The past few years have not been a good time to be in the tanker industry. However, green shoots are now starting to appear, and it would seem as if the industry is staging a recovery.

Indeed, demand for tankers to ship crude around the world is rising as economic growth picks up and governments look for energy security. Specifically, China is moving to fill part of its strategic petroleum reserve while India plans to launch underground storage facilities as part of a new strategic reserve later this year.

This rising demand is already sending the prices of new tankers higher, a trend that Scorpio Tankers (NYSE: STNG) is well aware of.

Tanker trader
At the end of last year, Scorpio placed an order for seven VLCC's, or very large crude carriers for an aggregate price of approximately $652.5 million, as part of the company's general expansion plans.

However, at the beginning of March, Scorpio announced that it was selling these VLCC's for a gain of $50 million, a return of just under 10% in three months.

A 10% return in three months is impressive for any investment, but considering the fact that Scorpio made this profit in the tanker market, where prices have been falling for years, this return is even more impressive.

Despite the sale of the seven VLCC's, Scorpio has around 50 vessels still under construction for delivery within the next few years, once again as part of the company's expansion plans, although this could be a problem.

In particular, some analysts believe that due to the recovery in the shipping market, orders for new builds are rising again, which will result in industry oversupply by 2016.

Right now however, Scorpio is primed for growth and returned to profit during 2013 for the first time since 2010. Unfortunately, Nordic American Tankers (NAT -0.36%) is not in the same position.

Losing money fast
Nordic recently announced its intention to undertake an underwritten public offering of 10 million new common shares. Demand for the issue was so strong, the company upped the offer to 12 million shares. The shares are being offered at $8.62, which should give Nordic a cash injection of just over $100 million before fees.

Nordic intends to use the net proceeds of this offering primarily to finance the acquisition of potentially two to four vessels, depending on the age of the vessels, and general corporate purposes.

For investors who have been watching Nordic for some time, this share offering will not come as a surprise; and if history is anything to go by, the company will not use the proceeds for new vessels.

That may sound harsh, but there is evidence to support my conclusion. Indeed, back during January of 2012 the company undertook a similar activity, offing 5.5 million common shares at $15.57 a piece to raise capital to focus on growth. This capital was spent on keeping the company afloat.

Then again at the beginning of 2013, Nordic announced another offering, intending to raise $87 million to pay for acquisitions under the company's expansion program. This cash was to be used for the acquisition of a new tanker, a very modern double-hull Suezmax tanker, for an agreed purchase price in the region of $55 million. Within months Nordic cancelled the order, and the cash was used to fund operations.

And yet another $65 million was raised by Nordic toward the end of last year through a underwritten public offering.

All in all, this offering takes the total number of shares issued by Nordic during the last two years alone to 31 million, a 66% increase on the number of shares in issue at the end of 2011. Over the same period Nordic's revenue has grown by 3% and gross profit has slumped more than 60%.

While the tanker market recovers...
The LNG tanker market is in trouble.

Until recently, the LNG tanker market was the bright spot of the shipping industry. As global demand for LNG surged, LNG tanker owners struggled to keep up with demand, and tankers designed to carry the super cooled gas were tied to longer routes pushing rental rates to record highs.

Unfortunately, high profit drew new competitors into the market and 119 new LNG carries have been ordered since 2011, expanding the fleet by over 30% and pushing day rates down by 50%.

However, it would appear that Golar LNG (GLNG 0.32%) is well placed to ride out this trend. The company has a very low gearing ratio of 0.22, below the industry average. In addition, Golar's return on equity exceeds that of the wider sector and the S&P 500. Unfortunately, with a high gearing ratio of 190%, Teekay LNG Partners (TGP) is poorly positioned to ride out weaknesses within the LNG market as low rates will constrict the company's ability to service its debt.

Foolish summary
Green shoots appear to be rising from the ground within the tanker industry, but investors need to be careful where they place their bets.

The LNG shipping market is struggling after years of success the industry is now plagued with oversupply. Meanwhile, Nordic is hemorrhaging cash and continues to tap investors for more money to fund day to day operations.

One bright spot is Scorpio. Scorpio seems to be making the right decisions and the company should report a solid profit for this year.