The benchmark index, maintained by the London-based Baltic Exchange to track the daily freight market prices for dry bulk transport, fell 8.2 percent to 826 following a near 4 percent decline Tuesday. The index has fallen more than 48 percent so far this year.
h/t Adrian
I’m not sure how much dry bulk is still extant. A local shipper, investigating damaged containers found a customer was standing the “cans” upright, then dropping scrap metal in. This is not uncommon. The shippers have been watchful of dinged/damaged container fronts for a while now.
Container traffic has fallen off dramatically…despite falling rates….shippers are faced with the prospect of partially loaded ships….unable to wait for full loads…because timeliness is more or less necessary to stay in business.
This has for some time given Chinese/Indian goods a trade advantage….and has a lot of exporters using containers for bulk goods such as scrap metal…cars….even used tires….
http://unctad.org/en/Docs/rmt2011_en.pdf
Freight rates in the dry bulk sector performed well for the first half of the year,
but the Baltic Exchange Dry Index (BDI) lost more than half its value from the end of
May 2010 to mid-July 2010. A partial rally occurred in August 2010 before the Index
continued its downward trajectory. Between May 2010 and May 2011, the BDI declined
by about two thirds. Container freight rates in 2010 witnessed a major transformation
brought about by a boost in exports and measures introduced by shipowners to limit
vessel oversupply. The result can be seen in the New ConTex Index, which tripled in
value from early 2010 to mid-2011.
During 2009, the index recovered as high as 4661, but then bottomed out at 1043 in February, 2011, after continued deliveries of new ships and flooding in Australia.[14]
Though rebounding to 2000 on 7 October,[15] by 3 February 2012, the index made a new multi-decade low of 647 on a continued glut of dry bulk carriers and decreases in orders of iron and coal.[16]
http://www.handyshippingguide.com/shipping-news/dry-bulk-freight-index-drops-and-container-shipping-line-forecasts-and-profits-slump_3438
With figures like these and other heavy losses at huge container groups such as Maersk and CMA CGM the message is clearly that overcapacity is slowly destroying the ability to maintain services with so many companies competing for trade which has not increased, and in many sectors actually reduced.
11/30/12 ASIA-EUROPE rates continued in decline last week to US$1,028 per TEU, down 4.7%, or $51 per TEU WoW, representing the lowest point reached since March, according to the Shanghai Containerised Freight Index (SCFI).
In short, over capacity has ravaged the profitability in the shipping industry, while the anemic economy has contributed to reduced profit margins.
Cheers
Hans Rupprecht, Commander in Chief
1st Saint Nicolaas Army
Army Group “True North”
I thought a major reason for the drop off was the increased capacity coming onto the market. New ships. ???