Iron ore and coal seaborne transportation costs fall to new low

The Baltic Dry Index (BDI), which measures freight costs for dry bulk shipping, fell to a new low this week hitting 471 on 16 and 17 December. The BDI was at 1,222 as recently as August 2015 and the new low represents just 4% of the record high of 11,793 in May 2008. The fundamentals of weak trade growth in coal and iron ore, a more rapidly growing fleet of dry bulk vessels and falling oil prices mean that this record low is likely to be tested in 2016. Lower dry bulk freight rates will put additional downward pressure on commodity prices and industry costs.