Today's ships come stacked with electronic navigation equipment that tracks both your own vessel's position and the location of potential obstacles in your path. Just the same, the prudent mariner still makes constant use of paper charts and binoculars to double-check what the computers display.
As Thursday's computer-driven, 1,000-point decline in the Dow Jones Industrial Average demonstrates, that same prudence of human oversight is utterly lacking in the structure of today's hyper-paced equity markets.
Meanwhile, neither computers nor humans have managed to prevent the dry bulk shipping stocks from striking an iceberg as they voyage through the mounting air of caution that has descended over equities in recent days.
Most of the major names are down more around 10% this week alone, which may coincide with a growing concern that China's incredible rate of growth may not continue to track a straight line. Beyond the pain of massive share dilution that speculators in DryShips
Around the fleet in 80 seconds
Genco Shipping & Trading
Looking proactively to the eventual bottom of this painful business cycle for dry bulk shipping, Genco completed its spin-off IPO of Baltic Trading
The queen of conservatism remains, meanwhile, the fare Diana Shipping
After biding her time through the initial absorption new vessel deliveries that Diana has long foreseen creating a debilitating oversupply condition for the sector at large, the shipper finally dipped its toes into opportunistic vessel purchases beginning last December. All told, this timely growth initiative targets $500 to $700 million in asset purchases on top of a separate $50 million investment in containerships.
Last month, Diana announced a very encouraging development that I believe will further cement the company's position at the top of the dry bulk food chain. Diana has contracted the construction of two new vessels that even outsize the gigantic Capesize carriers. Forming a new category that is clearly named for the maximum tonnage capacity at the busy Australian coal export facilities at Newcastle, these "Newcastlemax" vessels sport an incredible 206,000 deadweight tonnage.
Since BHP Billiton
Eagle Bulk Shipping
At the bottom of the fleet, moored alongside DryShips on my list of unsuitable investments within the dry bulk sector, is Excel Maritime Carriers
The shipper continues to pump headline earnings with amortized charter contracts from an acquisition that occurred more than two years ago, and nearly 83% of available charter days for 2011 remain unfixed.
Setting a course for home
There will be light at the end of this persistent malaise impacting the dry bulk shipping stocks, and Diana Shipping has given investors a clue regarding timing with the tepid initiation of its opportunistic asset purchases. I encourage Fools eager to participate in the sector to exercise the same patience that Diana has shown. When Diana Shipping steps up its buying activity to approach that $500 million mark, we may just be nearer to an eventual bottom that we are today.
Furthermore, all macroeconomic eyes must remain transfixed upon China and related pan-Asian economies to telegraph whether major interruptions in recent growth trends may be in store that could exacerbate the oversupply of bulk cargo vessels and place the more leveraged operators like DryShips and Excel at potential risk once again. As Thursday's troubling blip on the Big Board reminded us, this remains a time to turn off the auto-pilot and take the wheel with attentive care.
Whatever your opinions on the prospects for the dry bulk sector, continued uninterrupted growth in China, or even the significance of Thursday's stock market free-for-all, your fellow readers look forward to gleaning your perspective. I have selected Diana Shipping to outperform the S&P 500 within my Motley Fool CAPS portfolio. Which will you choose?
Fool contributor Christopher Barker has sailed through the Bermuda Triangle, but never encountered a sight as scary as DryShips. He can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Diana Shipping and Peabody Energy. The Motley Fool's disclosure policy can hold its breath underwater while a cargo ship passes overhead.