The Effects of Exogenous Shocks on the Baltic Dry Index

ანოტაცია

This study examines the movements of the Baltic Dry Index (BDI) during periods of major exogenous shocks of different origins in the dry bulk shipping market. The research is framed within the context of the fragility of international supply chains, the sensitivity of freight markets to supply-demand imbalances, and the critical role of maritime transport in global trade. The study focuses on four major exogenous shocks that coincided with periods of significant volatility in freight market conditions: the COVID-19 pandemic, the grounding of the Ever Given in the Suez Canal, the Russia-Ukraine War, and attacks on commercial vessels in the Red Sea. The COVID-19 pandemic disrupted port operations, reduced vessel availability, slowed logistics processes, and increased volatility in freight rates. The Ever-Given incident caused a six-day blockage in the Suez Canal, disrupting global maritime traffic, extending delivery times, and increasing costs on certain routes. The Russia-Ukraine War has heightened uncertainty in global supply chains, particularly regarding grain and energy transportation, and has been associated with higher volatility in the freight market. Similarly, attacks on commercial vessels in the Red Sea have highlighted maritime security risks and led to route changes. These events provide a comparative framework for explaining how different exogenous shocks were reflected in dry bulk freight market conditions. The study evaluates BDI movements through graphical comparisons and descriptive statistics cantered around the selected shock dates. The findings are interpreted as evidence of the temporal relationship between exogenous shocks and BDI movements rather than definitive causal effects.