The credit crisis meant short-term debt, a critical part of the shipping industry, was unavailable. Companies with goods to transport use letters of credit, with the goods themselves as collateral, to pay for the shipping - but with the credit crisis this credit became unavailable and shipping demand tanked.
The Baltic Exchange implements new index metric based on average timecharter rates from four equally.rated components (capesize, panamax, supramax and handysize).
The Markets have left dry bulk shippers at a stand still and prices at their lowest levels in years. The index has plummeted due to the financial turmoil on international markets, falling commodity prices and fears that Asian demand will falter. Some shippers and analysts have noted that letters of credit -- bank guarantees on behalf of buyers that are given to exporters and which are an important aspect of global trade -- have become scarce, leaving some cargoes stranded.
