What's wrong with the Baltic Dry Index?

For one thing, many of the recent ship charters have been done on a spot or trip basis, at totally undervalued prices.

Ship owners are doing this with the theory that some cash is better than laying up the ships or having them sit idle. I even saw one comment that it was good for the crews to keep busy.

The Wall Street Journal had an article recently, stating that many of the indexes for the sale prices of homes in the U.S. were not including home sale prices for those sold due to foreclosure.

Perhaps the Baltic Exchange needs to consider "throwing out" some of these really cheap charter rates which do not really reflect what a normal charter rate would be.

The market has really been in a mess lately with people defaulting on contracts.

I discussed the problem with the freight forward contracts earlier this week.

Lloyd's List has a very good article today, mainly quoting Philippe Louis-Dreyfus, chairman of the European Community Shipowners’ Association, discussing these problems.

There has been a general loss of confidence in the markets, both economically and in counterparties,” Mr Louis-Dreyfus said. “It strikes me that we see more and more companies in shipping, and their clients, both talking about it and doing it: not sticking to their commitments.”

Plummeting rates, which in some cases have fallen more than 90%, were no excuse to walk away, he said.

“Some companies are claiming it is force majeure. That’s not force majeure, it’s business.”

I love that comment.

That’s not force majeure, it’s business.


I think that would be a good title for a college course.