Posted on March 12, 2015

Freight shipping prices have fallen to a historic low, fuelled by a long-standing problem of too many ships and lower demand from China. Shipping industry experts however caution against seeing it as a warning on the health of the global economy.

The Baltic Dry Index (BDI), which tracks the cost of transporting dry commodities such as coal, iron ore and grain across 20 shipping routes, has dropped to 509 points, its lowest level since the creation of the index in 1985.

There have never been more commodity cargoes transported by sea, but the sector has been plagued with a surplus of ships ordered in good times, while falling imports from China has put further downward pressure on rates.

The index used to be seen as a reliable indicator of global economic health or looming crisis, but the gauge has lost its edge in recent years.

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