Commodity shipping prices continued their tailspin over the past week, dropping to their lowest point since 1986. The Baltic Dry Index (BDIY:IND), a definitive measure of commodities shipping costs, has fallen 65% over the last month to a record low of 647. The index has already seen dramatic declines, beginning with the global economic recession in 2008.
Out of a dry goods shipping fleet of approximately 8,000 vessels, there are currently more than 2,000 at anchor. Many vessels are being chartered at a loss, with some shipping companies reportedly chartering Supramax ships for only the cost of fuel. As of February 1, the daily rental rate for a Panamax vessel–the largest vessel class capable of navigating the Panama Canal–was $5,327. This pales in comparison with the 2008 daily rental rate for a Panamax vessel, which peaked near $234,000.
The precipitous drop in shipping prices has been blamed both on the uncertain future of the Euro and the over-expansion of the global commodities shipping fleet. Since 2008, the fleet has grown 56% while demand for commodities shipping has largely remained stagnant.