SAIL­ING THROUGH CHOPPY WATERS

BUT THERE ARE MORE LAND­FALLS AHOY, AL­LOW­ING GRINDROD TO GROW

Finweek English Edition - - COVERSTORY - By Shaun Har­ris

To an out­sider, sea trade and trans­port glob­ally would prob­a­bly seem full of con­tra­dic­tions. Com­mod­ity prices have been in­creas­ing for three years or more and many are reach­ing new highs. De­mand re­mains strong, es­pe­cially from the large de­vel­op­ing economies of China and In­dia. Yet freight rates for the large ships that carry those com­modi­ties have been tum­bling and are cur­rently at lev­els close to the early 2000s be­fore the com­mod­ity boom started.

Grindrod is spared much of that ap­par­ent con­tra­dic­tion due to con­tract cover on more than half its fleet of 35 ves­sels, which means it might miss out when spot mar­ket rates are high but there’s down­side pro­tec­tion when rates drop. But low freight rates re­main a fac­tor and af­fect other parts of the ship­ping in­dus­try.

Much of the ship­ping in­dus­try world­wide is bat­tling. There are cy­cles within cy­cles, and for some ship own­ers it’s so tough that con­tracts are not be­ing met and covenants not up­held with banks. Grindrod seems to have come through that pretty well. Its fi­nan­cial re­sults turned down but there was no disas­ter, key bench­marks – such as re­turn on equity and div­i­dend cover – were main­tained. Ben­e­fits are com­ing through from de­ci­sions taken

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