Grindrod to invest R175m in AutoPort in KwaZulu-Natal

Grindrod, the JSE-listed freight logistics and financial services company, has commenced construction of a R175 million 270 000m² state-of-the art AutoPort just off the N3 in Camperdown between Pinetown and Pietermaritzburg in KwaZulu-Natal.

The R105 million first phase of the development will accommodate the undercover storage of 2 400 vehicles and will be completed in the second quarter of this year.

The second phase will cost a further estimated R70 million and accommodate storage of a further 2 300 vehicles, with construction expected to commence in the second half of this year.

Planning for growth

Grindrod, which in 2018 unbundled and separately listed its shipping business on the US Nasdaq Stock Exchange and JSE, said options to increase the capacity beyond the first two phases are in place and will be developed in line with market demand.

These options will increase the capacity of the facility to accommodate a further 12 000 vehicles, it said.

Grindrod said this first-of-a-kind facility for finished vehicle logistics in South Africa includes reticulation for plug-in hybrid electric vehicles, metal roofing to mitigate fire and hail, a fully equipped workshop and fitment centre, a smart repairs facility, clearing and forwarding activities, bonded and duty paid storage, storage for trucks, light motor vehicles and other rubber-tyred vehicular equipment.

It said there was an emphasis on the ergonomic design of the facility to ensure efficient and effective vehicle flows.

Grindrod stressed that it understands the importance of moving towards a circular economy and has planned features such as solar panels, rainwater harvesting, wash-water recycling and plastic recycling systems as part of its Vision 2025.

Plastic wrappings removed from vehicles will be transformed into bricks and plastic roof sheeting, and used in commercial applications, it said.

Corridors

Grindrod CEO Andrew Waller said on Friday the rationale to invest in the AutoPort is a long term decision in line with Grindrod’s strategy to develop and provide logistical solutions on various corridors.

Waller said many factors were taken into consideration, including the location, the ability to expand in support of the extension of the Automotive Production and Development (APDP) and Automotive Masterplan to 2035, the need for an environmentally friendly facility, and the ability to cater for electric and hybrid electric vehicles.

The Automotive Masterplan announced by the Department of Trade and Industry in November 2018 envisages, among other things, doubling employment in South Africa’s automotive manufacturing industry to about 240 000 by 2035, with vehicle production to increase from 600 000 to almost 1.4 million units per annum.

The envisaged increase in production would mean South Africa’s global vehicle production ranking would increase from 0.62% to 1% of total vehicle production and, with much of this production exported, improve the industry’s contribution to the country’s trade balance.

Waller said Grindrod has engaged with Transnet to enter into a public-private partnership (PPP) to construct a rail siding on the facility, which is adjacent to the Natal corridor (Natcor) and already has rail infrastructure that will support this opportunity.

“This will give OEMs [original equipment manufacturers] the option of railing vehicles or trucking them,” he said.

Waller added that the location, on the trade corridor between Gauteng and Durban just off the N3, is ideal for distribution to the port and inland.

The facility will be used for both imported and exported vehicles.

Waller said there are a number of current contracts in place with various net OEM importers.

“OEMs we currently provide storage for include but are not limited to Nissan, Toyota, Honda, Motus, LSM [Lindsay Saker Motors] and Subaru.

“Further to discussions we have had, we anticipate these OEMs to migrate from our existing facilities to the new facility,” he said.

Waller said Grindrod Automotive has facilities nationally, with its KwaZulu-Natal facility currently located in the Southgate Business Park in Umbogintwini.

He said this facility will only be used for overflow vehicles during construction of the various phases of the new AutoPort and the intention is to migrate all operations to the new AutoPort at Camperdown.

Boost for local community

Mayor Eric Ngcongo of the Mkhambathini Local Municipality said they are very pleased with this exciting development, which will contribute to growth in the community.

Waller said the construction of this facility will bring revenue and employment to the community.

“This investment in key infrastructure supports our strategic focus of unlocking trade corridors,” he said. “Our management team has worked tirelessly and in collaboration with business partners to ensure that the design specifications provide our customers a unique competitive advantage and contribute to delivering a sustainable, cost-effective and efficient hub for strategic growth along this corridor.”

Grindrod’s automotive business is a significant part of the road corridor logistics business, which also handles fuel, minerals and containers.

Growth prospects

Despite the decline in domestic vehicle sales, the automotive business has increased its market share in the current year through focused customer service and internal excellence programmes.

Waller said Grindrod believes the South African and BLNS (Botswana, Lesotho, Namibia and Swaziland) market will be fairly static this year with subdued growth in 2021, but expects to see more meaningful growth post 2021 in the domestic market.

“Exports are expected to continue to show good growth into the future. The APDP 2035 programme has a commitment from all the OEMs and we believe the timeframe is realistic to achieve in excess of one million vehicles being produced in South Africa per annum.

“In addition, Grindrod sees opportunities in new geographies in sub-Saharan Africa which are currently serviced by a very limited number of providers,” he said.

Shares in Grindrod closed unchanged on the JSE on Friday at R5.27.