By Mike Wackett
Zim Integrated Shipping Services recorded a $74 million net loss in the second quarter of the year. This compares with a $23 million profit in the same period of 2015, which the Israeli carrier blamed on “unprecedented low freight rates and severe market conditions”. The second-quarter loss follows a $56 million deficit in the first quarter, after the Israeli carrier had returned to the black in 2015 with a modest net profit of $7 million.
Second-quarter revenue dropped 19.8 per cent year-on-year to $612 million, with average revenue per TEU plunging 25 per cent over the first half of this year to $903 per TEU. However, the container line’s aggressive marketing improved its TEU load count by 7 per cent on the second quarter of 2015 (which, by coincidence, was the same increase over the first quarter of 2016) to 617,000 TEU.
Zim’s outgoing President and Chief Executive, Rafi Danieli, said: “The very challenging market situation impacts the industry as a whole.” However, Mr. Danieli, who announced in January that he wished to step down as Chief Executive, but will continue until a replacement is found, said the line’s “fast reaction to market changes” had assisted it “to cope with the challenges”.
Zim only published its second-quarter results around a month later than had been expected. This, it said, was due to negotiations with creditors over the rescheduling of approximately $115 million of debt repayments. But it said it had now “reached agreement” to delay payments by up to 12 months. “With this agreement in place the company maintains its financial stability and will continue to develop its growth plan,” it said in a statement. “Reaching this agreement is another proof of the confidence and trust that the creditors have in the company.”
Zim was restructured in 2014 in a deal which saw its lenders and the owners of its chartered tonnage take a 68 per cent stake in the company in a $1.4 billion debt-to-equity swap. At around the same time, the carrier axed its loss-making Asia-Europe liner services to concentrate on the then more lucrative Asia to U.S. east coast tradelane.
According to Alphaliner’s latest update, Zim now ranks 17th in the ocean carrier league table, with a total vessel capacity of 341,430 TEUs across a fleet of 73 ships, giving it a 1.6 per cent share of the global market. It has no outstanding vessel orders and 67 of the vessels in its network are chartered in.
In July, when the 2M alliance signed a memorandum of understanding with South Korean carrier Hyundai Merchant Marine (HMM), there was speculation that Zim was also in talks to join the Maersk and MSC-led alliance. Subsequently, with the demise of Hanjin, rival vessel sharing grouping THE Alliance, which Hanjin was scheduled to join in April 2017, is rumoured to have been making overtures to Zim.
And post-Hanjin, with the intensity of carrier M&A activity stepping up, Drewry notes that the top five-ranked carriers now control 54 per cent of the world’s container trade, compared with 36 per cent in 2005.
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)