To start with the worst, Frontline is down more than -88% for the year, and its median target price has dropped to $6.00 from $7.25 in late October. At today’s share price of $2.98, the potential upside is slightly more than 100%. DryShips is not much better, with a lower target price of $5.00. At today’s price of $2.37, the implied gain is nearly 111%. Neither Excel nor Diana is as bad, but neither is likely to achieve anywhere near their implied gains of 63% and 46%, respectively. The shipping business has too many ships sailing around at unprofitable day rates. Until that situation resolves itself — not likely until 2013 — anything that resembles value in the shipping business is likely a mirage.

Railroads are faring better because rail traffic is up. The Association of American Railroads reported this morning that November carload traffic on US railroads grew 4% compared with November 2010. Intermodal traffic (containers) grew by 3.7% year-over-year. The largest increase came in motor vehicle carloads, which grew by 42% compared with last year and petroleum product carloads which grew by more than 28%.

Another large gain, more than 30%, came in carloads of crushed stone, sand, and gravel. Because beach sand is the most common material used in hydraulic fracturing of oil and gas wells, it’s probably a reasonable assumption to give the drilling industry credit for the increase.

Of the four railroads, Union Pacific and Norfolk Southern have both had target price boosts since late October. Union Pacific’s median target price is $114.00, up from $110.00. At a current price of $102.70, the potential upside in UP’s stock is 11%. The company’s dividend yield of 2.4% is also tied with Norfolk Southern’s for the best in the group.

Norfolk Southern’s median target price is $85.50, up from $82.00. At a current price of $74.90, the stock has a potential upside of 14.5%. With a slightly higher implied gain and an equal dividend yield, Norfolk Southern might be the best bet among the railroads.

In trucking, J.B. Hunt’s median target price fell from $49.00 to $48.00, but that was quite likely due to two brokers dropping coverage. At today’s price of $$45.40, the potential upside for the stock is just 5.7%. The company pays a dividend yield of 1.2%.

Landstar’s median target price is $52.00, up half a dollar from late October, and again likely due to a drop in the number of brokers covering the stock. At today’s price of $45.90, the potential upside for the stock is 13.3%. Landstar pays a dividend yield of 0.5%. Earlier this week, Landstar was downgraded from ‘buy’ to ‘neutral’ at SunTrust.

Of the two trucking companies, neither has a clear edge over the other. Hunt is more fully valued, but the company reported record results in the third quarter. If Hunt can do that again, then the current target price will be left way behind. Hunt’s strength in intermodal transportation could easily make that happen.

Of all ten stocks reviewed here, Norfolk Southern may be the safest bet, but J.B. Hunt may add more significant growth potential to its relatively limited upside potential.

Paul Ausick

Transportation stocks get a lot more attention as economic bellwethers than they do as market participants. Railroads, ships, and trucks are not particularly glamorous, and the industries are so entrenched that they most resemble utility stocks.

The companies included in today’s overview are CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC), Union Pacific Corp. (NYSE: UNP), Canadian Pacific Railway Ltd. (NYSE: CP), Diana Shipping Inc. (NYSE: DSX), DryShips, Inc. (NASDAQ: DRYS), Excel Maritime Carriers Ltd. (NYSE: EXM), Frontline Ltd. (NYSE: FRO), JB Hunt Transport Services Inc. (NASDAQ: JBHT), and LandStar System Inc. (NASDAQ: LSTR).

Of the ten stocks we’re looking at today, only one trades more than 10 million shares a day and most of the others trade less than 3 million.  On the surface, it would seem that all these stocks would more or less trade in parallel. In practice, though, railroads and trucking companies are faring far better than sea-borne shippers. Railroads are hauling more coal, and trucking companies are having trouble meeting demand for their services. Shippers overbuilt their fleets, and the resulting collapse in day rates has been punishing for their top and bottom lines.

Cargo traffic is closely watched at this time of year as a predictor of holiday retail sales. Typically, ocean container shipping headed to the US tips the coming strength of retail sales. This year, container shipments have been somewhat lower, and this month’s totals will really tell the tale. Rail and truck traffic has been strong though, although the shortage of available trucks is diverting more container (intermodal) traffic to the railroads.

All data from Yahoo! Finance, and share prices were collected shortly before noon today.

