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Baltic Dry Index

I find that looking at different indexes and rates to be rather helpful in judging the state of the world. One of the more interesting ones is the Baltic Dry Index that measure freight costs for bulk shipping on large oceangoing ships.

When demand exceeds ship capacity, the index spikes, like in 2006-2009 and during the pandemic. Pandemic spending on physical goods and congestion at ports in the US especially can clearly be seen in the data.

Baltic Dry Index 2001-2023

You can also see the combination of an increase in capacity coming online and large inventories leading to lower orders from retailers.

The Baltic Dry Index is only one single index that has a lot of underlying factors, but it will tell you something about COGS for retailers, consumer sentiment and the overall economy.

Baltic Dry Index 2020-2023

As of right now, 2023 is looking pretty bleak for shippers and the large profits seen during the pandemic will likely disappear very quickly.

Patrik

Tags: Macro Economy