News / Disruption gives volumes and revenue a boost, and Zim enjoys profit rebound

Chaos in the Red Sea has seemingly helped turn around Zim’s fortunes, the carrier recording surging profits, revenue and carried volumes for the first six months of the year.

Announcing its H1 performance, the Israeli carrier reported a 30% year-on-year uptick in revenue, to a little under $3.5bn, as Ebit went from a H1 23 loss of $182m to a profit of $635m.

Chief executive Eli Glickman suggested the success was down to the carrier having increased its exposure to the transpacific trade’s spot market, but others put it more bluntly.

One liner shipping source told The Loadstar that, along with other carriers, Zim was likely thinking “thank you, Houthis”, as prior to the disruption brought about by the Iran-backed group’s attacks on commercial shipping, the Israeli carrier had been “in trouble”.

“Zim had chartered ships at high rates and commitments for ships at equally high rates, so this disruption has been the silver lining and, once again, they’ve been lucky,” said the source.

“Disruption is good for shipping. As it was with Covid. Having had a situation where it had too many liabilities, Zim found itself in a situation where it could fill ships at high rates and take advantage of the situation.”

The source added Zim had shown the ability to not only seize opportunities when they arose, but see where the money was – pointing to its withdrawal from Europe.

Volumes had also climbed year on year by more than 10.4% over the six months, with the carrier hauling just shy of 1.8m teu, as average freight rates increased 22% year on year, to $1,569 per teu, leaving Mr Glickman optimistic for the remainder of 2024.

“We expect our results in H2 to be better than in H1, driven by continued supply pressure from the Red Sea crisis, combined with current favourable demand trends,” he said.

“While market fundamentals still signal supply growth significantly outpacing demand, we are confident that we have built a resilient business with a transformed fleet. By year’s end, our newbuild programme will be complete.

“We are on track to achieve our double-digit volume growth target in 2024, and well positioned to drive profitable growth ahead.”

The carrier’s second-quarter numbers also fared well, with carried volumes up 10.7%, year on year, to 952,000 teu, as revenue surged more than 47.5%, to $1.9bn, leading to Ebit of $468m, a reversal of Q2 23’s Ebit loss of $182m.

But despite the positive numbers, the source said Zim still had some issues on its horizon that would need addressing.

“It has slot charters with the 2M [Alliance, ending on 1 January], so it is going to need to think about where it will go for these. And while it has some cooperation with MSC, my guess is that it may look to the remaining THE Alliance members [HMM, ONE and Yang Ming].

“Zim’s other issue is the looming US east coast strike, where it has commitments. It could go to the west coast, but ports there will just get jammed up. So, there remain issues to be solved.”