ZIM

ZIM Integrated Shipping Company (NYSE: ZIM) is a leading provider of shipping services with a focus on highly profitable, niche routes where the firm has established a dominant market position. ZIM went public recently with shares being listed on the NYSE in January of 2021. Prior to the pandemic, the shipping industry was a boring mature industry with established firms and limited growth opportunities. While the industry and its firms are still boring, the economics of the industry have changed dramatically, providing shareholders with extremely attractive returns. ZIM is a dynamic shipping carrier when compared to its peers. Traditionally, container ship carriers purchased boats and then would charge per container. However, ZIM leases it ships rather than purchase them outright, enabling them to change their fleet size according to demand. This is a major advantage as ZIM can increase its fleet, as it has done so due to the surge in container ship demand. However, while ZIM can be nimble and adjust to the times, it comes at a cost as lease rates for ships can increase during booming periods, increasing costs. This is a threat ZIM has faced, yet increased costs are more than offset by sky-high demand and rates for container ships. One of the major risks posed to ZIM and other shipping companies is the introduction of more container ships to meet surging demands, leading to normal shipping rates. This is a major concern as it can lead to decreased income, directly impacting the firm. However, container ships are not built overnight, and it can take up to 2 years to build a vessel capable of taking to the sea. Increased demand resulting from globalized trade has led to a shortage of available container ships to carry products for import/export. As a result, carriers such as ZIM have increased shipping rates by 25% to 50%. The resulting rates have led to increased revenues for firms, while costs have remained stable during the same period. This has led to a ripple effect on shipping firms’ net income, with massive increases from prior years. Increased rates have led ZIM to record-breaking revenues, with the firm posting $1.36 billion in the 4th quarter of 2020 alone. Of the $1.36 billion in revenue, ZIM recorded net income of $366 million and EBITDA of $531 million (Q4 2020).

back

ZIM

bullish

ZIM Integrated Shipping Company (NYSE: ZIM) is a leading provider of shipping
services with a focus on highly profitable, niche routes where the firm has established a
dominant market position. ZIM went public recently with shares being listed on the NYSE in
January of 2021. Prior to the pandemic, the shipping industry was a boring mature industry with
established firms and limited growth opportunities. While the industry and its firms are still
boring, the economics of the industry have changed dramatically, providing shareholders with
extremely attractive returns.

ZIM is a dynamic shipping carrier when compared to its peers. Traditionally, container
ship carriers purchased boats and then would charge per container. However, ZIM leases it ships
rather than purchase them outright, enabling them to change their fleet size according to demand.
This is a major advantage as ZIM can increase its fleet, as it has done so due to the surge in
container ship demand. However, while ZIM can be nimble and adjust to the times, it comes at a
cost as lease rates for ships can increase during booming periods, increasing costs. This is a
threat ZIM has faced, yet increased costs are more than offset by sky-high demand and rates for
container ships.

One of the major risks posed to ZIM and other shipping companies is the introduction of
more container ships to meet surging demands, leading to normal shipping rates. This is a major
concern as it can lead to decreased income, directly impacting the firm. However, container ships
are not built overnight, and it can take up to 2 years to build a vessel capable of taking to the sea.

Increased demand resulting from globalized trade has led to a shortage of available
container ships to carry products for import/export. As a result, carriers such as ZIM have
increased shipping rates by 25% to 50%. The resulting rates have led to increased revenues for
firms, while costs have remained stable during the same period. This has led to a ripple effect on
shipping firms’ net income, with massive increases from prior years. Increased rates have led
ZIM to record-breaking revenues, with the firm posting $1.36 billion in the 4th quarter of 2020
alone. Of the $1.36 billion in revenue, ZIM recorded net income of $366 million and EBITDA of
$531 million (Q4 2020).

Comments

Write your comment....

Sign in to comment

read-time
1 min

50.00

Target Price

8/ 10

Confidence

6-12 Months

Timeframe
Share
catalyst icon
Earnings Per Share
catalyst icon
Financials
catalyst icon
Management
catalyst icon
Price to Earnings Ratio
catalyst icon
Dividend
catalyst icon
Other Catalyst

ZIM Channel

Start new chat
aiodd-ad
next