Excel Maritime Carriers, Ltd. (NYSE: EXM) is a dry-bulk shipping company that was incorporated in Liberia in 1988. It became the first dry bulk shipper to be listed in the USA when it joined the NYSE in 1998. The company currently operates 48 vessels: (7 Capesize, 14 Kamsarmax, 21 Panamax, 2 Supramax, and 4 of the smaller Handymax class), with a total carrying capacity of over 4 million DWT. Four Capesize vessels under contract to be built have been delayed, and may never be delivered (6-K dated 5/2/11).
Like most shipping companies, Excel receives revenue by chartering its vessels via two markets: the spot time charter equivalent (TCE) and the period TCE. Spot market TCEs are based on the current rate for dry bulk shipments, which is tracked by the baltic dry index or BDI. Spot TCEs can provide more revenue for a company during times of increasing rates, and less revenue when rates are falling. Period TCEs involve a fixed shipping rate for a certain period of time. Excel's ratio of spot TCEs to period TCEs varies, but its revenue from spot TCEs typically exceeds that of period TCEs.
A large factor in determining shipping rates is the current supply of vessels on the sea. Shipping companies try to match vessel supply with shipment demand, but an overabundance or shortage of ships can drastically affect rates. Successful companies are able to balance fleet size, fleet age, and the appropriate mix of spot TCEs vs. charter TCEs.
For a shipping concern to maximize revenue, its vessels must be chartered as much as possible (a boat doesn't earn much sitting at a dock!) A metric called percentage of fleet deployment is used to track how fully a fleet is utilized. Excel calculates percentage of fleet deployment by dividing the number of utilized days into the number of days the fleet was available for use (325 chartered days divided into 350 days available for use equals 93% deployment). This figure excludes time when vessels were not available for charter (when repairs are being performed, for example). Excel uses a separate figure, called calendar days, to track the number of days it had ownership of its fleet. While 100% fleet deployment is not realistic, the closer to this number a company gets the better. Excel's percentage of fleet deployment frequently hits above the 90% mark.
Certainly, dry bulk shipping is an asset-intensive business, which means players in the industry must also secure large amounts of capital to expand and maintain their fleets. Excel has been able to increase its fleet size over the years while keeping a manageable debt to equity ratio. The company has also seen its revenue and profit increase nearly 10 fold since 2002.