Financial peril for dry bulk shipping companies is expected to continue throughout the year, a new study finds, as weak demand from China shows no signs of abating, the Wall Street Journal reported today. Industry revenue dropped 18 percent between 2014 and 2015, according to a new analysis of 17 dry bulk companies by consulting firm AlixPartners LLP. Ebitda, or earnings before interest, taxes, depreciation and amortization, plunged 168 percent to minus $115 million from $169 million in 2014. Nearly every company included in the analysis received a distressed Z-score, a metric developed by bankruptcy scholar Edward Altman, and the majority of companies are at risk of filing for bankruptcy, AlixPartners said. Broadly, the industry dynamics date back to before the 2008-to-2010 recession, when strong demand for shipping caused companies to expand their capacity. Then the recession drove down pricing, and a slow rebound ushered many companies into bankruptcy through 2013, when pricing seemed to stabilize. However, the slowdown in Chinese manufacturing once again tanked prices last year. The Baltic Dry Index, a global measure of shipping prices for commodities, reached the lowest point in its 31-year history in February 2016, at 290 points.
