The main driver of the 2005-09 surge in the BDI was linked to commodity prices, particularly oil. The index then plummeted back to historical levels and has remained weak. Many ships that were ordered during the "bubble years" have entered the market, providing capacity growth above demand growth. Bunker fuel accounts for about 40% of vessel operating costs with limited opportunities to mitigate them. Thus, a surge in oil prices is directly reflected in shipping rates, and if energy prices drop, the BDI can also drop. Source
Always provocative is Stephen Colbert and his guest last night was Elon Musk (Youtube not available in Canada, but here is Elon unveiling the New Version of the All-Wheel-Drive Tesla Model S with dual drive and auto pilot: Video From Bloomberg TV Oct 10, 2014).
The disrupters are innovation (Musk etal), a rising supply of energy (U.S. fracking & China's solar panel ramp up) and the strengthening U.S. Dollar. If you are making a leveraged bet on continuing price rises in Calgary housing, it would be prudent to match your amortization to your wage earning contract. A sudden shift down in tar sand grade demand would force the weak hands to sell their real estate. The collapse in the BDI is due to the real price of oil dropping, an over supply in vessels, a strengthening of the U.S. Dollar, a global trade slowdown and disruption via innovation as an old generation gets replaced with the new.
1980 Oil peaked at US$35 per barrel ($100 per barrel today) Source
1986 Oil dropped from US$27 to below $10 ($58 to $22 today)
1986 Average U.S. Inflation was 1.9% Source
2014 Average U.S. Inflation is 1.7% Source
1.00 2014 US Dollar = 0.54 1986 US Dollars (using GDP Defaltor)
1.00 2014 US Dollar = 0.47 1986 US Dollars (using CPI Defaltor)
US$ Index peaked at 164.72 in February of 1985 Source