Handbasket Report — The Shipping News

The Baltic Dry Index.

Never heard of it? Until a few weeks ago, neither had I. So, to bring you up to speed, here’s a 2003 article from Slate“The Shipping News: The Best Economic Indicator You’ve Never Heard Of.”

In case you don’t want to read that, I’ll just say the BDI tracks the shipping of raw materials by sea. Sounds about as exciting as counting your heart beats, doesn’t it? Well, it is, because if you’re counting your own and that nice steady thumping slows and slows and slows, you may want to dial 911 before you faint and perhaps even stop breathing.

Money, the blood of commerce, has dried up, and shippers haven’t been able to get loans to move freight of late.  So in the past couple of months the BDI has gone from an overexcited thumpthumpthump to thump–thump———thump—————THUD.

The UK Times of November 13 says it’s down nearly 90% in the last few weeks. Other sources say it’s down even more.  But why should you care?

I like this simple explanation from LondonBanker:

If cargo trade stops, the wheat doesn’t get exported. If the wheat doesn’t get exported, the mill has nothing to grind into flour. If there is no flour, the bakeries and food processors can’t produce bread and pasta and other foods. If there are no foods shipped from the bakeries and factories, there are no foods in the shops. If there are no foods in the shops, people go hungry. If people go hungry their children go hungry. When children go hungry, people riot and governments fall.

Care now?

Cassandra

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2 Responses to “Handbasket Report — The Shipping News”

  1. Cassandra Says:

    LondonBanker’s fine article also appears on the subscription site _RGE Monitor_.

    http://www.rgemonitor.com/financemarkets-monitor/254399/systemic_risk_contagion_and_trade_finance_-_back_to_the_bad_old_days/

    I’ve added LondonBanker’s blog to my Visit Daily list.

    Cassandra

  2. Cassandra Says:

    UPDATE: “Baltic Dry Index Drops for 6th Month”

    It’s now down 94 percent since its record high on May 4

    Forbes has a nice line: “It’s hard to fathom how far rates for dry-bulk shipping have plunged in the past few months but easy to see how bleak the future has become.”

    And Seeking Alpha has a nice graph from InvestmentTools.com–nice if you like views of cliffs.

    Lowest since 1987. Yippee.

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