This article brought to you with: Finale Inventory.

See how Finale Inventory helps you improve and scale your operations with their all-in-one, multi-channel inventory management solution.

Shipping Index Reaches Highest Gain Since 2011 on the Back of Rising Chinese Demand

Image via Flickr by Corvair Owner

The Baltic Dry Index keeps track of the costs of overseas shipping of bulk dry goods. A rising index indicates growth in the market, as prices go up when demand is high. Conversely, a lowering index means overseas shipping trade is down. This quarter looks to be the best gain in the overseas shipping industry since 2011, and most of the gains are attributed to China’s increasing demand for iron ore from Australia to be used in making steel for their growing industries and economy. So far, during the fourth quarter of 2013, the Baltic Dry Index has averaged 1,815. This level hasn’t been reached since the final two quarters of 2011, based on reports from the Baltic Exchange in London, which tracks the rates of more than 50 global maritime routes. Shipments of iron ore from Australia to China rose by 19 percent over the course of the first ten months of this year. Iron ore generates more demand for shipping vessel capacity than any other commodity in the dry bulk category. Australia is the world’s largest producer of iron ore.

Chris Baxter, executive director of SSY Futures Ltd., expects the Baltic Dry Index to see even more gains over the next year. Capesize ships, the largest vessels tracked in the Baltic Dry Index, fell 3.1 percent in rental prices, but the smallest size vessels, Handysizes, have gained over the past 42 quarters. Most of the gains evident in the Index are in the Handysizes category.

Morgan Stanley expects 2014 to begin a two-year period of gains in the shipping industry, which is in serious need of a boom following long-term issues with overall low shipping prices combined with an overabundance of shipping capacities. There is no sign of slowing in the Chinese industries which depend on iron ore shipped from Australia. Additionally, other economies around the world are expected to pick up and contribute to the rising Index.

Global Procurement & Supply Chain Professionals Read This…

Free Case Study When You Subscribe

…Carefully curated procurement & supply chain issues that make you look smart, sent to your inbox every week.

PLUS: Get the FREE Procurement Case Study when you subscribe: “How McDonald’s Overcame Global Supply Chain Obstacles”

Procurement Bulletin eNL Subs Email Only Step 1

Similar Posts