Because shipping companies still have cash on hand? Because of that stupid bailout that is rewarding them for wasting money to bring useless trinkets in from China? Because if people stop importing stuff the government will threaten to maybe possibly consider beating the crap out of them?

Oh, and yes, shipping still comes in over land. Err, not "shipping", but you know.

Sorry to triple-post, but I forgot to mention that there are actually some morons who don't pay attention to the BDI. Their loss, but...

Just because the BDI has crashed doesn't mean that their is no shipping coming into the United States.

@spyman: I just said that.

And it hasn't actually crashed - even worse: it is negative (or a fraction, if it is still relative). So instead of not telling anyone anything about importing stuff, it is actually telling peole to NOT import anything.

BDI measure demand for goods vs. ship transport capacity. When more trade occurs overseas between nations, the BDI rises...conversely when demand for goods fall, so does the BDI. Given the fall of commodity prices lately....I would think a lower BDI indicates more of a reduction of demand...moreso than supply. So no...the US will not run out of food, Japanese cars or Korean TVs.

As a minor injection of reality, the US is a net EXPORTER of food products.
(I now return you to your regularly scheduled discourse screed).

@Spell of Wheels:
No it doesn't. It adjusts when transport capacity changes, but it hasn't solely measuerd that for centuries. This is an oversimplification, but basically it measures profitability of importing. Not capacity. Of course, if capacity changes, so does profitability as supply and demand change.

@EdiBirsan:
Can I edit your emphasis a bit? "the US is a net exporter of food PRODUCTS". Recently we import more actual food than we export because so much corn has been diverted to ethanol. This is probably irrelevant, though, as we can always just go back to producing food, right? Bush would never dissallow something that hurts his popularity further through absurdly high gas prices*.

*Corn used for food would not raise gas prices. Only the idiots who speculate the prices based on food production can do that.

i love you Sic!!

Yes ao3rules, you did say that already. I misunderstood your post, when you said "shipping still comes in over land". I just wanted Sicarius to understand that ocean shipping has not stopped.

So what does this all boil down to? Is starvation imminent like Sic asserts?

I'm a fat man.

No its a good indication that the world is in for a recession. Here is a link to an rarticle about it.
http://www.chinadaily.com.cn/opinion/2008-12/17/content_7313221.htm

*article

No. It's a good indication that people who are not idiots have stopped importing stuff (or just importing less), which generally accompanies a recession. Actually, it doesn't mean a recession is imminent, typically imminent recessions mean the BDI will drop. But yes, they are linked.

@Jerkface: No, or sort of. Worst case scenario is extremely high food prices, pushing many people over the poverty line and depriving people of nutrition. But most middle-class people should be able to survive as long as they stop buying American cars and HDTVs.

Nice raticle [sic, :] but i thought it was kind of unrelated. How was it relevant?

Something else that should be made clear (correct me if I am mistaken), if the index falls by 93% that does not mean that shipping has dropped by 93%. It just tells you that the price of shipping has fallen.

Yes not directly related. I googled BDI and that article came up, and I thought it was interesting so I posted it. The author talks the about the significance of this recession. He didn't mention imminent starving for millions American (as suggested by Sicarius). One interesting point that he made is that when we come through the other side the worlds economy may be restructured for the better.
"In the past, global growth had been too dependent on one nation; in the future, it will be more diversified and less risky."

Yes, you are mistaken. Not far off, but there is a difference - it was originally supply minus (or in some cases, divided by) demand, but sometimes a modified version is now used which actually measures average profitability. So if it is extremely low, almost nothing would be imported, except those few things which are still in high demand.

Sorry, didn't see that you had posted. Meant to say that first. But then your post would have been out of place. Odd.

But when I said that it does not mean that shipping has dropped by 93%, was that correct?
Wikipedia: The supply of cargo ships is generally both tight and inelastic — it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the California desert. **So marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly** So the index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, crude oil, metallic ores, and grains.

Oops, sorry. You had the wrong type of data, i had it mixed up - i meant demand minus supply.

Some other issues to consider relative to the BCI index and the US
1. it measures OCEAN ships vs cargo the US major partners in trade include Mexico and Canada both of which are rail and truck transport issues.
2. There has been a building of excess capacity for years that was known to happen starting the year through the next with the arrival of the large 10-15,000 container vessels in the Transpacific.
3. Ship Capacity in this index includes tankers for oil however there has been an increase in oil pipeline shipments etc.

