ZIM cargo ship 311.
(photo credit: Courtesy)
‘Just as no one anticipated the crisis, no one expected the recovery and return
to these levels. It was much stronger than we expected,” Zim Integrated Shipping
CEO Rafi Danieli told Globes. “In conversations with our
colleagues, no one expected such a recovery. But when there is such strong
volatility, there is concern that a powerful correction will
Just a year ago, Zim, a wholly-owned subsidiary of Sammy and
Idan Ofer-controlled Israel Corporation, was in the throes of the worst crisis
in its history. The company was hit by a confluence of a severe crisis in global
shipping and heavy debts, which threatened to sink it under a debt burden of
In the wake of the complex settlement with scores of
creditors to restructure billions of dollars in debt, Zim embarked on a new
route based on a new strategic plan. Although the company initially missed the
plan’s targets, financial recovery, cost-cutting measures and a sell-off of
assets has now enabled Zim to meet the targets, and it even made an operating
profit in the second quarter of 2010.
Zim expects even better results for
the third quarter, including an operating profit of $100m., compared with an
operating loss of $153m. for the corresponding quarter of 2009.
Sunday, Zim sold its stake in the Port of Lagos’s Tin Can Island Container
Terminal for $154m.
Globes: Do you intend to sell more assets? Danieli:
“We have no plans for more sales at this time. This sale was planned for 2011,
but we were able to bring it forward and make it this year.
Do you have
holdings in other terminals? “We have holdings in terminals in Spain and the
Netherlands, but these are both very important holdings, and we won’t sell
Even in the sale of the Nigerian terminal, we created a deal
structure that could actually expand our operations at it.”
If you are
planning no more sales, does this mean that the cutbacks are over? “I don’t like
the word cutbacks. It’s always possible to continue to become more efficient, so
that the company is under constant pressure to streamline. We’ve undertaken many
measures, some of which are still under way.
We were under pressure to
streamline in view of our financial results, but the tension should be kept even
when the results improve, so as not to accumulate fat.”
When times were
good, Zim considered an IPO on the Hong Kong Stock Exchange at a company value
of $1.5 billion, but the company missed the boat and failed to raise capital
before the crisis hit.
Although the crisis caused Zim to defer the IPO,
Danieli has not ruled it out.
“We haven’t dropped the idea of an
offering, and we definitely haven’t neglected it,” he said.
the plan because of the crisis, but the rationale behind the IPO is still
When the capital market and shipping industry allow it, we’ll
reconsider an IPO.”
Has the shipping industry returned to normal? “The
general trend in the industry is positive, but reservations are warranted, and
note that the economy has not yet returned to its previous levels, so we have to
look at the future with caution.
“In terms of activity, we haven’t
returned to the level of 2008, and we won’t get back to that scale of business
anytime soon. However, in terms of business and deployment, we’ve opened two new
important shipping routes and we have plans for changes and
The current infrastructure is more efficient and solid for
the future, thanks to changes in our debt structure and changes and reduction in
unprofitable activities. The infrastructure for the company’s future activity is
more solid now.”
Which markets have had strong recoveries? “Asia and
Europe remain strong markets, and they are the shipping industry’s growth
engines. The American market has also shown strong recovery, although it is
still in crisis.”
Europe is struggling in a deep recession. How can it
affect the shipping industry? “The crisis caused volatility, but in terms of
trade, activity is still extensive.”