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South Africa Freight Transport Report Q4 2009Published by: Business Monitor International Published: Oct. 28, 2009 - 69 Pages Table of Contents
AbstractGrindrod, Africa's largest shipping company, announced its H109 results in August and, like themajority of shipping lines, its financials were hit by the global decline in trade. The company's unauditedrevenue for H109 stood at ZAR12.4bn (US$1.6bn), down 11% on H108. Grindrod's operating profitbefore interest and taxation also registered a year on year (y-o-y) fall of 51%. Grindrod's shipping unitshave been hit hardest by the downturn, with H109 operating profit (before interest and taxation) decliningby 59% y-o-y. The company's shipping unit operates in both the dry bulk and tanker markets. Thecompany has initiated a downturn weathering strategy, which has seen it cut its fleet from 55 vessels to49. The company is prepared to idle more ships depending on the course of the downturn. Grindrod statedin March that it was well positioned to ride out the downturn. It said that its capability to do this stemmedfrom a 'strong balance sheet, good cash flow, favourable liquidity, a high level of contract cover and ayoung, low-cost fleet'. Despite the company's H109 revenue decrease, Grindrod is prepared to find thepositives in the downturn, with Olivier quoted by Engineering News as saying, 'we are looking foropportunities to make acquisitions in the shipping industry. This weak market gives us the opportunity togrow'.Since our last report, we have very slightly edged up the outlook for the South African economy as itseeks to find its way through the global downturn. We now expect the economy to contract by 1.8% in2009 (vs. our previous outlook of a 1.9% contraction) and to recover with growth of 2.2% in 2010 (+1.8%previously). However, the predicted average annual GDP growth rate across the 2009-2013 forecastperiod now stands at 2.1%, significantly less than the 4.7% figure achieved in the preceding five-yearperiod. The effect on our freight traffic forecasts across the two five-year periods is therefore quitestrongly negative. Freight transport statistics do not cover all modes in South Africa, but to draw anoverall picture, we make BMI freight carried estimates for road haulage, maritime cargo, and pipelinethroughput. We expect road haulage to grow on a par with GDP, although poor road quality in some areas will be arestraining factor. Rail freight will lag behind the economy's general growth rate due to an ongoinginvestment shortfall, and despite current catch-up attempts. Sea freight will be broadly ahead of GDP,supported by port expansion plans. Airfreight has expanded relatively slowly in recent years, althoughonce the current downturn has been worked through, the expansion of low-cost carriers and an increasingfocus on the African regional market should inject some extra dynamism in the tail end of the forecastperiod. Combining all factors, our conclusion is that total freight volume across the different modes,measured in million tonnes-km, will rise by an annual average of 2.5% in the 2009-2013 forecast period,a little ahead of GDP. Get Full Details About This Report >> |
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