Continued maritime liquidity will drive the biggest M&A deals this year
Shipping lines’ “cushy liquidity” helped double M&A deal value in the container port sector last ...
Israeli shipping company Zim reported a year-on-year trebling of third-quarter revenues as its average rate per teu soared and volumes grew 16%.
The Nasdaq-listed line posted an adjusted ebitda for Q3 of $2.08bn, compared with $262m in Q3 20, on the back of $3.14bn in revenue, following $1.01bn last year.
It carried 884,000 teu during the period, at an average rate per teu of $3,226, a year-on-year increase of 174% on last year’s $1,176 per teu.
Part of its burgeoning war chest is expected to go to expanding its vessel and container fleets as it looks to launch new services, and will involve considerable charter activity, CFO Xavier Destriau told The Loadstar.
“We are trying to solve a complex equation, as we are entering new trades and will require new vessels and, at the same time, the charter market is in a very tense situation,” he said.
“That is one of the reasons why we started to buy second-hand tonnage, because the tension on the supply side remains there and we needed to ensure we had access to tonnage. But we also had other tonnage come up for renewal over the past quarters, and we completed that successfully.
“Next year we have 25 vessels coming off charter, about two a month. This is perfectly manageable, and it also worth noting that most of the vessels coming off charter are smaller sizes.
“What we then need to do is secure new tonnage that will act as a bridge until we start taking delivery of the ten 15,000 teu vessels and 15 7,000 teu vessels that are on long-term charter.
“But it is hard to secure charters for less than 12 months, even though the market is beginning to stabilise and, in any case, we are happy to commit to charters lasting two-and-a-half to five years. In 2023, there will be another batch of [on-hire] vessels coming up for renewal,” he added.
However, the intriguing possibility that Zim might re-enter the Asia-North Europe trades when its larger vessels arrive was ruled out by CEO and president Eli Glickman (pictured below).
“The 15,000 teu ships will be deployed on Asia-US east coast; these vessels are designed for this trade as they are the maximum dimensions of the Panama Canal,” he told The Loadstar.
“We are also very happy to have made the deal on the 7,000 teu ships, which are very flexible and could be used on a variety of trades, such as China-India, the transatlantic, Asia-Africa or Asia-Latin America. They are effectively the next generation of today’s panamax vessels.
“Where they are deployed will depend on where the opportunities lie – but, for sure, we are not going to deploy 24,000 teu ships between Asia and North Europe. We are not part of that game; it is a trade that we leave to the big carriers,” he explained.
And while the freight forwarding and logistics sectors have their appeals, they are not a target for significant M&A, he added.
“We are not going to be a Maersk, with a massive investment in integrated logistics, and we are not going to be a CMA CGM and go out and buy a big 3PL. And are not going to invest in big terminals – it isn’t our game.
“But we would like to find opportunities for cherry-picking in the market – there is some demand from some of our customers for end-to-end solutions, and we will provide that service, but most freight forwarding investment is in digital tools.
“We just opened a company – the digital freight forwarding platform Ship4wd – and our targets here are the small- to medium-sized businesses that want to book shipments on a mobile or tablet. We have tried to find a unique digital solution for this market, but it is not a solution for our big customers,” he said.
However, he did admit that the company was hunting some acquisition opportunities, but “we haven’t found the shipping company to go for that we can digest”.
It will, however, continue to place orders for new containers, Mr Destriau said.
“We have grown our fleet by 60% over the past 12 months and have more to go. However, as the new boxes arrive, we will then phase-out our older equipment as the congestion eases and there are fewer boxes tied up in ports. Eventually we will have a larger fleet, but also a rejuvenated fleet in terms of age.”