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Baltic Dry Index Surges to Three Year High

The Baltic Dry Index is often looked at by some as a leading indicator of the global economy as higher shipping rates indicate stronger demand for shipping and healthier global trade.  While there are shortcomings to the index (supply of available vessels also plays a big role in rates), it is still widely followed.

The chart below shows historical readings in the Baltic Dry Index going back to 2007.  While the index is still well off its highs from 2007 and 2008, 2013 has been a great year for shipping rates.  Year to date, the index is up 234% and is now at its highest level in more than three years (November 2010). For followers of the index, this would indicate that the global economy is picking up steam.