The container shipping giant is suffering big losses as spot prices remain weak

Israeli container shipping giant Zim reported revenue of $1.34 billion in the first quarter, down 63% year over year. The company’s stock fell 16% after its earnings were announced on Monday. Zim is the 10th largest ocean carrier in the world.

“After a record year, Zim’s first quarter results reflected the significant decline in freight rates and weak demand, particularly in transpacific trades, that began last year,” said Eli Glickman, CEO. “While the near-term outlook for container shipping remains challenging, the proactive steps we took during the previous highly lucrative market phase have placed us better positioned to meet these challenges and we believe our differentiated strategy has long-term potential.” will create sustainable value for shareholders.” Term.”

Zim reported that carrier volume was 769,000 TEUs in the quarter, down 10% year-on-year. Average prices per TEU also fell by 64% to US$1,390.

The company’s total cash position decreased by $353 million in the quarter but remains at $4.25 billion, boosted by big gains during the pandemic.

Zim is more focused on the spot market than some of its larger peers, and that’s one reason for its poor performance. According to FreightWaves, Zim’s average rates and revenue are declining faster than carriers that are more contract-focused. Also playing a role is Zim’s reliance on the transpacific trade route, which is experiencing lower rates than the transatlantic.

Like its competitor Hapag Lloyd, Zim believes that spot rates cannot stay this low for long as shipping companies are losing too much money.

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