IVS breaks from tradition with launch of massive ore carrier

GRINDROD’S subsidiary company Island View Shipping (IVS) has become well known for its fleet of modern handysize (average 35 000-dwt) bulkers that have been introduced to the fleet in recent years, all acquired while building prices were low and now operating in markets where rates are high. That’s been the success of IVS, and a success that has helped Grindrod rise in the ranks of world shipping. But it’s interesting that the latest IVS newbuild is not another ‘handy’ but a Capesize bulker of 180 000 ton deadweight, the largest ship built for the group to date. Named IVS Cabernet to reflect her South African ‘flavour,’ the ship is the equal of three rugby fields in length and almost the width of one, while having a draught of 18m. Designed for the ore trades – iron ore and coal – IVS Cabernet is an ideal complement to the IVS fleet at a time when the demand for commodities such as iron ore and coal are rising. At the same time the shortage of newbuildings in this class, linked with the high level of confidence in the market’s long-term sustainability, has pushed prices to all-time highs. Not that Grindrod is paying top price for this ship. While not disclosing the actual figure, Alan Olivier, Grindrod’s CEO, says that three years ago when the ship was negotiated with the Japanese builder, long term charter rates were around $20 000 a day and are currently about double that. “The strategy of ordering ships when markets have indicated a future shortage of a particular class of ship, has served us well,” says Olivier. “We now have a modern, diversified fleet which will grow to 56 ships by the end of 2011 and we'll continue to look for opportunities to grow the fleet.” He said that much of Grindrod’s fleet had been contracted out ahead through next year and into 2009 with profits locked in which means they will not be affected by any fluctuations in the shipping markets. In August this year Grindrod reported capital commitments of R2.2 billion on ship expenditure over the next few years, with close to R800 million having been spent on ships to date this year.