B
Baltic Dry Index (BDI)
A daily shipping freight-cost index published by the London-based Baltic Exchange. It measures the cost to transport dry bulk commodities across 23 major shipping routes, using a weighted composite of the Capesize, Panamax, and Supramax sub-indices.
Baltic Exchange
A London-based membership organisation founded in 1744 that provides daily shipping market data, including the BDI. It is the authoritative source for global dry bulk freight rate benchmarks.
Ballast Voyage
When a vessel travels without cargo, it is said to be "in ballast." Excess ballasting — vessels repositioning without earning freight — indicates market oversupply and tends to be bearish for the BDI.
Bulk Carrier
A type of merchant vessel designed to transport unpackaged bulk cargo such as grain, coal, ore, and cement. Dry bulk carriers are the ships tracked by the Baltic Dry Index.
C
Capesize
The largest category of dry bulk vessel, typically 150,000–400,000 DWT. Too large for the Panama or Suez canals, they travel around the Cape of Good Hope or Cape Horn. Predominantly used for iron ore and coal. The Capesize component represents 40% of the BDI calculation.
C3 Route
The Baltic Exchange's key Capesize route: Tubarao (Brazil) to Qingdao (China) — the main iron ore trade corridor. C3 rate movements often lead overall BDI direction.
D
Deadweight Tonnage (DWT)
The maximum total weight a vessel can safely carry, including cargo, fuel, ballast water, crew and provisions. DWT is the primary measure of a ship's cargo-carrying capacity.
Dry Bulk
Unpackaged commodities transported in large quantities by ship — such as iron ore, coal, grain, cement, and fertilisers. Dry bulk is distinct from liquid bulk (oil, LNG) and containerised cargo.
F
Forward Freight Agreement (FFA)
A financial derivative used by shipping professionals to hedge against future freight rate movements. FFAs are settled against Baltic Exchange indices and are the primary way shipping companies manage BDI exposure.
Fixture
A concluded agreement between a shipowner and charterer for the hire of a vessel. Fixture data is used by the Baltic Exchange in calculating index rates.
H
Handysize
The smallest dry bulk vessel class, typically 25,000–40,000 DWT. Versatile and able to access smaller ports. Previously included in the BDI; removed from the calculation in March 2018. The BHSI is still published separately.
Handymax / Ultramax
Intermediate vessel sizes between Handysize and Supramax. Ultramax vessels (60,000–65,000 DWT) are the modern evolution of the Supramax class and are now the most popular vessel type in the Supramax fleet.
I
Iron Ore
The most important commodity in the BDI equation. China imports roughly 1.1 billion tonnes of iron ore per year, primarily from Australia and Brazil. Capesize vessels carry the bulk of this trade, making Chinese iron ore demand the single most influential factor in BDI movements.
L
Laycan
The "laydays/cancelling" period — the window of dates during which a vessel must be presented to the charterer for loading. Tightening laycans indicate high cargo demand and tend to be bullish for freight rates.
P
Panamax
A vessel class sized to fit through the original Panama Canal locks — typically 65,000–90,000 DWT, 225–295 metres in length. Primarily carries coal, grain and fertilisers. The BPI represents 30% of the BDI calculation.
Port Congestion
When vessels queue outside ports waiting to load or discharge. Congestion effectively removes vessels from the active fleet, tightening supply and pushing freight rates — and the BDI — higher.
S
Spot Rate
The current market rate for chartering a vessel for a single voyage, as opposed to a time charter (longer-term hire). Spot rates are more volatile and respond rapidly to market conditions.
Supramax
A vessel class of 48,000–65,000 DWT. Versatile, often equipped with onboard cranes, and able to access a wide range of ports. Carries grain, steel, fertiliser, and minor bulks. The BSI represents 30% of the BDI calculation.
T
Time Charter (TC)
An agreement in which a vessel is hired for a specific period at a fixed daily rate. The charterer pays for fuel and port costs. Time charters provide shipowners with revenue predictability and are the basis for BDI sub-index calculations.
Time Charter Equivalent (TCE)
A standardised measure of a vessel's daily earnings, calculated by deducting voyage costs (fuel, port fees) from gross voyage revenue, divided by voyage duration in days. TCE allows comparison of profitability across different routes and vessel sizes.
Ton-Mile Demand
A measure of shipping demand that accounts for both volume and distance. One ton-mile = one tonne of cargo moved one nautical mile. Longer trade routes (e.g. Brazil to China vs. Australia to China) create more ton-miles and thus more demand for vessels even with the same cargo volume.