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The Baltic Dry Index (BDI) is a daily average of prices for shipping major raw materials issued by the London-based Baltic Exchange, which traces its origins back to 1744. Since its inception in 1985, BDI measures international shipping rates for dry bulk goods such as iron ore, coal, grains, cement, sand, gravel, fertiliser, copper, etc. On May 20, 2008 the index reached its record high of 11,793 points, the highest since its inception. On December 5, 2008 the index plummeted to 663, the lowest since 1986. The fall represented a 94 per cent crash.

There are reasons for the world to take note of this relatively obscure economic indicator. First of all, while most indicators on which the market relies to forecast the future base their research on information that is weeks and months old, the BDI is current. Each day the Baltic Dry Exchange tracks hundreds of brokers around the world for price quotes on transporting goods, and aggregates them to form the BDI. The index therefore is a real-time reflection of the relations between supply and demand.

Second, since the BDI tracks the cost of shipping raw materials (as opposed to intermediate or finished goods) which are the precursors of economic output, it provides a rather precise measurement of the volume of global trade at the earliest possible stage. And since global economic activity at the end of the day influences the equity markets, movements in the BDI often predict or precede similar moves in the equity markets. The BDI started dropping drastically in early June 2008, before the global equity markets went into a tailspin.

Third, unlike most economic indexes, the BDI is completely devoid of speculative elements. No one will book an ocean freighter on a hunch. There is no room for manipulative or "massaged" data. The price is the price.

On January 21 the number of idle container-ships rose to a historic high of 225, or 5.5 per cent of the global fleet. On January 13 shipping rates hit the big zero as trade sank. Freight rates for containers shipped from Asia to Europe fell to zero - the first time since tracking began over two decades ago. The fall underscores the dramatic collapse in world trade, which represents a significant window of opportunity for the recovery of world economies. The dire prospects in the banking sector around the world means a scarcity of credit, which means a reduction in the availability of letters of credit required to load cargoes. This, in combination with the high debt load for future ship construction and the collapsing prices of raw commodities, is the making of a perfect storm for world commerce.

If past is prologue, we all have reason to feel dread. The Great Depression in the US in the 1930s led to the New Deal, which saw a huge injection of government funding into the economy along Keynesian lines. It also witnessed a rise in protectionism. President Roosevelt, to an extent, was able to stabilise the financial sector with the federal spending programmes, but the New Deal also necessitated higher tariffs to protect the US economy. Ultimately, Roosevelt was not able to resuscitate world trade until World War II. Economic dissatisfaction tends to breed war.

Prior to and during the Great Depression, there were several pieces of legislation passed by the US congress that led to rising protectionism. The Smoot Hawley Tariff Act of 1930, which managed to raise tariffs on imported items by as much as 50 per cent, and the Reciprocal Trade Agreement Act of 1934 were two factors that contributed to the deepening of the depression. The thinking at that time was that the protection measures for the US economy should at least equal the difference in the cost of production at home and aboard.

And didn't we just hear the uncharacteristically stern warning from the US Treasury Secretary Timothy Geithner about Beijing's practice of keeping the yuan artificially weak against the dollar to gain an advantage in international trade? Geithner's tough words, if followed by action, could renew economic and trade tension between two of the world's most important economies. Will it be the opening of an economic Pandora's Box?

The complexity of the intertwining interests of the US and China cannot be overstated. Given its relatively low savings rate, the US economy depends heavily on capital inflows from foreign countries with high savings rates (such as China) to help promote growth and to fund the federal budget deficit. Over recent years, China has invested a large share of its foreign exchange revenue in US securities and is now the second-largest foreign holder of US securities after Japan. These securities include Treasury debt, US agency debt, US corporate debt, and US equities. If the tension between the two giants gets out of hand, what becomes of the international trade landscape could be everybody's worst nightmare.

As for Thailand, we are a country that relies heavily on the free flow of international trade. Currently, exports make up about 65 per cent of our GDP. If we add trade in service to the mix, the figure rises to about 71 per cent. We can try our mightiest to revive the economy by stimulating domestic consumption, but in the end trade holds the key to a real and sustainable recovery. If the Baltic Dry Index tells us anything, it is that very stormy seas lie ahead of us.

Does not it make sense then for all of us Thais to put aside our differences, stop all the petty bickering, learn to respect one another, roll up our sleeves and get to work TOGETHER? We are on the same boat and will sink or sail as one. At risk is our shared destiny and our common future.