CSX Corp. (NYSE: CSX) has a median target price of $27.00 from 24 brokers. Shares are trading today at $22.66, for an implied gain of $4.34, or 19%. CSX’s forward P/E is 11.73 and the company pays a dividend yield of 2.3%. The stock’s 52-week trading range is $17.69-$27.06, and at today’s price that’s about 28% above its 52-week low, posted earlier this morning, and 16% below the 52-week high. CSX met analysts’ expectations when it reported third quarter earnings about 10 days ago. The company noted a 15% jump in intermodal freight revenue, although volume was essentially unchanged from the same period a year ago. CSX said at the time that it does not expect significant growth in the US, but neither does it predict a double-dip recession.

Norfolk Southern Corp. (NYSE: NSC) has a median target price of $82.00 from 23 brokers. Shares are trading today at $74.74, for an implied gain of $7.26, or 10%. Norfolk Southern’s forward P/E is 12.91 and the company pays a dividend yield of 2.5%. The stock’s 52-week trading range is $57.57-$78.40, and at today’s price that’s about 30% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. Norfolk Southern hauled 23% more coal in the third quarter than it did a year ago, and its intermodal traffic volume increased by 13%. Like CSX, the company expects modest economic growth in the US going forward. The company’s implied stock price gain is about half that of CSX, but with both coal and intermodal traffic up and growing, Norfolk Southern is more likely to bust through its current target price than the other railroads we’ve looked at today.

Union Pacific Corp. (NYSE: UNP) has a median target price of $110.00 from 25 brokers. Shares are trading today at $102.35, for an implied gain of $7.65, or 7.5%. Union Pacific’s forward P/E is 13.15 and the company pays a dividend yield of 2%. The stock’s 52-week trading range is $77.73-$107.89, and at today’s price that’s about 32% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. Union Pacific posted third quarter earnings a week ago, and its international intermodal shipments were down -12% year-over-year. That implies that retailers are buying less in anticipation of a slower holiday shopping season.

Just as we tried to look at the effects of a crude price of $120/barrel a couple of weeks ago, today is a good day to look at what effect a crude price of $80/barrel might have. First of all, it would be very good news for consumers who might anticipate gasoline prices around $3.25/gallon, at least briefly. And US drivers need some cheering up.

An $80/barrel price would definitely be bad for big oil companies like Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), and ConocoPhillips Corp. (NYSE: COP). Refiners, however could do better, especially those able to get WTI crude. US refiners situated along the Gulf Coast are essentially tied to Brent prices, while refiners further from the coast can get their hands on the cheaper WTI. That allows these companies to take advantage of the crude differential to achieve more margin.

Of the refiners, Valero Energy Corp. (NYSE: VLO) is most closely tied to the Gulf Coast and higher priced crude. Marathon Petroleum Corp. (NYSE: MPC), Tesoro Corp. (NYSE: TSO), and Western Refining Inc. (NYSE: WNR) all have more plants outside the Gulf Coast region, and thus, a better chance to take advantage of wider refining margins.

Another industry that should do well with $80/barrel crude is the airlines business. United Continental Holdings, Inc. (NYSE: UAL), Delta Air Lines Inc. (NYSE: DAL), AMR Corp. (NYSE: AMR), and Southwest Airlines Co. (NYSE: LUV), among others, have been slammed by high fuel costs. Provided anyone can still afford to fly, airline fuel costs will fall and fares may follow.

Other transportation industries that use large amounts of fuel are shipping and railroads. Shipping companies like DryShips Inc. (NASDAQ: DRYS), Diana Shipping Inc. (NYSE: DSX), and Genco Shipping & Trading Ltd. (NYSE: GNK) could catch a break from lower fuel costs. Unfortunately, over-capacity in dry bulk carriers could hold down any gain that might come from cheaper fuel.

Railroads might fare better. Union Pacific Corp. (NYSE: UNP), CSX Corp. (NYSE: CSX), and Norfolk Southern Corp. (NYSE: NSC) have been moving a lot more goods these days, and lower diesel fuel costs will make these stocks among the best able to take advantage of cheaper fuel. Loads are up, rates are up, and fuel is getting cheaper. That’s a potent combination.

Other transportation winners could include FedEx Corp. (NYSE: FDX) and United Parcel Service, Inc. (NYSE: UPS), both of which are shipping more these days and have taken a hit as fuel prices were rising.

