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Dry Bulk Freight Rate Forecast

Optimize operational, financial and freight strategies through an analytics-driven forecast

IHS Markit Freight Rate Forecast provides clients with an analytics-driven and unbiased view of the freight market, helping clients to find clarity in a volatile environment. Built in agreement with the Baltic Exchange, our model uses over 3,000 drivers from across IHS Markit, utilizing our unique breadth and depth of knowledge to draw links between macroeconomic factors and the freight rates. With the use of machine learning and advanced analytics, the forecast is able to provide an unbiased market view that enables clients to unravel the complexities of the shipping market with ease. Our forecast provides monthly freight rate predictions for up to three years, providing clients with the analytical rationale they need to make timely and efficient decisions.

The Freight Rate Forecast offers a valuable solution that helps you:

  • Capitalize on arbitrage opportunities by identifying trade signals
  • Gain valuable insights on the capsize, panamax and supramax market dynamics
  • Make smarter decisions based on an analytical rationale
  • Optimize operational efficiency with data–driven insights
  • Understand market conditions to mitigate risk to price exposure
  • Gain a granular understanding of market behavior and trends

Key Features:

  • Freight Rate Forecast is available on the Connect platform with dynamic dashboards showing:
    • Current Model Results – Table and Chart per route
    • Relevant drivers analysis and important model parameters
    • Downloadable freight results in an excel format
  • Downloadable monthly report containing models results and drivers analysis
  • Quarterly ad-hoc analysis on industry related matters
  • Global economic reports containing critical information on major countries economies
  • Dedicated analyst support

Drivers analysis – Understand the key drivers behind each route

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Gain Insight into the Dry Bulk Market with data from our World Trade Service

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Our interactive dashboard displays forecast results in both chart and table format

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Methodology

IHS Markit uses the most advanced modelling and statistical techniques to train its models in understanding historical relationships between industry related drivers (>3,000) and Baltic’s indices.

Using various combinations of drivers and modelling techniques, a number of forecast models are built to simulate freight dynamics under different market conditions.

These models results are assessed to ensure consistency of model parameters and out of sample accuracy (target >80%). Finally, the best performing modelling frameworks are selected and updated on a monthly basis.

The table below provides an overview of some key drivers used for the Freight Rate Modelling. The drivers contain data and trends from over 40 countries and approximately 50 commodities prices and spreads.

Demand DriversSupply Drivers
  • GPD
  • Fixed Investment
  • Industrial Production
  • Production Price Index
  • Consumer Price Index
  • Retail Prices
  • Bond Yields
  • Interest Rates
  • Exchange Rates
  • Commodities Prices & Spreads
  • Trade Volume of various commodities
  • Freight Price & Spread
  • Ship Availability per region (AIS)
  • Speed and Congestion Factor (AIS)
  • Slow Steaming Ratio (AIS)
  • Bunker Price of various regions
  • Fleet Capacity (start/end year)
  • Delivery
  • Deletion
  • Fleet Growth

See how the Freight Rate Forecast could help you:

The Freight Rate Forecast provides valuable data-driven insights to help organizations gain tighter control of all areas of their business.
Enhance Trading Strategy (FFA)
  • Benchmark IHS Markit Freight Rate Forecast against Forward Freight Agreement (FFA) curve to identify trade signals and arbitrage opportunities
  • Mitigate price exposure in an increasing volatile market
  • Assess financial impacts ahead of market shifts
Optimize Operational and Commercial Strategy
  • Gain insight into short and long term market trends and shifts
  • Assess optimum portfolio and fleet mix: Understand what vessel types and routes/basins hold future profitability
  • Improve contractual and pricing strategy: Evaluate accurate time to enter or exit a contract, define contract length (Spot vs Period) and best pricing strategy (Fixed vs Index linked)
Improve risk management
  • Identify the risks arising from unexpected changes in freight rates
  • Simulate risk exposure under different market scenarios
  • Estimate future earnings of vessels to support financial decision
  • Assess risks of covenant breaches and repayment defaults
Utilize Analytics - Driven Information to Support Decision Making on Freight Market

Benchmark conventional in-house freight analysis against our data-driven model to help:

  • Research and consulting functions
    • Evaluate alternative freight scenarios
    • Understand influential macro drivers not covered within internal research
    • Provide valuable insights on freight market dynamics backed by drivers exploratory data analysis
  • Financial and investment areas:
    • Make decision related to budget process and revenue prevision
    • Cash flow, return of investment and risk management
    • Asset acquisition

Partnership

About The Baltic Exchange - The Baltic Exchange is the world’s only independent source of maritime market information for the trading and settlement of physical and derivative shipping contracts. The company has an international community of over 600 member firms, which encompasses the majority of world shipping interests, and commits to a code of business conduct encapsulated in the motto ‘Our Word, Our Bond’. Baltic Exchange information is used by shipbrokers, owners & operators, traders, financiers and charterers as a reliable and independent view of the dry and tanker markets.

Visit the Baltic Exchange Website.

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