Ø  Zim Integrated Shipping Services on Wednesday reported a net loss of $2.7 billion for 2023, largely a result of the $2.1 billion impairment loss taken in the third quarter combined with a weak end to the year. 

Ø  But the carrier does not plan to wallow in red ink for long and has upgraded its forecast for 2024 earnings before interest and taxes (EBIT) from a $300 million loss to a $300 million profit based on expectations of higher ocean rates and improving volume on the trans-Pacific. 

Ø  “The objective is to grow our carried quantities and to utilize the capacity we are bringing in,” Zim CFO Xavier Destriau told the Journal of Commerce in an interview following the annual results announcement.  CEO Eli Glickman told that the first half of 2024 will be stronger than the second half. “We can see that,” he said. “But what we do not know is what the rates will be in the second half.” 

While Israel-based Zim has forecast an improved financial performance for this year, the 2023 result was predicted by the carrier’s executives in November following the weak third quarter that extended through the end of the year.  Zim last year handled 3% fewer containers than in 2022, with volume of 3.28 million TEUs, but the real damage was done by average rates that were down 64% year over year, at $1,203 per TEU. That dragged revenue down to $5.16 billion, 59% lower than in 2022, while EBITDA fell 86%, to just over $1 billion. EBIT recorded a loss of $422 million, with the full-year net loss reaching $2.68 billion. 

ØZim CFO Xavier Destriau noted that freight rates that began to climb late last year were now trending down and could likely to stabilize at pre-drought levels in Panama, but it will depend on how long the drought dissipates in the future

Ø  With the arrival of new vessels this year, there is pressure on the supply/demand balance.

Ø“On the trans-Pacific, we have resumed services we suspended and are deploying larger vessels to upsize the trades,” Destriau said. “We are also willing to push volume in the backhaul as opposed to reposition empties to capture additional market share.” 

ØThe Global TEU Volume and Pricing Index table shows rates will strengthen while volume growth will flatten through 2024.

Latin American demand targeted 

Ø  Zim in January launched a standalone Pacific Northwest Xpress (ZPX) service between Asia and Vancouver, Canada, while also debuting a new, independently operated express service from the east coast of South America into the US Gulf Coast as it looks to capitalize on increasing volumes of industrial and intermediate goods moving on north-south trade lanes. 

Ø  “We see some countries in Southeast Asia are benefiting from that, but also countries in Latin America such as Mexico, Brazil and Chile,” he added. 

Ø  Zim has received half the 46 ships on its order book, with 22 more to be delivered this year. All the vessels are more fuel efficient and will be larger on average than those they are replacing. 

Ø“On a TEU basis, our operated capacity when we finalize the fleet transformation by the end of the year will increase by double digits compared to today,” Destriau said. “The cost per TEU will trend downwards, making us even more competitive in the trades where we operate."