Abstract
Despite the continuous growth of dry bulk trade volume, the profitability of bulk shipping sector has not been improved. The Baltic dry index (BDI), an indicator of the dry bulk business, hit more than 4,000 in 2010 but has tumbled down to approximately 900 recently. The bulk shipping business is still suffering in a devastating situation. Many ship owners have forced to lay up their vessels to reduce the operating loss. It is believed that the poor profitability of the dry bulk shipping market is mainly caused by the over expansion in shipping capacity. The price of commodities and the volume of seaborne trade are identified as determinants to the dramatic growth of world tonnage in the past few decades. One of the main objectives of this study is to examine the price volume relativity in the bulk shipping industry. Our findings suggest that a negative relationship between the freight rate and world tonnage exists.
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