Finally, agriculture-related firms like fertilizer companies and machinery makers could get a boost from lower fuel costs. Ag companies like Archer Daniels Midland (NYSE: ADM), Potash Corp. of Saskatchewan (NYSE: POT), Mosaic Co. (NYSE: MOS), CF Industries Holdings, Inc. (NYSE: CF), and Deere & Co. (NYSE: DE) all benefit from lower fuel costs in one way or another.

Of all the companies we’ve looked at here, only FedEx, UPS, and CF Industries is showing a gain today. CF Industries raised its annual dividend today from $0.40/share to $1.60/share, on top of a blowout quarterly earnings report. CF Industries’ shares are up more than 70% in the past 12 months, and the company expects the rest of 2011 to be just as strong as the first half.

Paul Ausick

Altera Corporation (NASDAQ: ALTR) Raised to Outperform as Bull of the Day at Zacks.
Boardwalk Pipeline Partners, LP (NYSE: BWP) Started as Outperform at Credit Suisse.
Capital One Financial Corp. (NYSE: COF) Raised to Buy at SunTrust.
Celestica Inc. (NYSE: CLS) Cut to Sell at Citigroup.
Central Garden & Pet Company (NASDAQ: CENT) added as Value at Zacks.
CIENA Corporation (NASDAQ: CIEN) Raised to Neutral at UBS.
China Finance Online Co. Ltd. (NASDAQ: JRJC) Cut to Market Perform at Rodman & Renshaw.
Diana Shipping Inc. (NYSE: DSX) Cut to Underperform at CRedit Suisse.
DryShips, Inc. (NASDAQ: DRYS) Raised to Buy at Stern Agee.
MediaMind Technologies Inc. (NASDAQ: MDMD) Cut to Hold at ThinkEquity.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Reiterated Outperform and raised target to $16 at Credit Suisse.
Monster Worldwide, Inc. (NYSE: MWW) Raised to Buy at UBS.
Oracle Corporation (NASDAQ: ORCL) Added to U.S. Focus List at Credit Suisse.
Potash Corp. of Saskatchewan (NYSE: POT) Raised to Buy at TD.
Research in Motion Ltd. (NASDAQ: RIMM) Cut to Sell at Citigroup.
Sears Holding Corp. (NASDAQ: SHLD) maintained Underperform as Bear of the Day at Zacks.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

DryShips Inc. (NASDAQ: DRYS) is scheduled to report results tomorrow, and analysts are expecting EPS of $0.16 on revenue of $234 million. For the June quarter, expectations rise to EPS of $0.22 on revenue of nearly $279 million. Many other shippers have already reported quarterly results, including Genco Shipping & Trading Ltd. (NYSE: GNK), Diana Shipping Inc. (NYSE: DSX), Eagle Bulk Shipping, Inc. (NASDAQ: EGLE), and Excel Maritime Carriers, Ltd. (NYSE: EXM).

Charter rates remain low for both dry bulk and container shippers. The Baltic Dry Index, a measure of dry bulk shipping rates, currently sits at $1,344, about double its low of around $663, but still well below year-ago rates of nearly $4,000. Container shipping rates are rising somewhat, but by less than the industry would hope. From Shanghai to the Europe, the cost of shipping a twenty-foot container (teu) fell from $925 to $919. Rates had been as high as $1,300/teu earlier this year. Meanwhile, the cost of bunker fuel from Asia to Europe have risen to a record high of $776/teu.

Ironically, Diana Shipping was able to beat expectations for its first quarter by expanding the size of its fleet. The company’s average charter rate for the quarter was $31,592, compared with $31,982 in the same period a year ago. But the company averaged more than 2 more vessels in operation this year, making up for the lower rates and higher fuel costs. Genco, like Diana, also added new vessels in the first quarter, which helped the company overcome a 37% decline in shipping rates.

Eagle posted an EPS loss of -$0.09 for the first quarter, including a $6.6 million one-time loss. Excluding the item, the company posted EPS of $0.01 on revenue of about $87 million, which was up 60% compared with the same period a year ago. The company is expected to post an EPS loss of -$0.01 next quarter on revenue of $65.5 million, a sharp sequential decline from first quarter revenue of $86.7 million.

Excel posted an EPS loss of -$0.01 on a doubling of expenses. The company’s blended charter day rate was down by -20% year-over-year.

