MarketsFarm — Ocean freight rates have shown steady gains over the past month, rising to some of their highest levels of 2020 as world economies show signs of recovery amid the COVID-19 pandemic.
The Baltic Dry Index (BDI), a major indicator of shipping rates, has moved higher for 12 straight sessions, hitting 973 points on Monday. That compares with the four-year low of 393 points in mid-May.
The BDI is compiled by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea. The overall BDI includes sub-sectors for the different classes of ocean vessels including capesize, panamax and supramax.
The panamax index tracks the 60,000- to 70,000 tonne-capacity vessels that often carry grain or coal. It was pegged Monday at 884 points, roughly double its lows of a month ago.
While rising freight rates may be a sign increased optimism in the global financial markets, they can also put pressure on Canadian grain exports. Canada is at a freight disadvantage compared to its competitors into some markets, and higher rates make that disadvantage more pronounced.