Rod's handling old boat (5)
I believe the answer is:
canoe
'boat' is the definition.
(I know that canoe is a more specific form of boat)
'rod's handling old' is the wordplay.
'rod' becomes 'cane' (both can mean a stick).
'handling' means one lot of letters goes inside another.
'old' becomes 'o' (abbreviation).
'cane' going around 'o' is 'CANOE'.
(Other definitions for canoe that I've seen before include "Kayak-like boat" , "Small boat with paddles" , "Boat (that can be dug out!)" , "Boat one paddles" , "Narrow paddle boat" .)