The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.The reason I like this index is that it represents the true price of hiring a shipping vessel. While it is true that it is skewed towards commodity prices (and as such highly influenced by Chinese demand), I think it foretells things to come. China is the leading manufacturer in the world today and its imports should show the upcoming demand from the rest of the world! China has been stockpiling crude oil, copper, and many other materials. Once that demand slumps, shipping costs will plummet. Here is a graph for the latest value of this index. I'm already concerned since this value has fallen below the trendline, but I'd get even more concerned if it broke down below ~2240.
Here's a chart of a longer timeframe view of this index. Notice the massive volatility during the financial crisis and a bottoming prior to the bottoming of the market. Today's prices are still a fraction of what it cost then!
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