So this is not time to panic.

@Edi: Increase in oil pipeline shipments? Are you sure?

You're right, Edi, its not a time to panic.

Sicarius just wishes it was :P

Perhaps more pipelines means less demand for oil tankers and a thus a lower BDI? If I am wrong, please excuse me, I am just trying to understand.

I don't know what he meant by that either. Edi, could you explain?

Although I don't think oil tankers are counted in the BDI. At any rate Edi was talking about the BCI, but I think that still refers dry cargo, but only includes ships over 80,000 dtw. According to this article the BCI has actually gone up recently.
http://seekingalpha.com/article/111050-baltic-capesize-index-surges-a-step-towards-industrial-recovery

I am probably wrong about the oil tankers not being included, as Edi says they are, and I think he works in shipping. But if it is the Baltic Dry Index, how is oil considered dry?

As far as I know, dryness has nothing to do with it. But I know for a fact that oil tankers are counted.

I think I get it now dry cargo vs containers which are stored on deck, and thus are not dry.

aoe: edibirsan has mentioned in forums that he is a senior executive in the container/shipping/freight industry. I would take his opinion above the others since this is linked to his mortgage.

I am not convinced. According to Wikipedia the index covers "dry bulk carriers". Britannica makes a distinction between dry cargo ships and tankers. Plus this article from the spectator states that the index does not include oil.

http://www.spectator.co.uk/print/the-magazine/investment/464461/fall-in-dry-shipping-index-threatens-to-cast-commodity-market-onto-the-rocks.thtml

http://www.britannica.com/EBchecked/topic/172228/dry-bulk-ship

@ag7422: Who is not convincing you? And which of my statements are you disagreeing with?

oil tankers are not measured in the BDI

thanks everyone

@spyman: I never said the price of oil itself directly influenced it. Sorry if I misphrased that. But oil tankers are counted as cargo shipping... ships. Sort of.

Folks, there are several things at work here and people are spinning out from under the details.

The main thrust of the issue is that shipping capacity relative to the cargo that is being shipped has slipped into a surplus on the side of capacity vs. cargo. The exact make up of the BDI or whatever is not really that important as the over all issue of what does it mean.

The second issue that I was trying to address is the initial comment that suddenly the US was going to start starving because of the drop in the ratio of capacity to cargo.
My basic response can be summarized as

1. Not all cargo is transported by ship
2. Not all food cargo is transported by ship
3 The US agriculture can feed its own people
4. The capacity issues that were projected for late 2008 and through 2010 was known in advance and reflects some of the completion of huge container ships that were in construction and finance and planning for the last few years.
5, There is no need to panic on the ship capacity side, if anything it would lead to a decline in transport prices making things even cheaper to move in a globalization movement. Such shifts are not unknown in shipping history regardless of the BDI fluctuations.
Reality functions independent of index's that are used to explain it.

As an aside, I have been in the container business for 35 years. I am not an over all guru in the Shipping business but that is really irrelevant as the arguments and perceptions are independent and should be independent of any 'testimonial' value of the writer.

I am also reminded of an old somewhat obscene joke *(youngsters stop here) where two people are talking at a bar and one makes a series of proposals to the other with an ever increasing money offer, the punch line of which is that there is no shortage of (insert homosexuals-whores-perverts- whatever) only a shortage of money.

Take it easy folks, the world is not coming to an end. But if you really believe that, then money is useless and you can deposit it here through PayPal and we can get some real changes to the forum and other things in your memory.

No aoe3 I wasn't talking about the price of oil, but rather whether oil tankers were included. Sorry to be pedantic, but from what I have read it would appear they aren't.
Edi apart from Sicarius's first post, I don't think anyone thinks the world is ending. Most of the discussion between aoe3 and me has been about what exactly makes up the BDI. Pure curiosity that's all.

Glad to see that the world is not ending.

Just when I thought we'd scraped the bottom of the barrel for inane threads, this piece of work comes along.

Glad to see no one bought into Sicarius' "the sky is falling" mentality.

lol, they're too fat anyway, it'd be a forced diet!

Someone please tell me why we should care?

I'm no chicken little. nor am I in the shipping business.
I stated the problem as I heard it and wondered why it was wrong. not if, why.
notice I said prove me wrong numerous times.

It was a fair question Sicarius. None of us really new what the deal was either, but now we know.

When I say none of us... I mean I didn't know.