South African shipping group Grindrod has invested nearly R2-billion in a major expansion of its shipping fleet in recent weeks, the company said this week.
Grindrod managing director Ivan Clark said the company has bought a geared container ship of 605 twenty-foot equivalent units (TEUs) for $7-million, ordered four new 12Â 800 deadweight ton (dwt) oil/chemical tankers for $72-million and taken delivery of a 32Â 000 dwt handysize bulk carrier in which it has a 50% share at a cost of $10-million.
This follows a $200-million order for seven new building product tankers, leaving Grindrod with a “substantial fleet of ships” by the end of 2007.
“These ships have been ordered or purchased at competitive prices and with the strong rand are good buys in rand terms, although some have been financed in US dollars,” said Clark.
“These good buys will add further to our stated policy of creating sustainability and growth of earnings going into the future.”
In the most recent development, Grindrod has bought the 605-TEU geared containership, Range, which is currently on charter to Ocean Africa Container Line (OACL), Grindrod’s partnership with Safmarine for its Southern African feeder service.
Having been employed on the trade for a number of years, the 133m vessel will remain on charter to OACL for at least five years.
“This purchase represents a sound investment at a time when larger ships are being deployed on the trans-ocean container trades, increasing the demand for feeder vessels and consequently causing the rates for vessels of this size to firm,” he said.
Of the four new 12Â 800-dwt oil/chemical tankers, Grindrod expects the first, Cederberg, to be delivered by Samho Shipbuilding company in Korea during the second half of 2006. Another three — Swartberg, Drakensberg and Langeberg — will follow shortly thereafter.
Built to higher safety specifications than those required by international agreements, these 127m tankers will have a scantling draught of 8,7m, enabling them to call at smaller ports, giving Grindrod considerable versatility in the charter markets.
The tanker building programme is an extension of Grindrod’s earlier initiative in terms of which the seven 37Â 000-dwt double-skinned, product tankers were ordered from the Shin-A yard in South Korea. Of the seven tankers, three are already operating on long-term employment — is moving oil products along the Southern African coast; Nyathi is trading mainly around the Mediterranean and is currently in the Black Sea, while Oliphant, commissioned in December 2004, will trade worldwide within the Dorado products tanker pool that is managed by Heidenreich Marine, based in Darien, Connecticut, United States.
Oliphant entered service amidst a shipping climate that is favourable to owners of double-skinned tankers as earnings and values for this class of vessel are firm and the outlook for this market is encouraging.
Clark added that, with shipping markets having been exceptionally strong, resulting in record high ship prices, Grindrod took the opportunity to exercise a well-priced option to sell one of the seven 37Â 000-dwt tankers under construction in Korea, which will be delivered to her new owners in November this year.
“When Grindrod ordered the tankers, average daily earnings on the spot charter market were around $14Â 000 per day. The current daily rates are in the region of $25Â 000, and even time charter rates are now at similar levels,” he explained.
“Since placing our order for these tankers it has become mandatory on many important trade routes to move cargo in double-skinned tankers, and over the next few years, all single-skinned vessels will be phased out. This has surged orders for these vessels to the extent that most shipyards capable of building them have full order books well into 2008. It has also increased substantially the value of our subsidiary Unicorn’s tanker fleet,” he said.
Although the tanker market has been bullish for several months — pushed further by the seasonal demand during the Northern hemisphere’s winter — London shipbroker Clarksons believes that the trend will continue well into 2008. A shortage of refinery capacity in the US, against a growing demand for refined products, will not be fulfilled in the medium-term as environmental lobbies have succeeded in curtailing the expansion of North American refineries.
China, analysts believe, will continue to absorb huge volumes of imported energy adding substantially to the tonne-mile demand.
Clark added that Grindrod’s 32Â 000 dwt handysize bulk carrier The Durban Bulker will be used in the worldwide IVS/Lauritzen handysize joint venture pool, which is currently enjoying high rates and in which Grindrod has a substantial number of low cost handysize bulk carriers employed at much higher rates.
“In addition, Grindrod recently took delivery on long-term charter of two newbuilding panamax vessels, the IVS Pinotage and IVS Merlot. These ships were ordered and chartered in when shipping markets were low and have been chartered out for three and five years, respectively, at much higher rates with good counter parties.
Grindrod will be announcing its results for the year to December 2004 on February 24, and has issued a trading update which indicates that the results will be between 130% and 140% up on 2003 levels. – I-Net Bridge