in the months ahead does not look likely. It will be an interesting 2016.