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Commodity Shipping Prices Reach New Lows in Ongoing Decline

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.