M&A radar: DB Schenker gulps a (jagged, little) poison pill
Down the hatch
Zim’s strategy of launching new services in high-demand markets, while restricting its contract portfolio on the transpacific, boosted its first-quarter liftings growth and average rate per teu above the industry par.
Where most carriers have reported year-on-year declines in volumes in Q1, due to port congestion, the Israeli carrier saw liftings rise 5%, to 859,000 teu, on the back of ten new services since the beginning of the year, including intra-Asia routes and Asia-Australasia.
Zim’s revenue soared 113% on the same period last year, to $3.7bn, for an average rate of $3,848 per teu. This compares with Maersk’s $2,276, Hapag-Lloyd’s $2,774 and OOCL’s $2,873.
Adjusted ebitda for Zim’s first quarter was $2.5bn and ebit operating income was $2.24bn, for a net record profit of $1.7bn. This, compared with the $590m earned in Q1 21, has prompted the NYSE-listed carrier to upgrade its full-year guidance to an ebitda of $7.8bn to $8.2bn, and an ebit in the range of $6.3bn and $6.7bn.
“Building on an extraordinary 2021 for Zim, we maintained our strong trajectory in the first quarter of 2022,” said president and CEO Eli Glickman, adding that result had been driven by “proactive strategies to capitalise on both the highly attractive market and Zim’s differentiated strategy”.
Zim CFO Xavier Destriau said around 45% of its volumes were on the transpacific, where it had renewed its cooperation agreement with 2M Alliance partners Maersk and MSC last month for the US east and Gulf trades. At the same time, it ended the agreement with the 2M for the US west coast in favour of standalone services.
Mr Destriau said its 2022 contract rates on the transpacific were “more than double” the previous year, but despite demand the carrier had restricted, to about 50%, its contract business on the route.
“We could increase the volume we carry on a contract basis, it was not a lack of demand… the first question we were addressing with our customers was the amount of space we could allocate…it was more a decision that we should stick with the allocation of a 50% split between contract and spot,” he explained.
“That has been a recipe that has worked for Zim over the past few years and we didn’t see any reason to change it,” he added.
Zim is the tenth-largest carrier, with, according to Alphaliner data, a fleet of 129 vessels with a capacity of 461,601 teu, while Loadstar Premium reports today that it continues to scour the market for acquisition opportunities.
All but eight ships are chartered-in: 11 have an expiring charter party this year; 28 have charters expiring in 2023; and 34 have charters expiring in 2024.
However, Zim has an aggressive orderbook, comprising 46 ships, for a capacity of 390,000 teu, which the carrier is taking on long-term charters from shipowners.
To hear more about container line profits, listen to this clip from The Loadstar Podcast: big interview with Hapag-Lloyd