PIRAEUS, Greece (TheStreet) -- Some New York City ferry-boat operators do more business than the tiny dry-bulk shipper FreeSeas (FREE, let alone its peers in the global freight trade, but the company nonetheless had some interesting things to say about the industry at large in its second-quarter earnings report, released Tuesday.

FreeSeas owns just nine ships, all of which are Handysize and Handymax vessels, two of the smallest classes of dry-bulk ship but also the most common in the world. (Handysizes range from 15,000 to 35,000 deadweight tons; Handymax from 35,000 to 60,000 -- miniscule when compared to the Capesize behemoths, some of which weigh in at more than 200,000 tons.)

Most of FreeSeas's peers in bulk shipping own Capesize vessels, which haul the world's iron ore to the world's steel mills, and thus play key roles in the global economy -- flush beneficiaries during the boom times, but gut-wrenched washouts when those booms go bust.

One of the worries darkening the industry's prospects of late has been a coming supply imbalance. During the most-recent boom period, in 2006 and 2007, optimistic dry-bulk shipping magnates took out high-yield loans in order to make down payments on new ship orders.

Now two years later, so many of those brand-new vessels, most of them Capesize, are about to slide down shipyard ramps -- Champagne across the bowsprit -- that many industry observers worry that this fresh supply will sink rates and any near-term prospect for full recovery in the dry-bulk trade. There have been many aggressors when it comes to fleet expansion, including all the usual suspects: DryShips ( DRYS, Eagle Bulk Shipping ( EGLE - Get Report), Excel Maritime ( EXM and Genco Shipping & Trading ( GNK - Get Report), to name a few.

But FreeSeas needn't worry about such things, according to its chief executive, Ion Varouxakis. In the company's press release announcing earnings, which missed Wall Street targets by a penny, Varouxakis said, "As opposed to other asset classes, we are witnessing a net reduction in the worldwide Handysize fleet throughout 2009."

In other words, FreeSeas' bottom line won't be hurt by the coming surge in supply (at least according to FreeSeas), while the rest of the industry, drunk on Capesize profits during the boom years, will see their already-difficult hangovers prolonged.

FreeSeas said its second-quarter net income amounted to just $560,000, or 3 cents a share, on revenue of $12.4 million. Three analysts polled by Thomson Reuters were looking, on average, for 4 cents a share, on revenue of $12.6 million.

The company, which has itself struggled with a high debt load taken on during flush times to expand its fleet, said it improved its balance sheet during the quarter by issuing new equity and reworking loan terms. FreeSeas used some of that money to buy a used Handysize called the Free Neptune for $11 million.

The company expects the Neptune to begin adding to its bottom line "immediately."

Tuesday morning, FreeSeas shares were trading at $1.63, down 8 cents, or 5%.

-- Written by Scott Eden in New York

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