ZIM Faces Bleak Outlook as Container Shipping Weakness Persists

By Alex Whiteman (The Loadstar) –

Ongoing weakness in container shipping has forced Israel’s Zim to drastically re-evaluate its full-year performance, now expecting a loss that far outweighs analysts’ predictions.

Updating its guidance today, the carrier announced it was revising 2023 Ebitda down from $1.8bn-$2.2bn to $1.2bn-$1.6bn, with Ebit adjusted from profit of as much as $500m to a loss of $100m-$500m, markedly more than the $95m loss analysts suggested in May.

Chief executive Eli Glickman said: “Near-term container shipping market conditions continue to be challenging, with demand expected to remain muted for the remainder of the year.

“While our second quarter results are broadly in-line with our expectations, we no longer anticipate an improvement in freight rates in the second half of 2023, consistent with seasonality, as previously assumed.”

In a statement, the Israeli carrier said the updated guidance had primarily been driven by an ongoing weakness in rates across all its trades, particularly in the transpacific.

Optimism for any rate bounce back remains muted across the industry and Zim, which had been bullish in its Q1 presentation now appears to have accepted the weak market looks set to linger as demand remained subdued leading to little volume growth.

“We’ll continue to manage and rationalise our fleet and services, to maximise our cash position, while remaining true to our customer-centric approach,” Mr Glickman added.

“As we look to the future, we believe our cost-effective and fuel-efficient newbuild capacity, particularly newbuild LNG vessels, will markedly improve our cost structure and competitive position, allowing us to deliver sustainable value over the long term.”

After bagging net income of $1.7bn in Q1 2022, Zim recorded a net loss of $58m, as a volume decrease of 10% in the same period this year led to revenues collapsing, down 63% to $1.33bn.

Even so, in May, it reaffirmed full-year guidance for Ebit of $100-500m, in contrast to analysts who projected a loss of $95m, with Jeffries describing the reaffirmation as “surprising”, and one seemingly predicated on a hypothetical US restocking, rather than any demand rebound.

The late-May optimism was in marked contrast to all other carriers, the likes of Hapag-Lloyd, Maersk, and Yang Ming (who all recorded profits) believing Q1 will be their strongest.

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