Tickers in this Article: ALEX, HRZ, DRYS, TRBR, GMR
Alexander & Baldwin Inc. (Nasdaq:ALEX) demonstrated in 2010 why it is a different type of shipping company than most. For the year, A&B reported net income of $92.1 million, or $2.22 per diluted share. Net income for 2009 was $44.2 million, or $1.08 per diluted share. Revenue in 2010 was up 15% to $1.6 billion, compared to revenue of $1.4 billion for 2009. In the fourth quarter of 2010, net income was $20.2 million, or 48 cents per diluted share compared with $20.1 million, or 49 cents per diluted share. Revenue for the fourth quarter of 2010 was $461.4 million, compared to revenue of $362.9 million in the year ago period.

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By Land and Sea
Alexander & Baldwin has never just been a shipping company. The company's business includes both Maritime shipping and real estate. The company is the largest private land owner in the state of Hawaii and the diversity has not only helped the company navigate the recent recession, but also during other periods of turbulence during the company's history. Thanks to stronger demand from China, shipping revenues were up 24% quarter over quarter due primarily to an 81% jump in China container volume. The real estate segment didn't significantly improve year over year, but it clearly has not gotten worse. Hawaii is driven by tourism and management indicated that tourism is starting to pick up in Hawaii. Year-over-year real estating leasing revenue was down 9% while operating margins were down by 18%, respectively. (For more, see Analyzing Operating Margins.)

More Than Meets the Eye
Alexander and Baldwin is no ordinary shipper, however. ALEX is a Jone's Act shipping company and as such, ALEX is protected by the Jones Act from any foreign competition on shipping lanes between U.S. ports. So the company's shipping lines to Hawaii and Guam are only available to companies like ALEX, Horizon Lines (NYSE:HRZ) and Trailer Bride (Nasdaq:TRBR). The Jone's Act status essentially gives these companies a government support quasi-monopoly on valuable trade routes. However, even that protection can't prevent the effects of a recession and all shipping companies suffered as shipping volumes declined. The strong surge in China container volume is indicative of how low demand had gotten in the past two years. (For related reading, see Is Dry Bulk Shipping All Dried Up?)

But as the economy has turned a corner, A&B's status has proven very valuable. Shares of major dry bulk shipping companies including DryShips (Nasdaq:DRYS) and General Maritime (NYSE:GMR) continue to trade near 52-week lows and have significantly underperformed the broad market rally over the past two years. Recent reports have alluded to the continued excess supply of ships keeping shipping rates at historical lows.

The Bottom Line
Looking ahead, A&B management sees an improving economic environment in Hawaii and the US. Tourism in Hawaii continues to improve while unemployment in the state is declining. Shares in ALEX seem to reflect this as they are trading near a 52-week high of $42. (For more, see Buy High, Sell Higher.)

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