Someday, the sun will rise once more to warm the ice-bound fleet of the world's dry bulk shippers. But that day has not arrived.
Diana clings to countercyclical profitability on the strength of some remaining long-term charter contracts inked during the pre-collapse glory days of the dry bulk industry. The shipper's Capesize vessel Norfolk, for example, continues to generate $74,750 per day in charter revenue, and that lucrative contract extends to January 2013. But as time ticks on and the global fleet continues to grow far faster than baseline demand, those contracts are rolling over into replacement charters that pale in comparison.
On a consolidated basis, Diana's 11.5% year-over-year decline in its average daily charter rate appears relatively mild. With an attractive portfolio of even longer-term charters in place, Navios Maritime Holdings
As the dry bulk industry's crisis extends, the insulation that carriers like Diana enjoyed from long-term charters during the industry's boom cycle is stripped away. DryShips
I wish I could say brighter days were imminent on the horizon for dry bulk shippers. As an embattled investor in the sector myself, I continue to wait patiently for a clearing of the excess inventory and the improved rate environment that will eventually follow. For now, however, I hold little hope that such balance will be achieved during 2012, and I encourage Fools to approach the space with considerable, even extreme, caution. My 2010 CAPScall of Diana Shipping has underperformed the S&P 500
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Diana Shipping and DryShips. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.