Grindrod, Africa's largest shipping company, announced its H109 results in August and, like the majority of shipping lines, its financials were hit by the global decline in trade. The company's unaudited revenue for H109 stood at ZAR12.4bn (US$1.6bn), down 11% on H108. Grindrod's operating profit before interest and taxation also registered a year on year (y-o-y) fall of 51%. Grindrod's shipping units have been hit hardest by the downturn, with H109 operating profit (before interest and taxation) declining by 59% y-o-y. The company's shipping unit operates in both the dry bulk and tanker markets. The company has initiated a downturn weathering strategy, which has seen it cut its fleet from 55 vessels to 49. The company is prepared to idle more ships depending on the course of the downturn. Grindrod stated in March that it was well positioned to ride out the downturn. It said that its capability to do this stemmed from a 'strong balance sheet, good cash flow, favourable liquidity, a high level of contract cover and a young, low-cost fleet'. Despite the company's H109 revenue decrease, Grindrod is prepared to find the positives in the downturn, with Olivier quoted by Engineering News as saying, 'we are looking for opportunities to make acquisitions in the shipping industry. This weak market gives us the opportunity to grow'.

Since our last report, we have very slightly edged up the outlook for the South African economy as it seeks to find its way through the global downturn. We now expect the economy to contract by 1.8% in 2009 (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 forecast period now stands at 2.1%, significantly less than the 4.7% figure achieved in the preceding five-year period. The effect on our freight traffic forecasts across the two five-year periods is therefore quite strongly negative. Freight transport statistics do not cover all modes in South Africa, but to draw an overall picture, we make freight carried estimates for road haulage, maritime cargo, and pipeline throughput.

We expect road haulage to grow on a par with GDP, although poor road quality in some areas will be a restraining factor. Rail freight will lag behind the economy's general growth rate due to an ongoing investment 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, although once the current downturn has been worked through, the expansion of low-cost carriers and an increasing focus on the African regional market should inject some extra dynamism in the tail end of the forecast period. 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.