Israeli ocean carrier ZIM reported a net profit of $11 million in 2017 compared to a net loss of $163 million the year before.
Total revenues grew 17 percent from the previous year to $2.98 billion, as container transport volumes climbed 8 percent to 2.63 million TEUs and average freight rates rose 10 percent to $995 per TEU.
The return to profitability came despite ZIM posting a $10 million loss in the fourth quarter, a sharp decline from the $5 million profit the company reported in the same three-month period a year prior. And that quarterly loss came despite a 17 percent year-over-year increase in fourth quarter revenues to $761 million.
The company attributed the turnaround primarily to improved freight rates that resulted from the “extensive activity of mergers and acquisitions that also led to reorganization of the global alliances.”
ZIM is one of the few large carriers still operating outside the scope of the major east-west vessel sharing alliance agreements, which went from four groups to three in April 2017 after a 2016 year in which several global carriers were merged, purchased, or in the case of South Korea’s Hanjin Shipping, exited the industry via bankruptcy.
ZIM noted, however, that persistent overcapacity in the container shipping market translated into continued volatility in rates throughout the year, particularly in the fourth quarter.
Eli Glickman, who took the helm as ZIM’s new president and chief executive officer on July 1, 2017, said the results position ZIM "at the very top of the shipping industry.”
“ZIM is undergoing a profound process of change and improvement in all aspects of its activity, as is evident from its 2017 results,” he said. “Our well efficient network of shipping lines has proved reliable and able to provide excellent service levels to our customers. We lead the introduction of innovative digital solutions that will enable us to cater for changing market needs swiftly and efficiently.
“ZIM continues with its relentless efforts to improve customer service and to cost reductions, in order to achieve profitability,” added Glickman. “At the same time, the long-term overcapacity in the market and rising bunker rates continue to burden the industry as a whole.”