The primary dry sea freight index on the (BDI) measures the freight rates for cargo vessels carrying dry commodities such as coal, grains and iron. The overall London-based index factors in the rates for three types of freighters; specifically supramax, panamax and capesize ships. In one day, the main index logged a historic 7.4 percent gain from 1018 points to 1093 points. This is the most significant percentage gain for the index in a single day since November 16, 2016. It is a positive development for the BDI after six weeks without gains. It is also good news for the shipping industry as a whole, as the BDI has long been a bellwether for shipping stocks and the entire market.
Robust Capesize Index Growth
A strong growth trend in the capesize index was the primary catalyst for the index’s overall 75 point gain. The market generally has a lower demand for capesize vessels than it does for panamax or supramax vessels, which leads to rate volatility when demand is underestimated or overestimated. Consequently, the capesize vessel index experienced a 24.7 percent rise to 1,358 points, in the greatest single-day percentage gain since April 1, 2016. Capesize ships transport cargoes such as coal and iron ore that can weight from 170,000 to 180,000 tons. The surge in demand corresponded with a sizable $1902 increase in capesize vessels’ daily earnings to reach $10,853 USD. Industry experts and analysts with experience in the field suggested that the surge in the capesize index rates was due to consumer sentiment and exaggerated drops in confidence that did not accurately reflect the market reality. However, they also predicted that capesize rates would experience multiple surges and declines in the upcoming months instead of market rate stability.
Decline in the Panamax and Supramax Indices
Despite the capesize index growth, its value remains below the value for the panamax and supramax vessel indices. After eight sessions of losses, the panamax index dropped an additional two points to reach 1,376 points. Panamax vessels are much smaller than capesize vessels and carry lighter loads. The average panamax vessel transports cargo such as grain or coal weighing 60,000 to 70,000 tonnes. There is likely a direct correlation between the panamax index decline and the decrease in average daily earnings for panamax vessels. Panamax vessel earnings experienced a reduction of $22 to reach $10,996 on a daily basis. The supramax index also experienced a 4 point decline to finish at 952 points.