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.
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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
By Dr Matthew Partridge Published
-
Can Lidiane Jones be Bumble's perfect match?
Dating app Bumble is taking on Lidiane Jones, a well-regarded leader in tech, as its new boss. Can she work her magic in a new arena?
By Jane Lewis Published