The Baltic Dry Index an economic indicator in shipping: a quantitative analysis

Αναγνωστάκη, Χριστιάνα Κ.

Master Thesis

Author

Αναγνωστάκη, Χριστιάνα Κ.

Date

2012-06-06

Abstract

Although, Baltic Dry Index (BDI) is considered as a leading indicator in Shipping, few economists claim that this may not be the case. The main aim of this paper is to investigate this relationship by using regression analysis, examining the correlation of the dependent variable "Index" with set of economic measurements. The Index shows the everyday weighted average of main routes of all type of Bulker vessels, as a result of fixtures, supply/demand by ship owners and charterers, mirroring owner's final decision, the rate that vessel was chartered. Even though, Index may not be an accurate measurement, it sets the bottom line of what freight a ship-owner should ask for. Therefore, it is crucial to identify and check the factors that affect presently the index, developing also new variables that could probably support more or less this study. Several models will be created in order to find the relation between these factors and the index. However, even if we fail to get a clear high correlated outcome, we will automatically prove the great volatility of the Shipping industry. It is extremely difficult to find all these factors influencing the shipping market, a fact that may be considered as a limitation of the study.