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Tuesday, March 2, 2010

The BDI - whats going on?

Excellent article in the Wall st Journal regarding some of the big issues facing dry bulk shipping rates going into 2010.

Freight rates are subject to supply and demand - we know that. What many people outside shipping dont realise is that there are a number of unusual factors that are skewing freight rates.

1. Port congestion is still a huge problem. Most shipowners acknowledge that if the world ports worked efficiently the market would be halved. Port congestion takes ships out of the market and thus limits supply.

2. New Ships coming on stream. The subject of the attached article. New ships (all built during the boom) will increase supply and possibly kill the market.

3. Chinese governement stimulus packages. How long can this go on?

Imagine if we had lots of new ships, leess congestion and a chinese recession? Then again lets not.

Cheers
VS

4 comments:

  1. Hi VS,

    Kindly check below link which is informative.

    http://www.wikinvest.com/index/Baltic_Dry_Index_-_BDI_(BALDRY)

    With Rgds
    Varun

    ReplyDelete
  2. Hi Varun - thanks link - you can check out dsame link on my voyage estimation blog

    Cheers
    VS

    ReplyDelete
  3. Hi Vs,

    Thanks.Noted well...Can you please give some guidance on how to understand the market based on BDI & Fixtures reported. Normally fixture reports cover some major fixtures in major routes. How can we get an idea on the present rates in other routes for eg: An inter PG voyage
    for a handymax or a PG / WCI trip.

    Of course we can run a calculation. Apart from this is there any way?

    Sorry if my question looks meaningless.

    With Rgds
    Varun

    ReplyDelete
  4. Hello Varun

    The bdi merely gives a general overview of the dry bulk market. but as you know thre are many markets within the bigger market.

    The only way to tell the market for a specific route (if that route is not one of the major outes) is to run a voyage calculation. The may occassionally be a reported fixture but this is occassional and the terms are often different.

    The best way to keep tabs on the market for unusual routes is to run voyage calculations every week. Thats what i do anyway>

    Thanks for the qustion

    cheers
    VS

    ReplyDelete