Spud decides to look at the Baltic Dry:
The pattern of increase in September 2021 was not as marked as that pre the 2008 crash, but it is consistent with it, especially as in the past week the trend in the index has been heavily downward, matching other key price falls noted by my colleague Danny Blanchflower in things like lumber and the collapse in the wholesale price of gas in the UK, which is not being reflected in household supply prices.
So what does the Baltic Dry Index measure? It is a measure of the cost of carrying various bulk cargoes, such as coal and steel. It is run by the Baltic Exchange in London, where such trades are made, and it has fallen near enough 20% in a week.
There are three explanations. One is that the supply shortages that forced the index up in 2021 have been resolved.
Second, supply chains are now orderly again, so pre-booking is possible, resulting in a more orderly market.
Third, demand for raw materials is falling as the economy slows.
All three are possible, simultaneously. In fact, I think that is likely.
It’s just that the shipping problem has been in containers. Which are not part of the Baltic Dry.
Sigh.
I did have the mad thought that he communes with the dead, having an ex footballer as a colleague…