Baltic Freight Index

BALTIC Freight Index (BFI) is a leading indicator of spot dry bulk cargo rates. It is not a shipping index, but an indicator of the bulk cargo market. It is calculated by the Baltic Exchange, based in London, a key market for the global shipping business.

BFI is a weighted average based on 11 international ship routes and three commodities - coal, iron ore and grain. It reflects on the freight and charter rates of these commodities on these routes. The index uses January 4, 1985 equals 1,000 as base. BFI earlier represented all freight rates for all the vessels. It was split in late 1996, to represent only Panamax vessels (70 per cent) and Capesize vessels (30 per cent) on a weighted average basis.

BFI is now used for bigger ships such as Panamax and Capesize vessels. A Panamax vessel is a vessel that is capable of navigating through the Panama Canal and has a 50,000-80,000 tonnage, while Capesize vessel means the vessel can navigate through the Cape of Good Hope and carries 1,00,000-1,30,000 tonnage.

BFI is more relevant for bigger ships and most Indian shipping companies such as the Shipping Corporation of India (SCI), Great Eastern Shipping Company (Gesco), Varun Shipping and Essar Shipping have relatively smaller-sized vessels. In India, there are only eight Panamax vessels and one Capesize vessel.