Zim Integrated Shipping Services, the Israeli ocean carrier, is seeking to cancel part of its $1.4-billion container ship order book and reschedule delivery of other vessels.
Zim Integrated Shipping Services, the Israeli ocean carrier, is seeking to cancel part of its $1.4-billion container ship order book and reschedule delivery of other vessels amid tumbling freight rates and shrinking cargo volumes. Parent company Israel Corp. said Zim is talking with shipyards about rescheduling payments for ships by providing credit to the carrier.
Following talks with the shipyards, Zim will enter negotiations with its banks in February or March over whether to continue with ship loans of up to $1.375 billion, Israel Corp. said in a statement to the Tel Aviv stock exchange.
Zim is also seeking to reschedule loan payments on some of its ships after banks last year agreed to waive or change compliance with financial covenants on loans until the end of 2008. Some have agreed to waive compliance for a longer period.
Israel Corp., which said it will provide Zim with $150 million in financing if required, said the slump in the shipping market has affected the carrier"s ability to raise capital and well as the terms of its financing.
Zim has already laid up 16 container ships or 20.5 percent of its fleet capacity in TEUs, and said more vessels likely will be idled through 2009. It said it will also return chartered vessels when their hire contracts expire, withdraw from some trade routes and cut its payroll.
Zim has 41 ships on order totalling 290,738 TEUs, according to AXS-Alphaliner, a Paris-based consultant. These include nine 12,500-TEU ships at South Korea"s Samsung Heavy Industries, and seven 10,070-TEU and four 8,200-TEU vessels at another Korean yard, Hyundai Samho.
Zim is the world"s 17th-largest ocean carrier with a fleet of 31 owned and 71 chartered vessels of 277, 556 TEUs and a 2.1-percent market share, according to AXS-Alphaliner.