NEW YORK (TheStreet) -- Of the many industries that foundered during the Great Recession, few others sank like the shipping sector. The exchange-traded fund for the group, Guggenheim Shipping (SEA), dipped under $14 a share in November 2011 from over $26 in August 2008. At present, the SEA has rebounded to around $21.45.
It is much the same with many of the individual stocks in the industry.
Star Bulk Carriers (SBLK), FreeSeas (FREE), NewLead Holdings (NEWL), Seanergy Maritime Holdings (SHIP) and Eagle Bulk Shipping (EGLE) all plunged as a "perfect storm" of adverse conditions swamped the group. In the global boom before the financial crisis in 2008, shippers overbuilt, which took on a great deal of debt. Then when demand dried up due to recessionary factors around the world, shipping rates sank. Stock prices fell dramatically for shipping companies due to sinking incomes and a cargo full of debt.
But the sector is recovering, as the Baltic Dry Index, a daily measure of cargo rates for goods such as coal and steel, is up more than 50% from its low in October.That has resulted from the economic rebound of the United States and China. Recent articles here reviewed how both China and the United States are buying and selling more in trade with other countries. That requires ships to carry the goods over the waters. From that demand, the companies book more earnings which should eventually take the stock price higher. This has certainly been the case for recent market action as, over the last week, Seanergy Maritime Holdings has risen nearly 48% to $2.10 a share; Eagle Bulk Shipping has surged more than 39% to around $4.35 a share; Star Bulk Carriers is up more than 17% for the last month to around $13.10 a share; NewLead is higher by more than 53% to about $1.80; and FreeSeas has risen over 100% to the $2.50 range.