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Baltic Dry Index hits 3-year low as Capesize Shipping Rates Plunge
By Sea and Coast | 15/02/2023
The Baltic Exchange's main sea freight index, which tracks the rates for shipping dry bulk commodities, plummeted to a near three-year low on Tuesday, primarily due to the worst single-day drop in nearly six months for capesize ships. The index, which also takes into account rates for panamax and supramax shipping vessels, dropped 53 points, or 8.6%, to reach 563, a level not seen since early June 2020. Meanwhile, the capesize index recorded a loss of 152 points, or approximately 28.5%, bringing it to 382, with average daily earnings falling by $1,265 to $3,167. Panamax index also fell 15 points or about 1.7% to 848, with average daily earnings for panamaxes down by $133 to $7,631, and supramax index slightly rose by 2 points at 627, snapping its seven-day-long losing streak.
The significant slump in the Baltic Exchange's main sea freight index is reflective of the oversupply of vessels amid a fall in demand for shipping services, leading to a downward pressure on freight rates. The drop in capesize shipping rates is also attributed to the impact of the Russian invasion of Ukraine, which has disrupted global trade and oil markets. The ongoing COVID-19 pandemic and related supply chain issues have also impacted the shipping industry, contributing to the slump in freight rates.