Shipping Boom

[Starbucks Junkie]

FT.com Published: May 19 2008 09:42 | Last updated: May 19 2008 14:09

The market for shipping commodities around the globe has gone haywire. The Baltic Dry index, which tracks the cost of freighting dry goods like coal or grain, hit a fresh all-time high on Monday morning. The index has now doubled, halved, and redoubled in less than a year. A ship carrying about 180,000 metric tonnes of iron ore costs over $200,000 dollars a day to hire. Before 2003, when prices began to take off, the previous all-time high was about $35,000.
If the Baltic Dry is a useful economic indicator, as some argue, the world appears to have gone berserk. But should the index really perform this role? Its long-term increase reflects the rise of China. The country now accounts for about a quarter of seaborne trade, twice its share five years ago. In the short term, the index’s wild volatility suggests it has little wider predictive power.

[hanserus]

Interesting but not surprising. As the buying power of massive South East Asian markets keeps increasing the world commodity trade and transportation markets should follow in the same direction.