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Israeli carrier Zim Line has been obliged to add a “going concern” qualification – confirmation that the company will continue trading  to its third-quarter financial statement released on Saturday.

The addition, no doubt required by the company’s auditors, follows two weeks of tough talks with creditors to write-off half of the embattled carrier’s $2.4bn debt.

Zim said it had been required to reclassify some $1.5bn of long-term debt to short-term debt, but added that it was “on the verge of signing” an agreement that would “provide long-term stability”.

A company statement said: “There has been no deterioration in the company’s performance. Zim estimates that once the arrangement is completed and approved, there will be a significant improvement in the capital structure.”

The cargo unit of Israel Corporation posted an operational profit (EBIT) of $17m for the third quarter from revenue of $900m, but the carrier’s bottom line recorded a net loss of $44m, compared with a $16m profit in the same period in 2012.

However, Zim pointed out that there had been some improvement, as this followed a $97m loss in the previous quarter – although this had included $24m for employees taking early retirement.

The improved result, said Zim, was achieved against a backdrop of “downward pressure on freight rates and the continued uncertainty in the global economy”, challenges which, it said, it was tackling with “internal efficiency measures”.

Zim, the world’s 19th largest ocean carrier, carried 2% more containers at 640,000teu than in its second quarter when revenue was higher at $976m – a decline due to a 4% drop in its average freight rate to $1,202.

This was below par for the industry’s market leaders, with Maersk recording an average rate for the quarter of $1,327 per teu, CMA CGM $1,388, and Hapag-Lloyd reporting $1,476. However, Zim argued that its operational results were on a “par with the industry average”.

Zim’s dilemma is similar to other loss-making carriers as they prepare to finalise budgets for 2014: should they concede market share to carriers with lower unit costs or continue to fight to fill their ships?

The outlook does not appear promising for Zim and others. For example, the circa-$1,000 per teu general rate increase on the Asia-Europe trade lane has lost more than 50% since its November 1 implementation.

And in the current overcapacity-plagued market, the forthcoming mid-December Asia-Europe GRI will be a similarly tough ask for the carriers to sustain.

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