| The Index is a commercial statistical set of numerical | | | | system that daily tracks costs from the various |
| factors describing various shipping criteria. It was first | | | | routes folded into index. Brokers are contacted so as |
| officially codified in 1985, however, the history of the | | | | to aggregate the raw information into a uniform |
| earlier rudimentary basis of the Index dates back | | | | whole providing market participants a concise and |
| over two hundred years to the Virginia and Maryland | | | | easy to use data stream. In this manner the supply |
| coffee house on Threadneedle Street, London. | | | | demand economic fundamentals between goods, |
| Various individuals having commercial interests met at | | | | shipping rates and demand for the same can be |
| the coffee house to discuss the various opportunities | | | | assessed accurately and efficiently. All of this is |
| in the Baltic trade as early as 1744. | | | | effective at rapidly determining the rise and fall of |
| Within seventy years the meetings were transferred | | | | raw materials good as a result of increased demand. |
| to the Antwerp Tavern where the spirit of greed | | | | As an example, when a particular ore or raw material |
| fiercely gripped the participants. If it were not for the | | | | has an increase in demand the index will increase and |
| formation of a group of local leaders the frenzy that | | | | the reverse is true a drop in material prices has a |
| captured the Tavern group would have sunk the | | | | concomitant drop in the index. |
| entire assembly. These chiefs acted to standardize | | | | It should be understood that ships are static |
| the group by organized regulation of the market | | | | commodities since it takes a long time frame to |
| house including membership rules. As time went on, | | | | produce one. Thus, any increase or decrease in |
| the system evolved so that the by the year 1900 | | | | demand will directly relate to the rise and fall of the |
| the Baltic Exchange would receive the London | | | | index as described previously. Since the BDI closely |
| Shipping Exchange into its membership. | | | | tracks demand across a variety of commodities, the |
| In its long life the Baltic Exchange would create | | | | index is viewed as a leading indicator of global |
| several cargo statistics, suffer terrorist bombings and | | | | economic performance. The recent economic crisis |
| change locations several times to its present location | | | | beginning in 2007 saw a high watermark for the BDI |
| of 38 St. Mary Axe. The Exchange's current Baltic | | | | above 11,000. However, this peak only signaled the |
| Dry Index (BDI) dates to the year 1985 as cited | | | | beginning of the end as it fell in a crash diving to less |
| previously. It tracks the route and time as well as | | | | then 10% of its highs. As a result, ships world wide |
| materials and shipping for various commodities. In | | | | began to be parked by owners highlighting the global |
| particular, the statistics cover several different types | | | | economic meltdown still underway. |
| of freight container ships. Amongst the types of | | | | Whatever happens to the world economy, the |
| vessels indexed are the Handymax, Panamax, | | | | historical Baltic Dry Index will provide a broad and |
| Capesize dry bulk and Supramax ships. | | | | early indicator to be watched by those in the know. |
| All of these factors are correlated together into a | | | | |