Maybe some good news for supply chain costs

Published: 24 January 2022

With rising inflation some might worry about where the economy is heading. At 5.4% in December inflation is scarily high, and is the highest for almost 30 years.

National Insurance is about to increase, and as of this morning (24 January 2022) we learn that Nato is putting forces on standby and deploying additional ships and fighter jets to eastern Europe as Britain begins to withdraw some of its embassy staff from Ukraine. 

With all of that happening, I though it might be nice to draw out a positive, and that come in the form of the Baltic Dry Index. What is that you may ask...

The Baltic Dry Index is reported daily by the Baltic Exchange in London. The index provides a benchmark for the price of moving the major raw materials by sea. The index is a composite of three sub-indices that measure different sizes of dry bulk carriers: Capesize, which typically transport iron ore or coal cargoes of about 150,000 tonnes; Panamax, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes; and Supramax, with a carrying capacity between 48,000 and 60,000 tonnes. The Baltic Dry Index takes into account 23 different shipping routes carrying coal, iron ore, grains and many other commodities.

The following chart shows that has now been dropping for 11 days in a row: -

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Whilst not nailed on, some see this index as a proxy for what might be the efficiency and hence cost of supply chains. It might mean that the worst is over.

Fingers crossed!