Shipping is a very important industry in global trade if you take into consideration that two-thirds of the world's goods are transported by sea. However, it is also a cyclical business, with freight rates determined by the balance between the supply of vessels and the demand for transportation. As providers of seaborne transportation services, we are fully aware of the risks and opportunities that the cyclicality of our business presents. Companies with strong market positioning like ours can actually use periods of downturn to expand and reinforce their businesses.

There are numerous publicly listed companies in the dry-bulk shipping sector that follow distinctly different strategies in terms of fleet composition, fleet deployment, capital structure and dividend payout, thereby potentially appealing to different types of investors. Consequently, investors have a wide selection of companies from which to choose.

We expect that current market trends will result in a reshuffling of shareholder constituency in most shipping stocks. As a result, notwithstanding the volatility of current market conditions, shipping stocks should attain a more stable and long-term oriented shareholder base.

Following one of the strongest freight markets of all time early in 2005, freight rates began deteriorating in the second quarter of 2005 in the face of the developing supply side and continued sharply downward in the third quarter of 2005 before bottoming in early August 2005.

The reasons for such decline are simple and can be attributed to an inventory correction in China as well as seasonal weakness lasting longer than anticipated. Though rates staged a recovery in September 2005, they failed — so far — to live up to the anticipated levels suggested by many market participants.

Still, we believe that the fundamentals in the dry-bulk sector remain strong. The rapid industrialization that is taking place in China results in increased steel production and imports of raw materials, which act as the principal drivers for strong freight rates. GDP growth in China in the first half of 2005 was 9.5 percent, and industrial production growth was 16.5 percent. China's rapid growth rate, together with growth in the emerging economies of Southeast Asia, is behind the anticipated increase of seaborne trade of approximately 4 percent annually for the next three years. This increase in seaborne trade is expected to result in firm freight levels.

What is important to understand is that this demand is not consumer-driven. It is demand related to core commodities necessary for infrastructure development and industrial activity. These imports go into electricity generation and steel production. Even if there is softening in Chinese GDP growth, this does not necessarily translate into less electricity or less steel making, especially given China's preparation for the Olympics in 2008 and the 2010 World Expo in Shanghai. There are also other projects that will require large quantities of steel for the next several years, such as a national electricity grid, a national highway system, and the Yangtse-Huangpu Canal.

Therefore, based on the above, we remain confident in the long-term prospects of dry-bulk shipping.

Excel Maritime Carriers Ltd. (EXM ) — an owner and operator of dry-bulk carriers and a provider of worldwide seaborne transportation services for dry-bulk cargoes, such as iron ore, coal, grains, bauxite, fertilizers and steel products — is the first pure dry-bulk company to have listed on a U.S. stock exchange. The company has been publicly traded since 1998.