ISRAEL's major shipping liner zim has taken a US$3 billion punt that demolition and emissions regulations allied with a more flexible charter market and economic growth will create drivers that will bring a better supply and demand balance to the market in 2025.
Xavier Destriau, executive vice president and CFO at Zim said the carrier is replacing older and smaller chartered tonnage with more efficient modern ships but is betting on significant changes to market fundamentals to drive rates upwards, reports UK's Seatrade Maritime News.
Zim has a total of 138 ships, eight owned and 130 chartered. Its fleet is undergoing change, however, with some 39 newbuildings due to be delivered by the end of Q1 2025. Some 25 new ships are diesel/LNG dual fuel ships, 15 vessels of 7,800 TEU and another ten 15,000 TEU ships, six of which have already been delivered.
Mr Destriau argues that these new and larger ships will reduce the carrier's costs per TEU.
'The cost of operating a 15,000 TEU LNG ship is the same as operating a 10,000 TEU ship, so for the same cost we have 50 per cent increase in the potential intake in this service. So, providing we fill this ship we get the benefits of the lower costs,' argued Mr Destriau.
It is a gamble that will inevitably see the carriers revert to their pre-pandemic nature where overcapacity results in a battle for market share, but the Zim believes that the fundamental changes necessary for them to thrive will occur by 2025, it is effectively a $3.1 billion flutter with the company's cash reserves.
That wager, Mr Destriau accepts, means that there is a need for rates to rise significantly to meet the new challenges ahead: 'We are looking for some catalyst for the rates to go back up and it's clear that at this stage there is no catalyst, due to this it's clear that this year and next the rates will not increase.'
Another factor that Zim believes will aid carriers is that by 2025 there will be 'more elasticity' in the charter market, following the end of the effects of the pandemic, which saw charter periods increase substantially.
Mr Destriau concedes that: 'Many liner companies did contract quite a significant amount of tonnage in 2020-21 when there was no short-term charter market, so we committed for a longer duration than we would normally have done,' as these charters end then the market will again become more flexible, argued Mr Destriau.
Zim's volumes increased slightly from 842,000 TEU in Q3 last year, to 867,000 TEU, but average rates per TEU fell to $1,139, a year-on-year decrease of 66 per cent.
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Xavier Destriau, executive vice president and CFO at Zim said the carrier is replacing older and smaller chartered tonnage with more efficient modern ships but is betting on significant changes to market fundamentals to drive rates upwards, reports UK's Seatrade Maritime News.
Zim has a total of 138 ships, eight owned and 130 chartered. Its fleet is undergoing change, however, with some 39 newbuildings due to be delivered by the end of Q1 2025. Some 25 new ships are diesel/LNG dual fuel ships, 15 vessels of 7,800 TEU and another ten 15,000 TEU ships, six of which have already been delivered.
Mr Destriau argues that these new and larger ships will reduce the carrier's costs per TEU.
'The cost of operating a 15,000 TEU LNG ship is the same as operating a 10,000 TEU ship, so for the same cost we have 50 per cent increase in the potential intake in this service. So, providing we fill this ship we get the benefits of the lower costs,' argued Mr Destriau.
It is a gamble that will inevitably see the carriers revert to their pre-pandemic nature where overcapacity results in a battle for market share, but the Zim believes that the fundamental changes necessary for them to thrive will occur by 2025, it is effectively a $3.1 billion flutter with the company's cash reserves.
That wager, Mr Destriau accepts, means that there is a need for rates to rise significantly to meet the new challenges ahead: 'We are looking for some catalyst for the rates to go back up and it's clear that at this stage there is no catalyst, due to this it's clear that this year and next the rates will not increase.'
Another factor that Zim believes will aid carriers is that by 2025 there will be 'more elasticity' in the charter market, following the end of the effects of the pandemic, which saw charter periods increase substantially.
Mr Destriau concedes that: 'Many liner companies did contract quite a significant amount of tonnage in 2020-21 when there was no short-term charter market, so we committed for a longer duration than we would normally have done,' as these charters end then the market will again become more flexible, argued Mr Destriau.
Zim's volumes increased slightly from 842,000 TEU in Q3 last year, to 867,000 TEU, but average rates per TEU fell to $1,139, a year-on-year decrease of 66 per cent.
SeaNews Turkey
