Assessing dry bulk shipping industry players and performance

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Nov. 20 2020, Updated 5:15 p.m. ET

Dry bulk industry

Dry bulk shipping transports homogenous bulk cargoes by bulk vessels on an irregular scheduled line. The industry is affected by numerous factors, like the growth of world economies and commodity supply and demand. Growing construction activity in the global arena leads to significant demand for iron ore and coking coal, which expands the seaborne trade of these dry bulk commodities.

Dry bulk shipping co's

 

With China accounting for the major share of the imports and exports of key dry bulk commodities, rapid economic development, rising urban population, and grain production are some factors that strengthen the Chinese economy and the dry bulk shipping industry. Also, Australia and Brazil are major iron ore and coal exporters that affect the dry bulk shipping industry.

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Major companies and ETFs

On a year-to-date basis, the Guggenheim Shipping ETF (SEA), an index weighted with dry bulk shipping companies, has dropped 7%. This fall indicates positivity for investors. Plus, the Baltic Dry Index (BDIY) has plunged 32.9% year-to-date.

Companies in the industry compete mainly on the basis of factors like vessel price, location, size, age, and condition, customer relationships, operating expertise, and professional reputation. DryShips Inc. (DRYS) and Navios Maritime Holdings Inc. (NM) are the two major market players in the dry bulk shipping industry, while Safe Bulkers Inc. (SB) and Knightsbridge Tankers Ltd. (VLCCF) are smaller but still significant players.

Series focus

In this series, we’ll discuss some of the important metrics that drive the dry bulk shipping industry. To begin with, China’s PMI is one of the major yardsticks to determine the health of the economy and thus the demand for commodities. Port Hedland and Brazil’s iron ore export levels also play a major role in driving shipping demand.

The real estate scenario of China is also worth a look. Broadly, we’ll provide the vessel prices for newbuilds, second-hand vessels, and the orderbook for dry bulks. Plus, we’ll cover China’s thermal power output data to indicate that less reliance on thermal power is leading to lower coal use.

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