These aren't good times to be an ocean shipper.

The Baltic Dry Index, which measures the rates charged by bulk transporters such as DryShips (Nasdaq: DRYS) and Diana Shipping (NYSE: DSX), has fallen from a peak above 4,000 in May to 1,043 today. It has declined by nearly 60% just in the past three months, and it's taken the share prices of many fleet operators down with it.

The following companies have fallen between 12% and 40% in the past year and are likely to report some pretty ugly numbers in the coming quarters. But if you look past the near future, you may find some considerable long-term value in owning a carefully selected ocean carrier. Most now trade for significantly less than the price of their ships, and many can be had for less than the cash flow they generated over the past three years, which was a depressed environment to begin with. And things just may be on the cusp of turning around.

A new beginning?

Company Name

Market Cap

Price/3-Year Average OCF

Price/Book

Debt/Equity

52-Week % Performance

DryShips $1.5 billion 3.67 0.52 97% (12%)
Diana Shipping $945 million 4.80 0.85 30% (12%)
Navios Maritime (NYSE: NM) $492 million 4.32 0.48 219% (22%)
Genco Shipping (NYSE: GNK) $403 million 1.64 0.37 163% (40%)
Excel Maritime (NYSE: EXM) $378 million 1.93 0.23 70% (19%)
Eagles Bulk Shipping (Nasdaq: EGLE) $256 million 2.46 0.39 174% (18%)
Paragon Shipping (NYSE: PRGN) $161 million 2.09 0.33 72% (30%)

Data from Yahoo! Finance, Morningstar, and author's calculations. As of 1/30/11.

Even as commodities have continued their strong performance, dry bulk shipping has suffered from a confluence of woes. For starters, the worldwide cargo shipping fleet is estimated to grow by 18% this year, and that forecast has sparked fears of oversupply. It also hasn't helped that Australia, a major exporter of iron and coal, has seen its exports hampered by excessive flooding. Analysts have estimated that these floods may eventually cause more than 30 percentage points of decline in the Baltic Dry.

With any luck, these matters will be temporary, and they will shortly blow over. Some observers are expecting a new record in goods shipped this year, and so long as the demand for commodities continues to soar, shippers should work through this eventually.

Granted, there are considerable risks. Investors looking to navigate through these waters should know that high levels of debt are all too common in this industry. Small changes in value therefore have a disproportionate equity effect. It's also difficult in such an environment to keep up with debt payments during prolonged periods of slowdown.

The industry has also become heavily dependent on China. The Chinese consume more than 50% of the world's iron ore and import more than one 150 million tons of coal each year to satisfy their domestic demand. A slowdown in China could very quickly bring with it a drop in shipping demand.

But despite the potential headwinds, one has to get excited about these historically cheap valuations. Many of these businesses trade at only a fraction of their five-year average price-to-book values. Investors believing in the strength of commodities may find that with a little bit of due diligence, an investment in the shipping industry may turn into a profitable adventure.

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Fool contributor Nick Nejad owns no any shares in the above-mentioned companies. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.