Advertisement

Baltic Dry Index

The Baltic Dry Index is a key barometer of global freight activity – measuring the cost of ferrying raw materials around the planet.

The Baltic Dry Index is a key barometer of global freight activity measuring the cost of ferrying raw materials around the planet. Despite its name, it isn't just about Scandinavia. It's published by London's Baltic Exchange, the global marketplace for buying and selling shipping contracts.

The BDI measures the demand for space on so-called 'dry bulk carriers', which carry cargoes such as coal, grain, timber, steel and iron ore. That makes it a 'leading' economic indicator. Manufacturers need to buy supplies of raw materials before they can churn out finished products. So a pick-up in industrial activity will show up in the BDI - as producers stock up on raw materials - before it appears in the official production statistics.

Advertisement - Article continues below

And as the supply of shipping capacity tends to stay relatively unchanged over the short-term it takes up to two years to build a new ship, and most carrier operators are reluctant to scrap their vessels unless they have to it doesn't take a big increase in demand for transport space to push the BDI higher. Simliarly, a downturn will tend to show up in the BDI first.

Advertisement
Advertisement

Recommended

Economic indicators
Glossary

Economic indicators

An economic indicator is any statistic that allows us to analyse how the economy is performing or is likely to perform in future.
31 Jul 2020
Modern monetary theory (MMT)
Glossary

Modern monetary theory (MMT)

Modern Monetary theory, or MMT, has become popular on the left, both in the UK and abroad. (Wags say that it stands for "magic money tree".) 
14 Jul 2020
Modern monetary theory (MMT)
Glossary

Modern monetary theory (MMT)

Modern monetary theory, or MMT, has become popular on the left, both in the UK and abroad. (Wags say that it stands for "magic money tree".) 
14 Jul 2020
Barbell strategy
Glossary

Barbell strategy

A “barbell… investment strategy means weighting a portfolio towards the two extreme ends of an asset class with nothing in the middle.
8 Jul 2020

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020
The MoneyWeek Podcast: how to age well and profit from the “longevity dividend”
Investment strategy

The MoneyWeek Podcast: how to age well and profit from the “longevity dividend”

Merryn talks to economist and author Andrew J Scott and discusses how we can profit from the "longevity dividend" as we live longer; why we need to re…
6 Aug 2020