The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, hit a near four-month low on Monday due to weak demand for vessel charters.
The index, which reflects rates for capesize, panamax and supramax vessels, fell 27 points, or 1.9%, to 1,380, its lowest level since September 21. The capesize index fell 53 points, or 3.3%, to 1,541, while the panamax index fell 5 points to 1,260.
The decline in the Baltic index comes amid a slowdown in global trade and a surplus of vessels, which has led to a drop in charter rates. The COVID-19 pandemic and the resulting economic downturn have also contributed to the weak demand for vessel charters.
Despite the challenges facing the shipping industry, there are some signs of recovery on the horizon. The IMO’s recent decision to reduce the sulfur limit for marine fuels from 3.5% to 0.5% from January 1, 2020, is expected to boost demand for vessels as companies look to comply with the new regulations.
Overall, while the current outlook for the shipping industry remains uncertain, the longer-term prospects are more positive as the demand for goods and commodities continues to grow.