The shipping industry is in quite a mess at the moment. Supertankers locked into forward freight agreements until 2013 can barely break even, and tankers such as Frontline (NYSE: FRO) and Ship Finance (NYSE: SFL) are finding it hard to sustain themselves. As the U.S. finds more and more oil domestically, there's been a reduced need for tankers to ship oil from the Middle East. Thus, the outlook for tankers looks quite bleak.

Fellow Fool Rich Duprey pointed out that the glut in the oil tanker industry has spread to the dry bulk market as well. Dry bulk shippers such as Diana Shipping (NYSE: DSX) and DryShips (Nasdaq: DRYS) took a hit in their most recent quarters. DryShips' third-quarter earnings tanked by nearly 57%, whereas Diana's sunk 22%. Diana's earnings fell as it made less from leasing out its ships, but yet results beat analysts' expectations. Let's dive into Diana's third quarter.

Lower rates, falling numbers
Lower rates paid for Diana's vessels coupled with the deconsolidation of Diana Containerships resulted in total revenues for the quarter, falling 10% to $64.6 million. Diana added two new vessels -- Alcmene in November 2010 and Arethusa in July 2011. These two ships helped offset lower revenues by increasing the number of ownership days, which helped to partially compensate for the fall in time charter revenues. Lower revenues helped the company's earnings dip by 22% to $26.4 million.

Fleeting up
Diana said that fixed revenue days for 2011 are 100% full -- whereas that for 2012 is 79% full. But low rates will continue to hammer the company's top line. Diana has been looking to expand its fleet. It recently bought a Panamax dry bulk carrier for $32.2 million with a capacity of 81,297 dead weight tonnage. For further buys, Diana will wait for industry conditions to improve and then in an "orderly manner" go on the hunt.

The Foolish takeaway
The supply-demand imbalance in the economy is Diana's biggest problem at the moment. There is lower demand due to global economic uncertainty and the crisis in Europe, and Diana is heavily dependent on China and other BRIC countries for demand. Though it doesn't look too promising, we'll have to wait and see what the future holds for the Greek dry bulk shipper. To follow Diana as it tries to steer through rough waters, add the stock to My Watchlist.