The earlier lowest point was 554 in the August of 1986.
Baltic Dry Index (BDI), the measure of the freight costs of shipping, has fallen to its lowest point in 30 years on the back of the imminent economic slowdown in China.
According to Bloomberg data, on Tuesday, BDI dropped another 1.15% to close at 516 points. The index has already fallen over 34% year-to-date and nearly 55% over the past year.
The earlier lowest point was 554 in the August of 1986.
The global commodity trade is dominated by Chinese imports of key raw materials like coal and iron ore. In the wake of the slowdown in Chinese economy, the demand for these raw materials is falling and the cargo ships are running idle, leading to the fall , or freight rates.
Various reports ranging from International Monetary Fund to the World Bank, the Chinese economy is slowing down.
In January this month, China posted its weakest annual growth rates in 24 years.
The country even missed the official target and grew by only 7.4% last year. In the year before last, Chinese economy expanded by 7.7%.
The effect of this Chinese slowdown has impacted its international trade as well.
Its exports in January fell by over 3% and imports nosedived by 20%.
It is this fall in imports that is putting pressure on freight rates across the world and the subsequent fall in BDI.
Between its imports of iron and coal, China commands over 50% of the world's demand for these two raw materials.
According to this report, the fall in Chinese imports is steepest since the economic slowdown of 2009.
Another reason for this fall in BDI is excess shipping capacity.
Shipping companies across the world went on a buying spree in wake of ever increase Chinese appetite for raw materials to fuel its economy.
However, the global economic slowdown of the past decade reversed the trend. The result was the fall in commodity prices because of lack of demand. Shipping companies, who were adding capacity at a fast pace to handle the growing demand were suddenly sitting with huge debts and idle ships.
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