Dry Bulk Freight
Baltic Exchange
The price of moving the world's rocks and grain: the most cyclical market in commodities and a real-time pulse of global trade.
Top Producers
dry bulk fleet ownership by dwt, 2025
Top Consumers
seaborne dry bulk trade by cargo, 2024
Main Uses
seaborne dry bulk trade by cargo, 2024
All-time BDI high
11,793
May 20, 2008
All-time BDI low
290
February 2016
Dry bulk fleet
roughly 1 billion dwt, about 14,000 ships
as of 2025
Capesize size
about 180,000 dwt
2008 peak Capesize earnings
above $230,000/day
June 2008
Dry bulk freight is the cost of hiring a ship to carry unpackaged cargo: iron ore, coal, grain, bauxite, fertilizer. The Baltic Exchange, a London institution founded in 1744 and owned by the Singapore Exchange since 2016, polls a panel of shipbrokers every business day to assess hire rates across standard routes for each vessel class: Capesize (about 180,000 deadweight tonnes, too large for the Panama Canal, the workhorse of iron ore and coal), Panamax (about 82,000 dwt, coal and grain), and Supramax and Handysize beneath them. The Baltic Dry Index compounds the Capesize, Panamax, and Supramax timecharter averages into a single headline number, quoted in index points and watched far beyond shipping as a barometer of world trade.
No commodity market is more violently cyclical, because supply is a shipyard order book that takes two years to deliver and then floats for 25. The BDI peaked at 11,793 on May 20, 2008, with Capesizes earning above $230,000 per day, then collapsed below 700 by December 2008 as trade finance froze: a 94 percent fall in seven months. The 2010s were spent digesting the resulting glut of ships. The 2021 reopening squeezed rates back above 5,600 in October 2021, and the 2024 Red Sea attacks and Panama Canal drought showed how rerouting, by adding distance, silently removes effective fleet supply.
The paper market is the Forward Freight Agreement: a cash-settled swap on the average of a Baltic index over a calendar month, quoted in dollars per day for timecharter routes, cleared mainly through EEX and SGX. Miners, charterers, and trading houses use FFAs to hedge voyages they have not yet fixed, and the FFA curve is the market's collective forecast of trade volumes, congestion, and fleet growth. With Chinese iron ore imports the dominant cargo flow, freight trades, in practice, as a leveraged bet on Chinese steel.
How It Trades
| Venue | Baltic Exchange (index publication); FFAs traded through specialist brokers and cleared mainly via EEX and SGX |
| Benchmark contract | Forward Freight Agreements on the Capesize 5TC and Panamax 5TC timecharter averages, plus voyage-route contracts; the BDI itself is a barometer, not the main traded instrument |
| Contract size | Quoted in days per calendar month, commonly traded in lots of 5 or 10 days per month |
| Price terms | USD per day for timecharter averages; USD per tonne for voyage routes |
| Settlement | Cash settled against the arithmetic average of the relevant Baltic assessment over the settlement month; no physical delivery |
| Typical curve | Seasonal: rates typically firm into the fourth quarter on grain and pre-winter restocking and sag in the first quarter around Chinese New Year and the Brazilian rainy season; the curve flips between contango and backwardation with the cycle. |
| Liquidity | FFA volumes run to hundreds of thousands of lots per year, concentrated in Capesize and Panamax within the front 12 months; options on FFAs trade actively. Thin and brokered relative to energy futures, with wide moves on modest flow. |
Where It Trades
approximate share of global traded volume, 2025; the Baltic Exchange sets the indices but FFAs are the traded instrument, cleared mainly at EEX and SGX while physical fixtures remain broker-arranged OTC
Supply and Demand
Top producers
- The global dry bulk fleet, roughly 1 billion deadweight tonnes across about 14,000 ships
- Shipyards in China, Japan, and South Korea (newbuild deliveries arrive with a roughly two-year lag)
- Greek, Japanese, and Chinese shipowners (the largest ownership blocs)
Effective supply is elastic in hidden ways: slow steaming, port congestion, and rerouting around the Cape of Good Hope all absorb tonnage without a single ship being scrapped. IMO emissions rules (EEXI and CII from 2023) cap speeds on older vessels and accelerate scrapping decisions.
Top consumers
- China (the dominant importer of iron ore and a major coal and grain buyer)
- Iron ore flows from Australia and Brazil (the single largest cargo, the Capesize trade)
- Coal flows from Indonesia and Australia to Asia
- Grain flows from the Americas and the Black Sea
- Bauxite from West Africa to China (the fastest-growing major trade)
Major uses
- Iron ore transport (the backbone of Capesize demand)
- Coal transport
- Grain and oilseed transport
- Minor bulks: bauxite, fertilizer, cement, steel products
Tonne-miles, cargo volume multiplied by distance, are the true demand unit: a Brazil-to-China ore cargo employs roughly three times the ship-days of an Australia-to-China cargo of the same size.
What Moves the Price
- Chinese steel production and iron ore import demand, the dominant cargo flow
- Brazilian ore export volumes, which set long-haul tonne-mile demand
- Grain seasons in the Americas and the Black Sea
- Newbuild deliveries versus scrapping: the fleet growth rate
- Port congestion, canal constraints (Panama drought 2023-2024), and rerouting (Red Sea from 2024)
- Bunker fuel prices, which feed voyage costs and the slow-steaming decision
- IMO environmental regulation, which caps effective speed and ages the fleet faster
- Coal trade volumes, especially Indonesian and Australian flows to Asia
Moments That Made the Market
1985
The Baltic Freight Index launches, the ancestor of today's BDI, enabling freight derivatives.
2008
The BDI peaks at 11,793 on May 20, 2008, with Capesizes above $230,000/day, then collapses below 700 by December 2008.
2016
The BDI prints its all-time low of 290 in February 2016 amid fleet glut and Chinese slowdown; SGX acquires the Baltic Exchange the same year.
2020
Pandemic shock briefly crushes rates; recovery begins within months as stimulus revives bulk trade.
2021
Reopening demand and port congestion drive the BDI above 5,600 in October 2021, the highest since 2008.
2023
IMO efficiency rules (EEXI and CII) take effect, constraining speed across the existing fleet.
2024
Red Sea attacks reroute traffic around the Cape of Good Hope and a Panama Canal drought restricts transits, tightening effective supply.
What Changed Since the 2010 Handbook Era
- The market spent the entire 2010s digesting the ship glut ordered at the 2008 peak; fleet discipline only returned in the 2020s.
- Ownership of the benchmark moved east: SGX bought the Baltic Exchange in 2016, and FFA clearing consolidated at EEX and SGX.
- Environmental regulation became a supply driver: IMO speed and efficiency rules now do part of the job scrapping used to do.
- Chokepoint risk returned: the Panama drought and Red Sea diversions of 2024 showed distance, not just demand, sets tonne-miles.
- Bauxite from West Africa to China grew into a major Capesize trade that barely existed in 2010.