After taking advantage of the Corona crisis to stock up on long-term cash and ships, and after years of severe recession, not only thatZim Managed to stabilize but became a success story against the background of increasing the volume of sea transport, and especially the jump in transport prices in containers. Eli Glickman, The CEO of the company, which is currently traded at a market value of about $ 5.9 billion, this evening described at a conference of the Eli Horowitz Institute at Tel Aviv University what factors have made Zim a success story in recent times.
“When the corona started, we had a fleet of about 90 ships and we started to reduce expenses, while reducing the fleet to about 50 ships. I was told on the board: ‘You should ask for government help.’ Or six of the ten largest shipping companies in the world received help in the first months of the Corona, and I said, first of all do not go to the government, secondly do not fire any Zim worker and no worker goes to the IDF, All over the world and not just in Israel. “
Glickman added that “every week the board held a meeting to examine the status quo. At one point I felt that the lack of production in China was suddenly starting to take a turn of excess demand in countries in the West and the US. We decided to lease ships and grow. We had one car carrier, today we have about ten of them, today Zim has over 115 ships, we grew together with the corona and we continue to grow. “During the month of October, Zim purchased seven second-hand ships worth a total of about $ 320 million.
“One of the most significant things we did was after a meeting with the vice president of one of the largest global companies in the world who explained to me that air shipping expenses have increased significantly. I told him how long it takes you to transport a product from southern China to Los Angeles, he told me about six days. I asked if we would do it in twelve days and lower your price, would that interest you? He said yes. I agreed with him, without calculations, that we would lower his price by 80%, we earn several times more than the regular line, and we opened a first line from Shenzhen to Los Angeles in 11-12 days.
“Two shipping companies who wanted to cooperate with us, and because I wanted to be a fair I asked us to be partners, they said I was crazy. A year after these lines opened all the shipping companies in the world opened such lines, so the congestion was recorded off the shores of Los Angeles. Know, one, that we closed a better contract where the ship arrives she does not wait in line, and secondly the ship descends from the container to the smithler out of port, we took 2,900 smiters’ carts and there are no such carts in Los Angeles so the big competitors have a problem competing with us. A line from China to Australia and so on and in the end it’s part of the change we made, “Glickman said.
“A successful company can not do without the expense side. One of the things that helped us succeed is the control of expenses. A company that is inclined to pay for terminals in the world, $ 1 billion a year on fuel, trains in the world – these are huge sums. How do you make the change? Of growth engines, because even when the market changes, and it’s a matter of time, we can make the company a leader and not go back ten years, “Glickman said.
Yair Seroussi, chairman of the Horowitz Institute, said: “We are in a period of disruptions and volatility in the markets, which can also be great opportunities. The corona has created disruptions in the global supply chain and this has led to the golden age of shipping and an opportunity for creative and flexible companies to create alternate lines and grow rapidly. ZIM ‘took advantage’ of 2021 to equip itself with long-term cash and ships, thus stabilizing the company after years of severe recession.
“The world has undergone a leap in the use of technology to provide services remotely but is eventually needed by the old companies that carry out the production and transportation services. Companies like Amdocs and ZIM are examples of companies with billions of dollars in sales and large operating systems. In the coming year, such companies will have an advantage in the business model.The economy will be mainly affected by political moves of the major powers: China, USA, Russia. The boards will deal more than ever with the climate crisis, ESG and cyber protection in the coming year. Investors will look for stability and moderate growth. “