Is the Baltic Exchange Signaling a Downturn in Global Trade?

Over Spend Matters affiliate blog Metal Miner, Stuart Burns waxes eloquently about the Baltic Exchange's Dry Index potentially signaling a downturn on trade. According to Stuart, "Followers of the rather dry (pun intended) Baltic Dry Index will know that the measure of freight rates for dry commodities like coal, iron ore and grain rose from 4,000 a year ago to 11,000 towards the year end. The Index measures the cost of chartering a ship, and although volatile and sensitive to short term chartering, demand has been an accurate measure of the strength of the global market for trade in the volume dry commodities that power the major economies. This year it has dropped out of bed, plunging to 8,000, and in the process brought down the share price of the shipping corporations." Now, not that this is anything but another additional anecdote, but I did notice that prices on direct flights from Chicago to China are at the lowest point I've ever seen (and I've heard through the grapevine that the airlines are struggling to fill these seats). These are flights which for years have been packed with business people jetting back and forth between the industrial heartland of the US and China. Given these two data points, perhaps we are starting to see at least a slowdown -- if not a decline -- in trade (or at least Sino-US trade).

- Jason Busch

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