Operational review: Shipping


Key achievements 2017

  • Maintained world-class safety achievements.
  • Out-performed major shipping indices.
  • Qualified to raise bank finance notwithstanding adverse market conditions.
  • Became cash-generative in the second half of the year.
  • Took delivery of the twelfth and last Japanese built eco-friendly dry-bulk supramax carrier ordered in 2014.
  • Improved further on the fuel efficiency of the fleet by progressing the installation of variable-speed drives.
  • Achieved zero oil spills in excess of one barrel for the 12th consecutive year.
  • Received two awards at the 2017 MPA Seminar for Shipowners.
  • Successfully prevented staff exposure to the outbreak of bubonic plague in Madagascar.

Key challenges 2017

  • Managing the business in difficult market conditions.
  • Preparing for the Spin-off of the Shipping division as a separately listed business.

Key focus areas 2018

  • Finalise the Spin-off and listing of the new company on an international stock exchange.
  • Evaluate fleet-renewal and -growth opportunities.
  • Maintain compliance with increasingly stringent environmental requirements and regulations.

Key indicators


Continuing operations



R5 174 million

(2016: R5 113 million)


4 560.0%

R223 million

(2016: (R5) million)

Operating loss


(R62) million

(2016: (R451) million)

Attributable loss


(R908) million

(2016: (R803) million



Number of employees*


1 054 employees

(2016: 972)


No fatalities


(2016: 1 fatality)




(2016: 0.21)

Social responsibility spend


R3.1 million

(2016: R1.9 million)**



GHG emissions (CO2 equivalent)^


296 167 tonnes

(2016: 365 412 tonnes)

GHG emissions intensity^^



(2016: 71.45)^^^

Fuel oil tonnes


91 457

(2016: 115 041)

Total energy usage (GJ)


3 956 551

(2016: 4 962 265)

* Includes joint ventures and associates at 100% shareholding.
** Restated to reflect effective shareholding of joint ventures and associates.
^ Total GHG emissions including scope 3 (tonnes CO2-e).
^^ grams CO2 per Rand revenue.
^^^ Re-presented for discontinued operations as detailed in the basis of preparation.

2017 review

The Shipping division benefitted from improving market conditions, reporting a net headline loss of R202.6 million, a considerable improvement from the R569.6 million headline loss in 2016. Impairments to fleet and goodwill of R619.7 million resulted in a net loss after tax of R908.2 million (2016: R802.9 million). The division was cash-generative in 2017.

Dry-bulk rates improved during the year as increased demand for commodities bolstered a four-per-cent increase in seaborne volume. Handysize rates surged from US$5 422 a day in February to US$9 104 at year-end and supramax rates from US$6 432 a day to US$10 478. The low point in 2016 was US$2 698 per day for handysize and US$2 330 per day for Supramax. The tanker market continued to be hampered by an imbalance between oil supply and demand and an over-supply of vessels, which was affected also by a gradual change in fleet utilisation patterns as some oil majors prefer to charter vessels themselves.

Global fleet growth seems to be stabilising as the delivery of newbuilds decline. This is the result of stressed liquidity caused by the depressed market conditions up to 2016 and uncertainty around the specifications that will be detailed in environmental legislation and regulations which are still being drafted.

Grindrod’s continued investments in eco-friendly newbuilds to maintain a young and competitive fleet mitigates the risk of non-compliance to the ever-more stringent requirements, which, with its experienced management team targeting indice-beating performance, will contribute to the protection of its status as a blue-chip operator of the reputed Island View Shipping and Unicorn brands.

In January 2017, the last of the 12 newbuilds ordered in 2013/2014 was delivered. A medium-range tanker and a handysize dry-bulk vessel were sold in 2017. A chartered capesize dry-bulk carrier, a chartered MR products tanker and a chartered small tanker were redelivered during the year.

The increasingly stringent international environmental regulations confirm the benefit of investing in quality vessels manufactured in reputable Japanese shipyards. The vessels offer, amongst other benefits, reduced fuel consumption, which is increasingly being monitored by authorities. Additional fuel-saving was achieved by installing variable-frequency drives on a number of vessels over the past few years. Following the installation of the last two in 2017, fuel-saving improved by 16 percent compared with 2016. Any decrease in fuel consumption also contributes to CO2 emission reductions.

Current regulations governing the use of environmentally friendly, but more expensive, low-sulphur fuel in territorial waters are in the process of being broadened to include international waters by 2020.

Shipping has started upgrading ballast-water treatment systems on vessels in its fleet that do not comply with the more stringent regulations being implemented over a ten-year period.

Calculated on a proportional basis, Shipping wholly or partially owned and long-term chartered 36.5 vessels (2016: 41.2).

At year-end, the division commercially managed 38 dry-bulk vessels, which include five Japanese-owned handysize dry-bulk vessels managed on behalf of third parties. During the year, a further 16 vessels per month were commercially managed through short-term commercial management agreements. The Grindrod tanker fleet is commercially managed through pool and long-term charter agreements.

Island View Shipping benefitted from the increasing dry-bulk shipping rates. Global fleet capacity should stabilise in 2018, following the last substantial deliveries of forward-ordered newbuilds in January. Its young and efficient fleet gears IVS to benefit from improving rates and a slower growth in global fleet capacity.

Unicorn Shipping experienced reduced earnings due to the weak tanker market. Global fleet growth in excess of demand, notably in the smaller and medium-range sectors, remains a concern. The delivery of forward-ordered tankers should taper off towards mid-2018, when preparations for the northern-hemisphere winter is expected to contribute to seasonal increased demand.

Ship-operating reported a reduced profit due to rate fluctuations and load and discharge delays at some ports. In the third quarter of the year tonnage demand for exports out of southern and east Africa increased substantially, especially for handysize and supramax vessels.

During the year, Cockett Marine Oil and OACL were incorporated into Freight Services.

Dry-bulk rates at 2 March 2018 were as follows:

  Spot rates
(US$ per day)
One-year time
charter rates
(US$ per day)
Three-year time
charter rates
(US$ per day)
  Average spot
rates 2017
(US$ per day)
  Average spot
rates 2016
(US$ per day)
Handysize 9 000 9 500 9 500   7 512   5 214
Supramax 11 500 12 000 11 500   9 351   6 164
Capesize 12 400 20 000 18 500   14 232   7 388
Source: Clarksons Research – Shipping Intelligence Network.
  Spot rates
(US$ per day)
One-year time
charter rates
(US$ per day)
Three-year time
charter rates
(US$ per day)
  Average spot
rates 2017
(US$ per day)
  Average spot
rates 2016
(US$ per day)
Medium range 13 343 13 250 14 250   11 830   13 620
Small 11 153 10 250 10 500   10 150   9 700
Source: Clarksons Research – Shipping Intelligence Network.