Understanding the BDI (Baltic Dry Index)

Recently, Slate had an article entitled The Shipping News, The best economic indicator you've never heard of. It is referring to the Baltic Dry Index.

DryShips always gives the Daily Market Report of the Baltic Exchange indexes.

The origin of the Baltic Exchange can be traced to the Virginia and Baltick coffeehouse in London's financial district in 1744.

The Baltic Market

Baltic Exchange members are at the heart of world trade, arranging for the ocean transportation of industrial bulk commodities from producer to end user. The bulk freight market relies on the co-operation of shipbrokers, shipowners and charterers to ensure the free flow of trade.

Baltic Exchange shipbrokers undertake to abide by a code of business conduct based on the motto “Our Word Our Bond” and those who breach the code are disciplined or expelled.

Fixtures

Each working day the Baltic produces a dry cargo fixture list. Each fixture is carefully checked and verified and our report is regarded as the most comprehensive and independent such list available. This site also contains a database of over 25,000 fixtures.

A fixture is the agreement to charter a ship.

Index Summary

A summary of the Baltic Dry Index (BDI), Baltic Capesize Index (BCI), Baltic Panamax Index (BPI), Baltic Supramax Index (BSI), Baltic Handysize Index (BHSI) and Baltic International Tanker Routes (BITR).

OK, that's enough boring stuff for today. Tomorrow I will (hopefully) make a post regarding what makes up the various indexes.