I've looked at the shipping sector briefly about half a year ago. The issue as I remember was that they were heavily reliant on shipping commodities to emerging economies. Yet, after the shipping/commodities bubble of '08 a lot of shipping tonnage came online. So even with the strong bounce in demand for commodities, the shipping companies had to take lower charter rates because there was so much excess capacity. Add to this the fact that many of these companies were buying ships w/ debt at cyclically high prices and I think you will see why these companies deserve such low valuations.
Then there is the much more macro viewpoint on China's real estate market. Many smart people have been saying that is the source of China's commodity demand for things such as iron, copper and even gold/silver. If that market snaps then you will probably see many shipping companies will not be able to roll over their debts when they mature (for example, Eagle's facility is due on July 2014). Should that occur I expect to see capitulatory selling in these companies, and the strong ones which do survive it will be worth investing in (i.e. those which are not forced by bankruptcy to sell assets). Of course no outcome is completely inevitable, but I believe such a scenario is definitely likely which is why you see such depressed valuations on these companies.
Unless you believe you have an informational edge in this sector (e.g. you're familiar with shipping industry, commodity demand, etc) I think it would be better to stay away except when/if such capitulation occurs in the industry. It is most likely that those with the lowest debt/equity levels will survive a second shipping "pop", and those are the companies you should look at. One such company I've tracked is Diana Shipping (DSX), though I'm sure there will be others if you look hard enough.
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