Dry bulk ship
Workers (L) use a mobile crane as they paint the container ship 'Atlantic Bridge' in a dry-dock at Blohm + Voss shipyard in Hamburg.
Reuters/Christian Charisius
It's one of the most widely used indexes to measure global trade - and is often tied to global economic growth.

And today, it's at one of its lowest levels ever. It's up 109 percent since bottoming this past February… but is still 9 percent below its previous lowest levels of December 2008 - during the worst depths of the global economic crisis. And it's down 95 percent from its all-time highs of May 2008.

I'm talking about the Baltic Dry Index (BDI).

The BDI is a measure of world trade. It measures the prices to ship raw materials like coal, oil, grain and copper.

We recently highlighted why it's a key index to follow in measuring China's economy - because China is a major buyer of the raw materials cargo ships carry.

We also showed how shipping prices are so low that in December you could have rented a 168-metre cargo ship, which is big enough to transport 10,000 elephants, for less than what you would pay to stay in Singapore's Ritz-Carlton hotel for a single night.

Analysts looking for a recovery in this index shouldn't hold their breath, though.

You see, in a classic boom-bust cycle mistake, shipping companies ordered a huge number of cargo ships at the height of the commodity boom in 2011.

Demand then proceeded to collapse. Commodity prices - as measured by S&P's GSCI Total Return Index - fell by 59 percent over the next four years.

The BDI collapsed alongside commodity prices. After all, if the thing you're transporting is worth nearly 60 percent less, the price that you're prepared to pay to transport it is going to fall by about as much.

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Today, there are hundreds of cargo ships sitting idle…waiting to be used. There simply isn't enough demand. And rather than make nothing on their ships, a lot of shipping companies operate their ships at a loss (making some revenue is better than making no revenue at all).

But the world's shippers aren't waiting for the cargo ships (supply) to be used. Instead, they're building even more ships (adding more supply). In 2014, management consulting firm Boston Consulting Group reported that global shipping capacity would rise another 30 percent by 2019. The orders for these new ships were lodged when demand was booming - and building them takes years.

Meanwhile, China's economy is in a state of transition, as we've written about before. China's economy is becoming more service oriented (like those of the U.S. and Europe), and it's moving away from being the world's low-end manufacturing sweatshop.

Countries with lower labour costs, like Bangladesh and Vietnam and many other countries, are assuming that role. Of course, China will continue to be a major production centre for decades to come, but it will increasingly move towards more value-added goods (like electronics and machinery - rather than t-shirts and cheap plastic kitchenware), while services will become increasingly important.

China becoming more service-oriented will put a major lid on the demand for commodities. In total, China accounts for more than half of the world's demand for commodities. This includes 57 percent of the world's concrete, 54 percent of the world's aluminum, 48 percent of copper and 45 percent of its steel. Growth in China's demand for commodities, though, will only slow as its economy changes.

The excess supply of cargo ships - and China converting its economy to be more service-based - will keep the BDI lower for years. So, investors holding their breath for a recovery by the BDI to its 2007 peak are going to be disappointed.

And anyone pointing to the poor performance of the BDI and concluding that the global economy is sick is missing the point. The BDI doesn't have to return to record levels to see the global economy grow. Meanwhile, shipping companies like New York-listed Scorpio Bulkers, Genco Shipping & Trading and Eagle Bulk Shipping are going to continue to suffer.