The number of dry bulk ships is expected to increase by at least 10% this year, while cargoes are expected to rise by only 5%. Add in higher fuel costs, and the outlook for shippers in 2011 is decidedly downbeat.

Paul Ausick

One type of shipper that could benefit fairly quickly is dry bulk, the massive carriers that haul coal, iron ore, and other raw materials. The carriers include DryShips, Inc. (NASDAQ: DRYS), Diana Shipping Inc. (NYSE: DSX), and Genco Shipping & Trade Ltd. (NYSE: GNK). The Baltic Dry Index, BDI, is recovering slightly from a very low 1,064. As coal is required in Japan to generate electricity no longer available from the damaged nuclear reactors, dry bulk rates from Australia and from the west coast of the US could rise. The rises will be limited by the amount of coal Japan requires and the amount that dry bulk terminals can handle. Terminals and coal shippers on the east coast of the US could also benefit as coal cargoes bound for Europe could be diverted to Japan and additional ships put into service.

Container shippers like A.P. Moeller Maersk (OTC: AMKBF), Danaos Corp.(NYSE: DAC), and Seaspan Corp. (NYSE: SSW) could see a slight slowdown in shipping until Japanese manufacturers get back to work. That process will probably be slower than anticipated.

Crude oil carriers like Frontline Ltd. (NYSE: FRO) and Nordic American Tanker Shipping Ltd. (NYSE: NAT) should see a pick-up as more crude cargoes are sent to Japan to help fuel electricity generation plants. Demand will be a function of how quickly Japan’s refineries can come back on-line, and the length of time the Japanese must depend on crude oil to fuel their generators. Another possibility is that refined products would need to be imported if re-opening the refineries is delayed for long.

Japan’s crude stocks stood at 169 days at the end of December 2010, according to Balkans.com. The country won’t want to run down its stocks and have to replenish them at higher crude prices, but by judiciously calling on its stocks, the country could mitigate some of the expenses from buying and shipping additional supplies of crude.

Liquefied natural gas (LNG) carriers include Teekay Corp. (NYSE: TK), Teekay LNG Partners, L.P. (NYSE: TGP), and Golar LNG Ltd. (NASDAQ: GLNG). Japan is already the world’s largest importer of LNG and it is reasonable to expect the country to receive more in the days ahead. In the longer term, it could be that Japan decides to replace at least some of its nuclear generation with gas-fired generation. But that decision is still months away in all likelihood.

The lightly traded Guggenheim Shipping ETF (NYSE: SEA) is up nearly 2% today, and Teekay LNG Partners and Golar are both up about the same amount. Most of the other shippers are trading slightly up as well, with only Dry Ships down slightly.

Paul Ausick

Earlier this month, Dryships Inc. (NASDAQ: DRYS) completed a private placement of shares worth a total of $500 million in its wholly-owned subsidiary Ocean Rig UDW Inc. The shares were newly-issued, unregistered shares priced at $17.50/share and amounted to about 20% of the Ocean Rig’s value. Dryships also plans to buy back up to $25 million of the Ocean Rig shares it just placed. On January 19th, Diana Containerships is expected to begin trading on the NASDAQ under the symbol ‘DCIX’.

Both Diana Shipping and Dryships are seeking a path out of the doldrums of dry bulk shipping, their main business. Dry bulk shipping rates have been soft all year, due primarily to an over-supply of ships. The Baltic Dry Index reached a 52-week low of around 1,700 in July, recovered to about 3,000 in September, and has fallen to below 1,900 again. For comparison, in May 2008, the Baltic Dry Index set an all-time high over 11,000. By December of that year, the index posted a low of 660.

In late November, analysts at Goldman Sachs said that the size of the dry bulk fleet would increase by 11% in 2011, while demand would increase by just 8.4%, according to report by Bloomberg. Dryships and Genco Shipping and Trading Ltd. (NYSE: GNK) were rated as ‘neutral’, and Diana Shipping was rated as a ‘buy’.

Diana Shipping and Dryships appeart to be following the same basic strategy — follow the money. And the money is in deepwater drilling and container shipping. Dryships already has two drilling ships at work and four more on order. Diana Shipping is raising capital for Diana Containerships without resorting to borrowing and further reducing Shipping’s exposure to the uncertainties of the container shipping markets.

