Thursday, November 23, 2017

Ocean Container Shipping Line Sees Spectacular Turnaround in Profits

Freight Rate Rises Help Struggling Carrier
Shipping News Feature
ISRAEL – WORLDWIDE – The latest results from ocean carrier Zim Line are enough to cheer up any shipping executives who may sometimes doubt their wisdom when choosing a career. Spectacular hardly describes the phenomena of turning a $151.3 million loss for the first nine months of 2016, into a $51.3 million profit in the equivalent period this year. There are several factors which produced such a turnaround, not least the average freight rise chargeable on a container from $898 to $1,008, a 12% jump in the comparable January to September figures.

Most of the spike in profitability has occurred in Q3 with an adjusted net profit of $36.2 million, compared to the adjusted net loss of $40.4 million in Q3 2016. Those months saw Zim carry 10.6% more TEUs, 688,000 as opposed to 622,000, reaping a net profit of £25.2 million against the previous net loss of £37.6 million. This period also saw that rate per box show the biggest hike, up from $887 at a time of falling rates, to £1,058, an almost 20% increase year on year.

Zim executives were however not showing too much excitement despite the turnaround saying that many challenges still lie ahead for the industry with uncertainty over freight rates and fuel bunkerage costs. Zim does however claim to be in the forefront of the blockchain revolution, something we covered in our August article.

The system, developed by paperless systems specialist Wave uses distributed ledger technology to ensure that all parties can issue, transfer, endorse and manage shipping and trade related documents through a secure decentralised network. The application is free for Shippers, Importers and Traders and requires no IT or operational changes.

Describing the electronic bill of lading substitute as the ‘Holy Grail’ Zim says its Integrated Shipping Services is convinced the system will lead ocean shipping into the digital era. Zim has successfully trialled the scheme on a consignment of containers shipped by Sparx Logistics from China to Canada, with all delivered to the consignees without a hitch. Zim CEO Eli Glickman said he was proud his company was leading the way whilst IO Eyal Ben-Amram commented:

”Promoting innovation and technology in our industry is an integral part of Zim’s vision. While we are still in the process of evaluating the technology, we are confident that this type of forward-looking ideas will advance our industry as a whole towards a more efficient and modern phase.”

For its part this was a crucial test for Wave as the first pilot of its kind by an ocean carrier and CEO Gadi Ruschin commented:

“We thank Zim for leading the industry adoption of the Wave application and network. Moving to a digital Bill of Lading would be hugely beneficial in supporting the supply chain in general, through reduced costs, error free documentation and fast transfer of original documents. We look forward to continuing the process and invite more of ZIM’s customers and partners to join the pilots and use Wave for their business needs”

Photo: The 8,200 TEU containership Zim Ningbo at rest.