While demand for some types of vessels remains strong, the companies which comprise SEA's portfolio own and contract a broad range of ships, making the fund vulnerable to the recent draught.
Companies at the top of SEA's roster, like Seaspan (SSW), Teekay Tank (TNK), General Maritime (GMR) and Euronav (EURN), face a difficult climate in the wake of the global economic crisis as ready fleets outstrip demand in many sections of the industry.
SEA's underlying portfolio includes shipping companies that derive more than 80% of their revenues from one of the following segments of the shipping industry: the seaborne transport of dry bulk goods and the leasing and/or operating of tanker ships, container ships, specialty chemical ships and ships that transport liquid natural gas or dry bulk goods.Strong demand for raw materials like steel has helped to keep bulk ships busy, but a drop in buyers of finished goods is keeping container ships stuck in harbors. According to a recent New York Times article, one tenth of the world's container ships are estimated to be idle. Empty ships are clogging international ports as commercial vessels sit idle -- a trend that has not been missed by industry insiders. A recent report from the Baltic and International Maritime Council, an independent international shipping association, noted that, "the sheer number of ships currently swinging around their anchors either waiting to load or discharge throughout the month of January has been exceptional."
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