Globalization has these ships traversing the earth, bringing coal, iron ore and grain from the Americas to Asia. Since shipping companies get paid by the day, the longer the trip, the more revenue they earn.
The limited number of ships helps boost the rate too. It’s simple supply and demand: The margins on building the ships are low, so companies choose not to expand their fleets. Now there are fewer ships to meet the rising demand. Hence, the higher rates.
If an investor wants to own a dry bulk shipping stock, the key is to get in before the company announces a dividend, Cramer said. Shippers are classic big dividend stocks, so an announcement is most likely only a matter of time.
Two companies to watch are Oceanfreight and Star Maritime. Both are new to the industry; so much so that OCNF is operating with less than half its anticipated fleet, and SEA doesn’t even have one ship yet. But these circumstances are only temporary, Cramer said. Neither has yet to announce a dividend either.