This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dry Bulk Shipping Rates Surge

NEW YORK ( TheStreet) -- The going rate for some of the biggest cargo ships in the world -- the so-called Capesize vessels charged for the most part with hauling iron ore to China -- spent most of 2010 in a muted, depressed range, a situation that most industry players attributed to a revolution in the way iron ore is bought, with dry-bulk shippers caught in the middle.

And then suddenly, over the last several days, Capesize rates have surged.

According to the Baltic Exchange, a London ship broker that tracks the nautical freight business, the day rate on the spot market for these giant vessels went from about $26,000 at the start of last week to more than $38,000 on Wednesday -- a jump of almost 50%.

Dry-bulk stocks, meanwhile, have for the most part fluctuated along with the broader market. Shares of DryShips (DRYS - Get Report), for example, which has had its own issues with equity dilution, are basically flat with where they were last week, trading on Wednesday midday at $6. DryShips also has no exposure to the spot market, having locked 100% of its fleet into long-term charter contracts. Genko Shipping & Trading (GNK - Get Report), on the other hand, with 30% of its fleet on the spot market -- rather high for the publicly traded segment of the industry -- has seen its share price gain nearly 4% on Wednesday.

For Capesize ships, such volatile rate gyrations aren't unheard of, since the bigger the ship, the more prone their spot rates are to such swings. The same holds true for Very Large Crude Carriers, which have also experience a significant rally of late.

And, yet, it appears as though fundamentals of supply-demand have at least momentarily swung in favor of ship owners, who each day enter into a kind of battle with the other side: the commodities traders or industrial raw materials consumers who need to put the cargo on a boat and bring it home. The battle is refereed by ship brokers, the middlemen inside offices in London or Hong Kong. With phones shouldered to their ears eight hours a day, the brokers talk with owners on one line and the ship hirers on the other, dickering and haggling, playing it cool or going aggressive, as the situation warrants.

On Monday alone, the Capesize rate on the spot market jumped 20%.

More on Dry Bulk Shippers
Five Dry-Bulk Shipping Stocks to Watch

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
EXM $0.00 0.00%
GNK $0.00 0.00%
EGLE $10.57 0.00%
BALT $1.52 1.33%
DSX $6.89 -0.29%


DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs