Perhaps you'd rather forget, but I know you remember Waterworld.
I refer to the notoriously expensive production that featured Kevin Costner (complete with gills) sailing a tricked-out trimaran through post-apocalyptic seas. The movie was terrible, but as a sailor, I found the craft fairly intriguing -- it had an answer for every challenge.
In the wake of the perfect storm, I view the dry bulk shipping industry in a similar light. If these haulers aim to survive, they had better have their operations and their balance sheets fully tweaked in a manner suited to the prevailing conditions.
Reporting a 10% decline in earnings per share despite a 14% increase in revenue, Excel Maritime Carriers
Meanwhile, whereas Excel's fleet enjoys attractive tonnage diversification that is heavily weighted in the midsized Panamax and Kamsarmax varieties (approximately 70,000 to 80,000 dwt), the addition of five additional Capesize carriers in 2010 will tip the balance more heavily into precisely that segment of the global fleet now feeling the greatest pressure from oversupply. Capesize vessels will then account for nearly 40% of Excel's total tonnage.
Competitor Eagle Bulk Shipping
For its part, Eagle reported earnings of $0.18 per share ... a painful 31% slide from the prior-year period despite a 24% surge in revenue. With only a $2.3 million disparity in nominal earnings, the reduced earnings per share were more reflective of share dilution than reduced profitability.
With so much of the acute vessel oversupply problem coming from the larger end of the dry bulk fleet, perhaps -- just perhaps -- Eagle has found a workable niche in the Supramax space. In truth, though, the jury is still out.
Waterworld had plenty of fuel-starved craft, but only one sailboat. Diana is still my tricked-out trimaran, but against significant odds, Eagle may prove a pretty dinghy after all.