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Baltic Dry Index

If this is your first time here please read the explanation on shippers.

From the Baltic Exchange in London the Index is described as providing "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain".

The BDI is a leading indicator for two reasons. First an increase in the shipment of raw materials will force the BDI higher. Second when those raw materials are manufactured into goods they are often shipped back to their markets putting more upward pressure on the BDI.

An increase in demand does not often show up well in economic indicators because they usually measure sales volumes. The BDI more accurately measures an increase in demand and an up-tick in the BDI can predict an increase in sales volume some six months later. Of course a dropping BDI is also a leading indicator.

How data in these plots and spreadsheets was obtained and an explanation of the gaps in the TCE data is provided on the candidates page.

This link provides a spreadsheet in CVS format for BDI data going back to July 2007. TCE data is included but it has gaps before 2009.

Baltic Dry Indices

The BDI is a weighted blend of the BCI (Capesize ships - around 150,000 tons), the BPI (Panamax - around 80,000 tons), and the BSI (Supramax - around 50,000 tons).

Click the graph to see only the last 6 weeks.
(Note: PNG images fail to render properly on Firefox 11.0 works fine in Firefox 10.0, IE, Chrome, Opera)

Time Charter Equivalent

The TCE rate (time-charter equivalent per ship per day) is defined as the voyage and time charter revenues less voyage expenses during a period divided by the number of operating days during the period.

The TCE rate is a shipping industry performance measure used primarily to compare daily earnings generated by vessels on "time charters" with daily earnings generated by vessels on "voyage charters".
Vessels on "time charters" generally are expressed as a daily rate whereas charter hire rates for "voyage charters" are reported for the entire trip.

Handymax ships (around 30,000 tons) are no longer tracked by the BDI but should typically get 1/2 to 2/3 of the TCE of a Supramax ship. Sooty mentions this because he owns shares in FreeSeas (Nasdaq:FREE). This small company runs nine Handymax ships and pays a healthy dividend (well it used to). It has a good Current Ratio, a better than average Debt/Equity ratio, and should be a good long term hold.

You can use the TCE to evaluate performance. In April 2009 FREE was getting an average of $19,000 per day on its ships. This is excellent considering the Supramax TCE was only $12,000 at that time (so a Handymax estimate would be $6,000 to $9,000). Outperforming the average TCE should equate to outperforming dividends in the future. The BDI is extremely volitile and difficult to predict but it is generally agreed the April 2009 value is very depressed and should be double or triple by the time the world recovers in Fall 2009. Since most of the FREE costs are either fixed or dependant on the interest rate an increase in the BDI should substantially increase their cash position and dividends.

Click the graph to see only the last 6 weeks.
(Note: PNG images fail to render properly on Firefox 11.0 works fine in Firefox 10.0, IE, Chrome, Opera)

This data is updated every morning at 8:00 AM Pacific Time.