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NEW YORK (TheStreet) -- The volatility has dried up. The trading volumes have plunged. The money has fled.

A fleet of formerly high-beta dry-bulk shipping stocks have entered the doldrums. From


(DRYS) - Get DryShips Inc. Report


Excel Maritime



Eagle Bulk Shipping

(EGLE) - Get Eagle Bulk Shipping Inc Report


Genco Shipping & Trading

(GNK) - Get Genco Shipping & Trading Ltd Report

, maritime transporters of dry cargoes such as iron ore, coal and grain have seen investors decamp from the sector over the last year, even as demand and prices for those commodities have themselves surged.

The irony is not lost on those involved in the trade.

"Nobody cares about shipping," says one hedge-fund manager, dejectedly. A native of Greece, he specializes in trading maritime equities. "It's like a forgotten industry. Nobody wants to touch it. It's actually kind of worrisome."

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It's easy to see why. For two years now, industry observers have been sounding the alarms and raising the semaphores about a coming glut of new vessels. Back in the boom times of 2007 and 2008, ship owners were flush with cash as demand for raw materials exploded (especially from China). Borrowing costs, meanwhile, fell to historic lows. And, seduced once again by all that easy money, shipping executives behaved like U.S. homebuyers and binged at the shipyard, ordering thousands of new ships. It's an ancient story -- the cycle of the shipping industry. "Owners always do this," says Jeffrey Landsberg, who runs the dry-bulk analytics shop Commodore Research, in New York.

The craze was especially vigorous among Capesize vessels, the largest dry bulkers on the high seas, more than 1,000 feet long and so big they can't fit through the canals of Suez and Panama and must therefore circumnavigate the famous southern capes of Africa and South America (Good Hope and Horn, respectively).

That's because "Capes" (as they're called by insiders), are the hauler of choice for iron ore, and -- in good times at least -- service the most lucrative cargoes and routes, because they're responsible for feeding China's dynamically growing steelmaking industry.

But even Chinese demand hasn't been able to absorb all the cargo space ordered up by ship owners with dollar signs in their eyes back in 2008.

By almost all accounts, the glut has arrived. Last year, about 210 new Capes were delivered. By comparison, 115 emerged from shipyards in 2009. In the several years before that, the annual number of new Capes came to between 40 and 60. Since 2009, the global Capesize fleet has grown by 18%.

The rates at which iron-ore miners hire out Capesize ships slowly eased lower throughout 2010, a decline that sharpened in the final months of the year, moving from about $40,000 per day in early November to $20,000 as of Jan. 3.

Then, just last week, the cliff head was reached. The going charter price for a Capesize vessel on the spot market plunged by 50% over the space of a few days, as judged by the Baltic Exchange, a London ship broker that tracks maritime freight rates. The going rate as of Tuesday, Jan. 11, was less than $12,000 a day -- very close to the amount it takes to operate a Capesize ship, and the lowest since early 2009, in the midst of the financial crisis.

It was as if a switch had been flipped. Of course, epochal floods in Australia's Queensland state have disrupted mining in one of the world's most prolific coal fields, which has hurt the dry-bulk trade at large. But coal is mostly carried by smaller Panamax and Supramax ships, not Capes. Indeed, the glut in the latter class of vessel has been so strong that Capes are now the cheapest dry bulk carriers to rent on the spot market except one: the Handysize, which are one-tenth as big as Capes.

Another 200 Capes are scheduled for delivery across the year -- which isn't good, not by any means. Still, most publicly traded dry-cargo shipping companies have insulated themselves to some degree from the fluctuations of the spot market, having locked their fleets into long-term contracts with raw materials suppliers. Thus, the spot-market plunge won't ruin profits at most companies.

Owners also have taken countermeasures. They're removing ships from service, either mothballing them or selling the oldest ones for scrap. But no one believes that scrapping alone will cull the fleet enough to assuage the impact of all those new ships. "Rates are going to be under pressure all year," says Commodore Research analyst Landsberg. "I'm not optimistic."

Still, as far as share prices go for 2011, encouraging signs do exist. For one thing, some industry watchers say, dry bulk stocks-- though they've certainly performed poorly -- have held relatively steady in the face of the collapse in freight rates. Even the company with the fleet most exposed to spot rates -- Genco Shipping & Trading -- has seen its stock hang above $14 since the bad news began late last year.

