Has anyone been reviewing shipping lines? I must admit I have never reviewed that sector.

This is a tricky sector to invest in, more suited to trading because of the volatility.

There are lots of variables to consider when valuing these companies. Not just fuel costs, but charter rates, insurance, financing large capital investment, maritime regulations, crewing, maintenance, and recently, (un)availability of letters of credit, which is putting a crimp in the industry.

Because of the long lead times and huge investment costs, a miscalculation can be very expensive. If you have new ships entering service when rates are falling or financing costs are high, straight away you have a problem. Likewise, if you don't replace your fleet in a timely fashion it becomes very expensive to operate. For these reasons, many shipping companies lease their vessels on long or short term charters, depending on future business projections. There's a real art to running these companies, and likewise trading them, and it tend to be highly specialized.

You need to read up on how this all works before you jump in. Here's a few useful links to get you started:

http://www.balticexchange.com

http://www.poten.com

http://www.tankerworld.com

http://www.imarex.com

http://biz.yahoo.com/p/watertyied.html

I used to work on coastal tankers hauling petroleum product such as gasoline and heating oil. That was many years ago and a lot of things have changed, but I can attempt to answer any questions you might have.

I follow the industry today because it's a good leading indicator of global trade patterns and commodity demand.

Some of these co's have high payout ratios and behave a lot like income trusts. Others retain earnings and are best valued on a revenue basis factoring in fleet/vessel replacement which has a huge impact on the bottom line. In addition, there's a wide range of companies involved in service and logistics, similar to what you find in the oil industry. It's a fascinating industry, but you really have to understand it well to make money at it.

Good luck!

ebear