Eagle isn't alone in its exposure to Korea Line. Navios Maritime Partners ( NMM), the all-dividend shipping company, which reported results Monday, derives about 15% of its revenue from ships chartered to Korea Line, according to the shipping-equities trader.

But Navios looks to be protected from that counterparty risk. According to a spokesman for Navios, the company has the default insurance that Eagle Bulk reportedly let expire last year. The insurance covers any losses that would come from charters terminated by a bankrupt counterparty.

A glut of new ships coming into service, combined with devastating floods in a key mining region in Australia, has destabilized the market for dry-bulk ships, which haul raw materials such as iron ore, coal and grain.

According to the Baltic Exchange, day rates for a capesize ship, the biggest dry-bulk freighters in the world, fell to $8,000 on Tuesday. That means that some ships are now losing money. The cost of operating a capesize vessel comes to $7,000 to $10,000 a day, according to industry experts.

Other dry-bulk stocks sold off sharply on heavy volumes Tuesday as well.

Genco Shipping & Trading ( GNK) closed down 8% at $11.91 after Deutsche Bank downgraded the stock to hold from buy.

The bearish call was part of a larger research report released Tuesday by the firm's shipping-stock analyst, Justin Yagerman, who recommended that investors rotate money from dry-bulk stocks into oil-tanker stocks.

The analyst pointed to the obvious to explain his dry-bulk bearishness: the glut. "Chinese and Indian commodity demand will likely be unable to match the substantial fleet growth expected to deliver in 2011 and 2012," Yagerman wrote in his 48-page report on the state of the maritime shipping trade.

Genco, compared to its peers, has a larger percentage of its fleet (80% in 2011, according to Yagerman) unchartered and picking up cargoes on the spot market, thus giving the company more relative exposure to the recent collapse in shipping rates. Other publicly traded shippers have as little as none of their ships on the spot market, their entire fleets locked up into long-term contracts.

Elsewhere in the sector, Excel Maritime ( EXM) surrendered 5.3% to close at $4.65, Navios Maritime Holdings ( NM) -- the sister company of Navios Partners --dropped 6.4% to $4.80, and DryShips ( DRYS) gave up 3% to finish at $4.76.

Holding up better than the rest was Diana Shipping ( DSX); the stock closed down 1% to $11.59.

-- Written by Scott Eden in New York

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

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