Israeli ocean carrier ZIM Integrated Shipping Services Ltd. (ZIM) has sunk to the red in the first quarter of 2016 after staying in the black for almost a year.
ZIM swung to a $56 million net loss in the first quarter from a $12 million profit in the previous year and revenue was down by a fifth as slumping freight rates negated a market-beating increase in container volume. The adjusted EBIT margin was negative 2.6% for the three months ended March 31, 2016.
Israeli container shipping company carried 577 thousand TEUs in Q1, reflecting a 3% increase compared to Q1 2015 ZIM maintained its competitive position in terms of EBIT margins, vis-à-vis the industry, in spite of severe market conditions and historically low freight rates.
But the average freight rate per TEU carried was USD 943 in the first quarter of 2016, reflecting a 25% decrease compared to the respective period last year.
Rafi Danieli, ZIM’s President and CEO, said: “The very challenging market situation impacts the industry as a whole. ZIM continues to make progress with its extensive cost-cutting and efficiency projects, along with investment in customer service excellence, as evident in a recent first place ranking awarded to ZIM in a schedule reliability report."
He added: "Our asset-light business model facilitates a highly flexible and cost-efficient fleet management, which, together with our pro-active optimization and rationalization of the Company’s line network, proves crucial in the current market environment. Our strategic business plan, focusing on select markets where the Company has a competitive advantage, aims at allowing ZIM to cope with the challenges faced by the industry.”