Eagle Bulk Shipping (NASDAQ: EGLE) owns one of the largest fleets of Supramax dry bulk vessels in the world.^[1] Dry bulk vessels are ships specifically designed to move dry cargo, like steel and coal, across long distances, like from the U.S. to China. Supramax vessels are a class of large container ship with a carrying capacity of 50,000 to 60,000 deadweight tons (dwt)^[1]. Because Supramax vessels are defined by their relative small size, they can access many more ports than their larger compatriots.^[2] Eagle's entire fleet can hold a little less than a million dwt.^[3] The company takes that capacity and charters its ships for periods of 1 to 3 years, and in doing so skirts some of the day to day volatility of the international shipping market.^[1]

Strong growth in China has caused demand for raw materials and ships to transport them to rise.^[4] Eagle hasn’t been able to take full advantage of that, because it locks up its ships in long-term contracts.^[1] However, Eagle has been expanding its fleet, because it expects demand for dry bulk shipping to continue to rise.^[5] Eagle was able to tie up construction contracts before steel prices began their rapid rise, but will have some trouble finding customers for all of its new ships because the entire industry is in rush to build as many ships as possible. Expecting an oversupply of ships in the next two to four years, rates for new long term contracts have begun to fall. ^[5] The question for the future is whether they’ll continue along their descent, or whether unexpected growth in Asia will shore up slack demand and cause prices to reverse.

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