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How Zim went from deep debt to one of Israel’s most profitable firms

CM 18/08/2021

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Zim Integrated Shipping Services, a company that was billions of dollars in debt just several years ago, is now one of the most profitable companies in Israel.
The Haifa-based shipping and container company posted a net profit of $888 million in the second quarter of 2021 on revenues of $2.38 billion. A year earlier its profit was just $25 million.
The company’s stock rose more than 5% to $48 in Thursday morning trading on the news. Shares of Zim have quadrupled in value since the company went public on the New York Stock Exchange in January.

“We are very proud of posting our best-ever results,” Zim CEO Eli Glickman told The Jerusalem Post. “We have become a leader in profit margin in the entire container industry, and one of the most profitable companies in Israel.”
Glickman explained the company’s dramatic turnaround.
“Ater the financial crisis in 2009, when the company was billions of dollars in debt, we completely changed the company. We changed our vision, our values. We went from being a volume-oriented company to a profit-oriented company. We made the company agile so that, for example, in the beginning of COVID-19, when activity declined, we decreased our number of vessels, and then later, when the market changed, we were able to increase the number of vessels. We became a technology leader in the container business, using big data, business intelligence and artificial intelligence.”
Zim more than doubled its fleet of vessels to 113 ships, from 54 a year earlier, and increased its number of containers by 50% to 930,000 20-foot equivalent units, or TEUs.
“All of our vessels are chartered, for a long-term lease,” Glickman said. “We are a non-asset company. We own only two vessels ourselves, but we prepared for a high-demand market.”
“The shipping industry is currently in a state of disorder, and there is a shortage of vessels and a crisis for lack of containers available to meet high demand. We have people knocking on our doors asking for space in our containers.”
Prices per container have skyrocketed during the pandemic. The Shanghai Containerized Freight Index, the most widely used index for sea freight rates, has risen between two to 10 times over the past year, Glickman said. Shipments from China to the United States that cost $2,400-$2,600 can now go for as high as $15,000-20,000.
“We opened a new shipping line for e-commerce deliveries that can compete with air cargo, because air traffic had dropped tremendously and there are not enough planes to handle the demand. We can ship from China to the US in 11-12 days. The airlines do it in six days, but we offer a better price.”
Most of Zim’s business is on routes between China and the US. Only about 9% of its business is with Israel, although, Glickman noted, that represents 30% of Israel’s total trade.
Eli Glickman, president and CEO of ZIM. (credit: RAPOPORT PRIVATE NEWS)Eli Glickman, president and CEO of ZIM. (credit: RAPOPORT PRIVATE NEWS)
At the time of Zim’s IPO in January, the company had a market capitalization of $1.5 billion, even though its actual value was negative before that, Glickman said. The market cap is now nearly $5.5 billion.
“The president of the NYSE said we were one of the top IPOs of the year,” Glickman noted.
Looking ahead at the shipping industry crisis, where costs and delivery times have risen around the world, Glickman said he doesn’t see any end in sight.
“I have no good news,” he said. “The crisis will remain for a while.”

Source: Jerusalem Post

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