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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (30533)4/3/2008 10:49:02 AM
From: E_K_S  Read Replies (2) of 78628
 
Another article on DryShips (DRY)... CEO of DRYS is now compared to John Fredriksen, Norway's richest man and largest investor in FRO.

DryShips and the Oil Rush
seekingalpha.com

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My observation is that with the high price of oil, all shipping costs are increasing and only the most efficient sectors are going to make money on the margin. Both rail and the bulk cargo group are able to pass along their higher operating expenses per unit of cargo shipped. The truckers and air freight companies are in trouble as they are having a more difficult time passing on their higher fees to the end user.

In a recent interview with the CEO of CSX, he stated their trains can haul the equivalent cargo of 250 semi trucks with only a crew of two. Their sector is much more efficient at the margin than the trucking industry and that is why several of the rails are trading near their all time highs.

It will be interesting to see what happens as the price of oil continues to increase. Will there be a transition to move more goods via rail and ship cargo (bulk & container) or will the volume of items shipped just decrease due to the higher costs.

Maybe at some point, new factories have to be built closer to the end users as the high shipping fees just price the final product out of reach for the intended user.

EKS
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