In a separate deal, the Seattle-based shipping maintenance and repair outfit called Todd Shipyards Corp. (NYSE: TOD) has agreed to be acquired in a $130 million buyout valued at some $22.27 per share by Vigor Industrial LLC.

Dryships’ shares and Diana Shipping’s shares have so far hardly seen much action on the news.  Todd’s shares are up only about 7% at $22.45 after having been above $23.00 at the open.

Paul Ausick

Maersk Brokers have said that new dry carriers totalling 34.8 million deadweight tons, dwt, were delivered in the first half of 2010. Another 55 million dwt are on tap to be delivered by the end of the year. Maersk forecasts that 117 million dwt will be delivered in 2011.

The increase in tonnage increases competition for cargoes, and is almost certainly the cause for the dramatic drop in the BDI. Further evidence of the effect on new vessels is a report that three capesize ships, the largest in the dry bulk fleet, have been anchored in Singapore. When a large vessel is, essentially, mothballed, that means that shipping rates have fallen so far that it is no longer practical to keep a ship afloat. Capesize vessels are now being booked at $15,000/day, a price equal to the handysize carriers which displace less than 20% of capesize tonnage.

For a time, the falling BDI was thought to be connected to lower demand for commodities like iron ore. But iron ore shipments are currently stronger than ever. Seasonal demand from grain shippers helped hide the effects of the growing fleet size, which are just now becoming evident.

In a related development, demand for very large crude carriers, VLCCs, has also fallen. Day rates are down from $70,000/day to $10,000/day. VLCCs are capable of carrying up to 2 million barrels of crude, and as many as 74 ships were being used as floating storage for crude oil while the cargo owners wait for the price of crude to rise. Iran has recently released six VLCCs, with about 12 million barrels of oil, and sent the carriers to Europe.

New VLCCs are also being added a high rate, with 55-50 new tankers expected to be delivered by year-end. These deliveries are being offset somewhat as some 40 single-hulled tankers are removed from service.

The down market for VLCCs is expected to last through the rest of 2010.

DryShips and Genco are down about 30% since the beginning of the year, while Diana is off about 10%, although all are up slightly more than 1% in today’s trading.

The good news is that the collapse in the BDI probably does not indicate that the global economy is headed for the dreaded double dip. The not-so-good news is that the shipping companies are going to need an even bigger uptick in shipping than they’ve already gotten in order to soak up all the dry bulk capacity that’s coming.

Paul Ausick

Containerships are facing nearly the opposite problem — a jump in demand that is absorbing all but about 2.5% of available capacity even as new containerships are launched. From a peak of more than 240 ships available in March 2009, only 44 carrier-operated ships are now available. That’s good news for container shippers like A.P. Moeller Maersk (OTC: AMKBF), Danaos Corp. (NYSE:DAC), and Seaspan Corp. (NYSE:SSW). Dry bulk shippers Dryships Inc. (NASDAQ:DRYS), Genco Shipping & Trading Ltd. (NYSE:GNK), and Diana Shipping Inc. (NYSE:DSX) are stumbling.

Danish shipper Maersk, the world’s largest container shipper, today raised its 2010 earnings forecast, predicting that it would earn more than the $3.5 billion in profit it saw in 2008. In 2009, the company lost $1.31 billion. Maersk includes an accounting gain from a share sale in China, but excludes a $1.2 billion gain from sale of its Netto food stores to the UK division of retail giant Wal-Mart Stores Inc. (NYSE:WMT). Once the Netto sale is approved by UK regulators, it too will add to Maersk’s bottom line for 2010.

Where day rates for dry bulk vessels have fallen steadily, demand for container vessels is rebounding strongly from 2009 lows, both in volume and in rates. German container shipper TUI AG recently raised its outlook for 2010, and Taiwan’s Evergreen Group has ordered 10 new container ships.

Container shipping from Asia to Europe rose 21% year-over-year in May 2010. Shipments from Europe were down 6.3%. Traffic from Europe to North America 15.8% in May, good but nowhere near the 25.7% growth in April. From North America to Europe, traffic was up 13.2%, a bit short of the 14.8% growth in April.

