• ITVI.USA
    13,795.070
    81.410
    0.6%
  • OTRI.USA
    26.560
    -0.120
    -0.4%
  • OTVI.USA
    13,740.380
    64.000
    0.5%
  • TLT.USA
    2.720
    -0.060
    -2.2%
  • TSTOPVRPM.ATLPHL
    2.670
    0.130
    5.1%
  • TSTOPVRPM.CHIATL
    2.930
    0.280
    10.6%
  • TSTOPVRPM.DALLAX
    1.320
    -0.020
    -1.5%
  • TSTOPVRPM.LAXDAL
    3.040
    0.050
    1.7%
  • TSTOPVRPM.PHLCHI
    1.740
    0.050
    3%
  • TSTOPVRPM.LAXSEA
    3.210
    0.000
    0%
  • WAIT.USA
    108.000
    5.000
    4.9%
  • ITVI.USA
    13,795.070
    81.410
    0.6%
  • OTRI.USA
    26.560
    -0.120
    -0.4%
  • OTVI.USA
    13,740.380
    64.000
    0.5%
  • TLT.USA
    2.720
    -0.060
    -2.2%
  • TSTOPVRPM.ATLPHL
    2.670
    0.130
    5.1%
  • TSTOPVRPM.CHIATL
    2.930
    0.280
    10.6%
  • TSTOPVRPM.DALLAX
    1.320
    -0.020
    -1.5%
  • TSTOPVRPM.LAXDAL
    3.040
    0.050
    1.7%
  • TSTOPVRPM.PHLCHI
    1.740
    0.050
    3%
  • TSTOPVRPM.LAXSEA
    3.210
    0.000
    0%
  • WAIT.USA
    108.000
    5.000
    4.9%
American ShipperShippingTrade and Compliance

ZIM has become a global niche carrier, CEO says

Rafi Danieli, chief executive of ZIM, said in an interview with American Shipper that the carrier focuses on specific global trades, where it wants to sail, and where it has an advantage and a big market share.

   ZIM has become a “global niche carrier,” said Rafi Danieli, chief executive of the Israel-based container carrier.
   The company concentrates on specific global trades, where it wants to sail, and where it has an advantage and a big market share, Danieli explained in an interview with American Shipper.
   On the Asia to North America trade lane, ZIM has concentrated on services to the Pacific Northwest and U.S. East Coast, while avoiding the crowded California ports.
   Case in point: Last week, ZIM announced that it is beginning a service to Prince Rupert, British Columbia by chartering space on the CEN service. The CEN deploys seven vessels operated by COSCO with an average capacity of 12,653 TEUs and operates with a rotation of Xingang, Qingdao, Shanghai, Prince Rupert, Long Beach, Oakland and Xingang according to ocean carrier schedule and capacity database BlueWater Reporting.
   ZIM will join the loop Oct. 25.
   ZIM omitted the California calls in its announcement of the new service, and although its schedules show the calls to California, a ZIM spokesperson confirmed the carrier will not be serving ports in California on the CEN service.
   The service will supplement ZIM’s existing services between Asia and the Pacific Northwest, which include the Pacific North Express Service 1 (NP1), calling Vancouver, Tacoma and Seattle; and the Pacific North Express Service 3 (NP3), calling Vancouver and Tacoma.
   From the Far East to the U.S. East Coast, the company operates five strings. Three of which utilize the Suez Canal – the ZIM Seven Star (Z7S), China East Coast (CEC), and South Asia Suez (SAS) – and two of which use the Panama Canal – the ZIM Container Service Pacific (ZCP) and ZIM Pacific Atlantic (ZPA).
   Danieli noted ZIM does not participate in several major trades lanes. For example, the carrier has no services between Asia and North Europe, or between North Europe and North America.
   However, the company has three strings between North America and the Mediterranean, and offers services between the Mediterranean and a host of other locations including Asia, the East Coast of South America, North Europe, Africa and the Black Sea, as well as on the intra-Med trade.
   Another major area of concentration is the Caribbean and South America, including services to the U.S.
   Earlier this month, ZIM reported a loss in the second quarter of 2016.
   Revenues reached $612 million, down from $763 million in the second quarter of 2015, while the net loss for the company’s owners totaled $75 million compared to a profit of $10 million in the second quarter of 2015.
   The company’s adjusted earnings before interest and taxes (EBIT) was a negative $40.5 million, compared to positive $49.8 million for the second quarter of 2015.
   Danieli said that ZIM, like other container carriers, is under pressure because of a strong decrease in demand and a big increase in capacity. He said this has caused rates to plummet and “bad results for the whole industry.”
   Steeling itself for a continuing difficult market, ZIM approached creditors, some of whom are also shareholders in the company, and negotiated a rescheduled repayment of $115 million. The payments were extended seven to 12 months.
   ZIM was able to renegotiate those payments, he said, in part because creditors agree that ZIM has done relatively well when compared to its peers. He said the company has had a better EBIT margin (EBIT divided by revenue) than other carriers over the past six quarters since the company finalized a financial restructuring.
   He also noted that SeaIntel ranked the company as having 87.8 percent schedule reliability in the second quarter of 2016, the best among its peers.
   Danieli also said ZIM has become an asset-light company, owning only seven ships out of the 82 it operated at the end of June. More typically, he said carriers own about half their vessels. According to industry analyst Alphaliner, ZIM owns just six of the 71 ships it operates, and that its 334,110 TEUs of capacity makes it the 16th largest container carrier.
   ZIM is not a member of any alliance, but the company is involved in space sharing agreements with many carriers, including Hanjin, but Danieli said ZIM was far less entangled with Hanjin than its alliance partners.
   Looking ahead, Danieli said he does not believe there will be further bankruptcies in the container shipping industry in the near future.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.
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