SAILING THROUGH CHOPPY WATERS
BUT THERE ARE MORE LANDFALLS AHOY, ALLOWING GRINDROD TO GROW
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