
Israeli ocean carrier Zim said yesterday it expected freight rates to keep falling and was preparing for the ânew normalâ by focusing on profitable niche markets for its container services and expanding its car-carrier business.
Zim reported third-quarter revenue of $3.1bn, down 3% on the same period of last year, from 4.8% less volume, at 842,000 teu, for an average rate of $3,353 per teu, up 4% on the previous year.
Operating profit for the period was down 17%, to $1.54bn, while Zimâs net income declined 20%, to $1.17bn, versus Q3 21.
The rapid decline in global freight rates since September obliged the carrier to downgrade its guidance for the full-year, for an ebit of between $6bn and $6.3bn, from the previous expectation of up to $6.7bn.
During Zimâs Q3 earnings call, CFO Xavier Destriau said Zim expected rates âto continue to go downâ.
âIt depends on the trade; there are some trades that have been more exposed to the rate deterioration than others. For example, the North Atlantic is better today, whereas the US west coast has been suffering much more than other tradelanes,â he said.
âOn some trades the spot market went below contract rates⦠more importantly from our perspective, the demand and volume was not there so we had to deal with a new reality and engage with customers, with whom we have a long-term relationship. So clearly, with the spread between the contract and spot rates increasing, we had to sit down and agree pricing in order to protect the business,â added Mr Destriau.
In terms of supply, Mr Destriau said it was âvery likelyâ there would be an increase in the number of blanked sailings on the transpacific in the coming weeks, adding: âWe intend to be profitable in the trades where we operate, and we donât wish to sail capacity at a loss.
âIn some trades, such as Asia to the US west coast, the spot rate has already crossed the breakeven point, and there is not much more room for further reductions.â
He added that the US east coast market was proving âmore resilientâ, but the Latin America trade was also now âslidingâ.
Zim has an operating fleet of 138 ships, for 538,189 teu, ranking it tenth in the carrier league table, with all but eight vessels chartered in.
Moreover, it has an orderbook of 43 ships, for 378,034 teu, including ten 15,000 teu LNG dual-powered ships stemmed for delivery from February next year, which it intends to deploy between Asia and the US east coast.
The charters of 28 vessels expire next year and a further 34 can be returned to owners in 2024.
In terms of renegotiating some of its more expensive charters with owners, Mr Destriau said âshipowners were always prepared to listenâ.
He told The Loadstar there was âgreat pressureâ for its expedited China to Los Angeles service to remain profitable. However, he said before Zim decided to âexit the tradeâ it would look at other options, including slot-sharing with other carriers.
Post time: Nov-17-2022