Some of the effects of the glut, in other words, have already been priced into dry-bulk stocks.

Further, the latest trading in the derivatives called Forward Freight Assessments, or FFAs, indicates that Capesize day rates will average $21,000 in the second quarter of the year. Once again, that's not good. But rates that double from here could give a bit of a lift to stocks in the sector.

But what of the individual dry-bulk companies themselves -- and their stocks? And what of their fate in the coming year? Click on for the outlook for dry-bulk shippers in 2011...


P/E Ratio: 25.45

Company Profile

Is DryShips even a dry-bulk carrier? Some argue that it isn't, what with its push into the oil-rig business and its recent controversial acquisition of a dozen oil-tanker orders, allegedly unloaded onto DryShips by its CEO, George Economou, who controls a private fleet. (The company has denied the allegation.) DryShips promises to reward shareholders by spinning off the two fleets (rigs, tankers) into two separate companies. But tanker market fundamentals are abysmal, and the most-recent shipping IPOs have been duds.

Income Statement

DryShips hasn't set a date for its fourth-quarter earnings report. Wall Street analysts are targeting a bottom line of 25 cents a share on revenue of $220 million. That would mark improvement over the fourth period of 2009, when the company earned 19 cents a share, on revenue of $193 million.

Analyst Ratings

Sentiment among the nine analysts covering DryShips is evenly split between bears and bulls. Four analyst rate the stock at the equivalent of strong buy and four at hold. One analyst, meanwhile, has a strong sell rating on the stock.

Diana Shipping

P/E Ratio: 8.01

Company Profile

Praised for its conservatism and balance-sheet caution in an industry not otherwise known for such things, Diana Shipping has moved into the only sector of the broader maritime shipping industry that has performed well: container ships. After an even more disastrous run amid the financial crisis than either dry bulk or oil tankers, container shipping has rebounded strongly throughout 2010 as trade in finished goods around the globe has improved with the end of the recession. Diana plans to offer 80% of the container fleet later this month, on Jan. 18, to shareholders of record Jan. 3.

Income Statement

For fourth-quarter earnings, analysts expect Diana to post 41 cents a share. Revenue is forecast at about $70 million. A year ago, Diana earned 34 cents a share, on revenue of $57 million.

Analyst Ratings

Diana is well liked by Wall Street. Of the 14 analysts covering the company, 12, or 86%, have strong buy ratings on the stock. Just two have hold ratings.

Excel Maritime

P/E Ratio: 1.67

Company Profile

Judging by the trailing 12-month price-to-earnings ratio, Excel Maritime stock is the cheapest in the sector. The company, along with DryShips, has been one of the more volatile names in the sector in its history as a public name. But Excel has been striving to pay down debt it took on after ill-timed ship acquisition back in 2008, on the cusp of the financial crisis.

Income Statement

Analysts are looking for Excel to report 17 cents a share for the fourth quarter, on revenue of $107 million. A year ago, the company earned 95 cents a share on revenue of $103 million.

Analyst Ratings

The eight analysts covering Excel are evenly split. Half have strong buy ratings and the other half holds.

Genco Shipping & Trading

P/E Ratio: 3.33

Company Profile

Genco made an epic bet this past summer when it acquired 13 dry bulk ships for about a half-billion dollars. Even at the time, the move was seen as highly risky, like buying a call option on the Baltic Dry Index. Combined with the company's heavy exposure to the spot market, it's easy to see why Genco's shares have underperformed even its peers among the bulkers.

Though the moves haven't paid off, at least they don't threaten to sink the whole company. Genco's sister shipping company, the tanker operator

General Maritime


, may have problems in the future, some market participants warn, after it made a big tanker acquisition last year.

Income Statement

The Wall Street forecast for Genco's fourth quarter is calling for a profit of $1.04 a share, on revenue of $130 million. In the fourth period of 2009, Genco earned $1.13 a share, on revenue of $96 million.

Analyst Ratings

Of the 12 analysts covering Genco, nine rate the company at strong buy. Three have holds opinions on the stock.

-- Written by Scott Eden in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.