Given the Baltic Dry Index’s (BDI) all-time lows of early 2016 (http://nnw.fm/7xHSF), it is no wonder that many of the key players in the heavily fragmented global dry bulk shipping market have seen some painful quarters, with only the best of breed operations able to weather the storm. Slumping demand in the sector (roughly two-thirds of which is folks transporting iron ore and coal) has been due primarily to falloff of industrial and urbanization activity in China, enhanced by factors such as China’s mounting power overcapacity. China and India are both going greener too, with aggressive emission targets on the table that have cut deeply into an already steel demand-wounded coal transport market.
Everyone has had to tighten their belts in this competitive and capital-intensive industry, including leading operators such as Diana Shipping (NYSE: DSX), DryShips (NASDAQ: DRYS), and Genco (NYSE: GNK). The reality here is that only the strongest can survive such a challenging market, and be poised to thrive when the upswing happens. The operations which are best able to adapt and keep doing lots of business through the hard times (simply surviving if they cannot really thrive at that moment), will be the success stories when the BDI heats back up, like it did in late 2013, and late 2011. The recently published 2016 edition of Koncept Analytics’ report (http://nnw.fm/Bo2i0) on the global dry bulk shipping market explains the underlying phenomenology of the sector as a the result of the industry being in a transitional phase, where the decline of China has caused a need for the primary market drivers to be redefined, and operators to evolve.
One such operator that has managed to shore up its operational footprint and even increase overall utilization during these stormy seasons is Eagle Bulk Shipping (NASDAQ: EGLE), a company which proudly boasts an impressive company-owned fleet comprised chiefly of the versatile 50,000 to 60,000 deadweight tonnage (DWT) ships of the type known as Supramax. The Supramax is an agile freighter capable of operating in regions all over the world that have small ports and length/draught restrictions. This versatility is why The Supramax class makes up the vast majority of the planet’s ocean-going cargo vessels.
Eagle Bulk Shipping has a relatively young fleet of 41 ships (http://nnw.fm/N1azj), pending execution of the memorandum signed in early August to sell the company’s 4 by 30 ton crane, 2002 Supramax, the Kittiwake for $4.2 million in net proceeds. Sale of the Kittiwake follows up nicely on the company’s previous shedding of…
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