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Shipping Costs – The Baltic Dry Daily Index

Tags: puerto rico

The recent 40-percent jump in global shipping costs for sending freight goods around the world as measured by the Baltic Dry daily index of shipping costs is thought by many to be an indication of rebounding demand. Because economic and shipping experts currently do not agree on the specifics of this unexpected rise in demand, it is uncertain whether this will have some impact on the cost of international auto shipping be it short- or long-term. The main questions are: how much of an impact, what regions of the world will experience this impact, and what particular sectors are likely to see the greatest effect in terms of pricing?

Although the Great Recession had a devastating effect on setting the stage for overcapacity in shipping and dangerously low shipping costs, the recent 40-percent jump as measured by the Baltic Dry Index may signal major rebound acceleration.

Some economists point out that the sharp fall in the index between May and December of 2008 was among the key indicators in the great recession. Few can determine if this sudden spike is driven by demand, a fall in ship supply, or other causes.

The Baltic Dry, which is a composite of costs across all major shipping routes, is issued daily by the London-based Baltic Exchange and provides “an assessment of the price of moving the major raw materials by sea.” Some investment and world market experts are cautiously optimistic about this sudden rise being an indicator of a stronger global economic recovery. In addition, there is speculation that Russia’s inability to import key goods from the E.U., thereby forcing acquisitions from further afield, is at least a partial source of causality.

Although this jump in costs and its tie to demand bodes well for container shipping companies worldwide, many are wondering how it will affect those within the Jones Act market. The Jones Act sets the terms for shipping to and from America’s non-contiguous states as well as areas like Puerto Rico and the Dominican Republic. So far, there seems to be little if any indication that shipping to Puerto Rico will come with any significant cost increases.

While the same holds true for Dominican shipping, both areas are likely to affect major cargo shipping interests rather than individuals. This can be seen with brokers and other large auto transporters verses individuals shipping a car to Puerto Rico or the Dominican Republic.

At least one major container shipping organization, Transpacific Stabilization Agreement (TSA), is urging fleet owners to raise rates by as much as 14 percent based on strong cargo demand. TSA is a lobby group for operators between the U.S. and Asia, and includes major container shipping lines such as Denmark's Maersk Line, Switzerland-based Mediterranean Shipping Company, China's COSCO Shipping and Korea's Hanjin Shipping.

Despite the fact that a sustained demand will benefit the health of container shipping companies overall, the cost for shipping to Puerto Rico as well as Dominican Shipping are unlikely to hamper those individuals shipping a car to Puerto Rico or the Dominican Republic in terms of any noticeable cost increases.

Trailer Bridge, Inc. is headquartered in Jacksonville, FL and offers cargo transportation and logisticalservices to and from North America, Puerto Rico and the Dominican Republic. Trailer Bridge vessels offer versatility to the trade and are capable of carrying a wide range of diverse cargoes. Company operations are ISO 9001, ISO 1400 certified. Trailer Bridge was founded in 1991 by the legendary Malcom P. McLean, the universally recognized “Father of Containerization.” Mr. McLean was honored by Forbes Magazine as one of the ten outstanding innovators of the twentieth century. He has also been described as “one of the few men who changed the world.”

This post first appeared on Trailer Bridge: The Bridge, please read the originial post: here

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Shipping Costs – The Baltic Dry Daily Index


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