Dry Bulk Shipping

So I have been buying stock over the past month and 1/2.  One area I have been watching and buying stock in is the Dry Bulk Shipping Industry:

"Dry bulk shipping refers to the movement of significant commodities carried in bulk : - the so-called major bulks, together with ships carrying steel products (coils, plates and rods), lumber or log carriers and other commodities classified as the minor bulks."

Basically things like iron ore need to get moved around the world. Dry shippers operate the boats that do this. They usually charter the boats out in one of two ways:

• Spot charter (or voyage charter) - A charter for a specific number of trips or voyages.
• Time charter - A charter for a specific time period, usually between 1-3 years.

So other companies charter these boats to move cargo. Sometime the charteree is another cargo company or sometimes its a producer of the raw materials that need to be moved.  

As most things at this point in time there is alot of uncertainity in this industry. Demand for dry shippers is way down. This is measured by the BDI or Baltic Dry Index:

…an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.

Every business day The Baltic Exchange in London calls shipping companies around the world and gets quotes for moving various stuff across various routes in the different sizes of ships (Supramax, Panamax, etc...). From this derive the index. It kind of like the LIBOR for the shipping.  

Demand is way down which means a lot of people are scared of these stocks. Although its fair to say a lot of people are scared of most stocks right now. I personally find Dry Shipping very fascinating because its a key component of how our global enconomy operates and yet the business it self is very easy to understand.  So although like alot of industries its on shaky water (pun?), I have been trying to educate myself about it so I can make investment decisions that will hopefully survive the carnage for however long it goes. 

Something I will probably go into more detail later on which I find very interesting is how the BDI is used by economists and investors as a general tool and indicator.