Container ships carry mostly finished goods in those 20-foot boxes we’ve all grown so used to seeing. Dry bulk carriers haul mostly raw commodities like iron ore, coal, and petroleum. A slow-down in dry bulk shipping, reflected in the BDI, points to a slow down in base-level manufacturing of such things as steel. If steel manufacturing is falling (and it is), then demand for iron ore and coal will also fall as steel makers use up inventory and slow production.

On the other end of the manufacturing chain, products that use steel lag behind commodity pricing simply because it takes time to make the stuff. Container shippers are thriving now on orders to manufacturers that were made months ago, when the overall outlook for the global economy were much rosier than they are now.

If global GDP growth projections begin to soften, as they probably should, demand for goods will also weaken and container shippers may find themselves in the same position as the commodity shippers.

Container shippers and dry bulk shippers are trading about flat today, except for Genco, down about -2.5%, which has announced that it is selling 3 of 16 dry bulk vessels that it just bought and hasn’t even taken delivery of yet.

Paul Ausick

As shipping rates fall, dry bulk shippers like Dryships Inc. (NASDAQ:  DRYS), Genco Shipping & Trading Ltd. (NYSE: GNK), and Diana Shipping Inc. (NYSE: DSX) follow. All three shippers seem to be setting new 52-week lows every day. Two shippers more active in crude oil and refined products transportation are Frontline Ltd. (NYSE: FRO) and Teekay Corp. (NYSE: TK), both of which have seen share prices appreciate in the past year. The recently re-issued Claymore/Delta Global Shipping ETF (NYSE: SEA) is also trading near its 52-week high.

Daily rates for the largest vessels, called capesize, have fallen from $59,324 on June 2nd to $24,239 on June 30th. Even daily rates for the smaller vessels of panamax size have dropped from about $31,000 to $22,000.

The decline is mainly blamed on falling demand from China for commodities like coal and iron ore. As China tries to cool its economy, the country plans to cut its production of steel which has also been suffering from lower pricing.

A contributing factor to the falling shipping rates is the pace of growth in the supply of ships. One analyst estimates that the dry bulk shipping fleet will increase by 17% in 2010. Filling those ships with goods would not be a problem if the global economy were growing. Because the economy is growing only tepidly, freight rates will not rise, and may even continue falling. The average daily earnings from a capesize ship in 2010 is expected to fall from $41,000 in 2009 to $35,000 this year, and the outlook for 2011 is for more declines.

Another threat to shippers is the continuing piracy off the horn of Africa. Earlier this week, Somali pirates hijacked a Singaporean-flagged ship with a crew of 19 Chinese nationals. The ship, which is owned by a Chinese company, was carrying a chemical used in making anti-freeze and was on its way to India.

The Chinese government has already contributed ships to an international fleet that is patrolling the waters off the Somalia to keep that vital shipping lane open. Yesterday, China sent another flotilla of warships to the Gulf of Aden to relieve the country’s ships that are already there.

The increase in piracy raises the cost of insurance for ships travelling offshore of east Africa, and contributes to the shippers’ shrinking profits. But the big problem is lack of demand for shipping coal and iron ore. And unless demand for finished goods grows, demand for commodities will stay low.

The issues facing the shipping business mirror the issues facing the global economy. Demand is dying as buyers lose confidence in the economy’s ability to grow out of its current doldrums. As a result, unused capacity increases and people lose their jobs. Then the cycle repeats.

Dryships thought it had found a way out of the vicious commodity cycle when it bought a couple of drilling platforms and ordered four more to be newly built. But the disaster in the Gulf of Mexico has put a serious crimp in the company’s ability to lease its rigs. The original two rigs are under contract and manned by experienced Norwegian crews. However the company can’t contract for any of the new build rigs and lacks financing for two of them.

Dryships had originally intended to spin-off its drilling operations by the end of this year, but no one thinks that will happen now. Genco paid more than $500 million last week for 16 new supramax vessels, which is either a very smart move (buying at or near the bottom) or a very dumb one (adding to over-capacity and under-utilization).

Diana Shipping recently purchased two new container ships for about $45.5 million each. One is fully contracted for a year at $16,000/day, and the other, which will be delivered before the end of July, is not yet contracted. Again, a smart move or a dumb one?

Based on the dive these three stocks have taken since late April, investors seem to believe that none of the moves is positive. Until prospects for global economic growth brighten and begin to move steadily upward, commodity shippers are going to remain under intense pressure.

Paul Ausick