The “collapse” in the index is due to the Chinese building too many ships. Those ships are all chasing a mildly reduced amount of traffic. In effect, they’ve built the equivalent of their ghost cities to ply the ocean waves.
The Chinese are trying to dominate the container market with these mega ships. This reminds me very much of the speculative boom in Very Large Crude Carriers before all of that collapsed.
Scrap Yards will be busy with a lot of older inefficient ships taken out of service
Collapse of the price is indeed because off too much capacity. Look at the unit movement it is also in a serious down trend.
From Wiki.....
The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides “an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.”[1]
Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).