In Q3 2023, the company’s revenue slumped more than 60% to US1.3B and operating profit (adjusted earnings before interest tax, depreciation and amortisation – EBITDA) of US$211M compared with US$1.9B in the same period of 2022. For the first nine months of the year adjusted EBITDA of US$859M was down 86.9% on 2022’s figure (US$6.6B). The volume of cargo carried also fell with the 2.5M TEU shipped in Q3 2023 comparing with 2.56M TEU in the same period of 2022. Meanwhile, the average freight rate (US$1,139)  at which this cargo was carried was down 66%.

The poor results have led to Zim cutting its fiscal guidance for the full year with an adjusted EBITDA in the range of US$900M to US$1.1B now expected. In 2022, the company posted an EBITDA of US$7.5B.

“These results reflected the current operating environment, as demand remained weak and freight rates continued to deteriorate,” said Eli Glickman, president and CEO of Zim. “Given our negative outlook for freight rates in the near future, we recorded a non-cash impairment loss of approximately US$2.1 billion which negatively impacted our net results, as well as revised our full year guidance.”

The CEO does not expect a quick turnaround in the current situation, but believes the actions being taken by the company will enhance both its commercial and operational resilience”. These measures include a mix of cost cutting programmes and above all network rationalisation, with Glickman citing the recent collaboration agreement with MSC as “enhancing our operational efficiencies and elevating our service levels”.

He elaborated: “Foremost, we have embarked on a fleet renewal programme, which includes 46 newbuild containerships of which 28 are ‘green’ LNG vessels, and that along with the redelivery of older, more expensive and less efficient vessels, we expect will improve our cost structure and drive long-term profitable growth.”

But Zim has in its fleet a large number of charter ships hired during the COVID-19 when daily charter rates were very high. While some vessels have been returned to their owners and some have been sub-let, but at much lower rates, its fleet operational costs are high. A considerable amount of this tonnage is contracted into 2025.

“As we look towards the future, our focus is to emerge from the current downturn in a stronger position than ever,” said Glickman. “While market challenges may continue in the near term, we expect that the combination of the initiatives we have undertaken and our solid market position will drive profitable growth over the long term.”