The break bulk sector has been flat for months, arguably years, but as the world economy recovers so do the prospects for an improved break-bulk sector. But its larger dry bulk brethren and boxships squeeze the dry cargo break bulk sector, which complicates recovery.By George Lauriat, AJOTThe dry break-bulk sector has been flat for months and with new bulk ships sliding down the weighs in what is an already over-tonnaged sector, the chances for any quick recovery appear remote. The unrest in the Middle East, Japan’s earthquake, tsunami and nuclear disaster coupled with other global calamities have adversely impacted global recovery and consequently held down improvement in the dry bulk sector. Nevertheless, with a global recovery spurred by China, India and the Asian economies, the break-bulk sector could be poised for a quicker than anticipated rebound. It is really a question of whether renewed demand for raw materials will outstrip bottoms, not only in the break-bulk sector but also with unitized ships and larger sized dry bulkers. Back in late January, South Korea’s Korea Line filed for bankruptcy, becoming the poster child for all that has gone wrong with the bulk sector since the spike in 2007. The dry bulk specialist charters in nearly 70% of its fleet, much of that being fixed long-term at high rates during the heady days of 2007/08 before the crash. Although Korea Line was the largest dry bulk group to hit the rocks, the Korean-carrier wasn’t alone, as the entire sector has bled red over the last three years. There is also a trickle down effect as witnessed by Eagle Bulk Shipping Inc., which posted a first-quarter loss, hurt by bad debts for its charters with Korea Line. It’s an old sea story (Sanko and Japan Line in the 1970s) where a shipping line builds at high prices, at peak market demand and charters top dollar, only to see the charterer fail and the debts to the yard falling due. It’s easy to understand what happened to Korea line and others. At the height of the market in 2007, the BDI (Baltic Dry Index – calculated on the market average of four dry bulk sizes), averaged out for the year at 7,090. By 2010, the BDI had fallen to 2,761. However, the real story is just how precipitous a drop it was in specific dry bulk sectors. Capesize vessels (80,000 dwt and over), even in 2008, posted a BCI (Baltic Capesize Index) of 105,391. In 2009 the BCI had dropped to 42,464 and in 2010 slipped even lower to 33,345. Loosening the squeeze The dry break bulk sector, composed mainly of Handymax and Small Handy (35,000-59,000 dwt and 10,000-35,000 dwt) multi-purpose vessels is subject to different market pressures than the larger size dry bulk ships or unitized vessels. The larger dry bulk ship sizes (Capesize 80,000 dwt and up and Panamax 60,000-80,00 dwt) are commodity driven with limited flexibility in choice of cargo, routes or port facilities. Equally, containerships are also limited to purpose built facilities but have the advantage that a box can contain a wide variety of commodities, and liner frequency offers a wide variety of route options. On the other hand, multipurpose break–bulk sector is squeezed for freight between unitized ships (containership and ro-ro to a lesser extent) and the dry bulk ship sector. For example, if box rates are low, agricultural commodities such as grain can be shifted into containers. Equally, larger vessels can be loaded with single commodities, such as grain and at a far lower rate per ton than can be carried by the smaller break bulk ships. However, the reverse is also true. Self sustaining break bulk ships given the right economic environment can successfully compete for some freights with both unitized and larger dry bulk ships. The multi-purpose ships also compete for project cargo work, which tends to be high value. Taken together, in most instances break-bulk owners are able to return steady, if not spectacular returns by lifting a wide variety of freight over a highly diverse set of routes. Part