Integrated GRA with Entropy Method to Evaluate Factors Affecting Baltic Dry Index

The International bulk shipping industry is a perfect competition market so freight rates are volatile, and influenced by unpredictable factors. Better understanding the influences on freight rates can reduce the operational risk to shipping companies. In the paper, we investigate the influence of the Baltic Dry Index (BDI) on the bulk shipping industry from the demand prospective. The paper integrates Grey Relational Analysis (GRA) with the Entropy method to construct a composite index combination, and then analyzes how this composite index influences the industry. The empirical results indicate that the fluctuation of international steel prices is most closely correlated with the BDI index, followed by fuel prices, grain prices, and coal prices. The conclusion has a beneficial guidance for decision-making in the bulk shipping industry.