Shipping boom boosts Zim’s Q2 results

Zim Integrated Shipping Services Ltd (NYSE: ZIM) reported exceptionally strong results for the second quarter of 2021, buoyed by the global shipping boom. The Israeli shipping company reported net profit of $886 million in the second quarter of 2021, up 50% from the previous quarter and 35 times higher than the corresponding quarter of 2020. After just a decade of having to seek debt settlement, Zim may be Zim is the most profitable company in Israel today, with profits of $1.48 billion in the first half of 2021. The company is benefiting from the global boom in freight rates since the outbreak of the COVID-19 pandemic and the growing demand for the freight services it provides. During the second quarter, Zim shipped 921,000 containers (TEU), an increase of 44% from the corresponding quarter of 2020, while the average container freight rate was $2,341, an increase of 119% from the corresponding quarter. Second-quarter revenue totaled $2.4 billion, three times the corresponding quarter of 2020 and well above analysts’ estimates of $1.77 billion. Revenue for the first half was $4.1 billion, up from $1.6 billion in the corresponding period of 2020. Zim held an initial public offering on the New York Stock Exchange in January 2021 at the company’s valuation and the stock price fell 23% on the first day of trading. But it recovered quickly and the stock price rose yesterday by 203% since the initial public offering. The stock is up another 4.05% today at $47.28, giving a market value of $5.4 billion. Kenon Holdings (NYSE: KEN; TASE: KEN), controlled by Idan Ofer, is Zim’s largest shareholder with a 28% stake. Eli Glickman, CEO of Zim, asserts that the increase in freight volume by Zim is well above the industry average. “We do not control the prices but the market. We try to be better, more efficient, more innovative and be in the markets where prices are higher. We are a global but specialized player and we go to places where our profits are higher.” Container freight rates have doubled according to the Shanghai Index but domestically there are lines where prices have gone up tenfold. For example, from Asia to the United States, where a year ago the average was $2,400 per container and today it is possible to see $20,000 and there is no place on the ship. People are knocking on my door willing to pay any price, and as in many industries, negotiations today revolve around finding a place on the ship. Related Articles Zim rents ‘green’ container ships for $1.5 billion Zim shareholders sell $279 million of stock in secondary offering How did this happen “In the wake of Covid, the crisis started with production in China, which was shut down for two months and from there it shifted to demand” , especially in Western countries. There is a huge excess of demand, because people have freed up money that they don’t need for hotels and flights and may have incurred the expense of renovations and e-commerce orders, so from a situation where ships are “idled” today there are no ships around the world. We were set right. At the height of the crisis, we had 54 ships and today we’re on our way to 120 and our container count has gone from 600,000 to a million. These were decisions that justify themselves today.” Will this global trend continue or do you expect things to stabilize? “Demand is growing and getting stronger. All over the world, there is supply chain disruption, so we can see a bottleneck: a shortage of ships, a shortage of containers, in ports, especially in American ships. Dozens of ships in Los Angeles are waiting for more than 10 days. I don’t see this getting any better.” We also see this in the ports of Israel “I don’t want to talk about Haifa or Ashdod. There are things about the culture of labor committees and not at all with demand. We lose a lot of money because we wait in inefficient ports around the world.” Glickman concluded, “As of now our forecast is getting better every week. How long will it last? I don’t know but at the moment there are no changes in trends.” Published by Globes, Israel business news – en.globes.co.il – on August 18, 2021 © Copyright Globes Publisher Itonut (1983) Ltd. 2021