THE Alliance Teams Up with Zim

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Container Ship Zim Virginia

Container Ship Zim Virginia by Daniel Ramirez

During these trying times for ocean carriers in the international shipping industry, carrier alliances dominate the shipping lines, sharing ship operations to reduce costs. On the outside looking in is a bad place for carriers to be.

That’s exactly where Zim Integrated Shipping Ltd has been.

The general consensus is that shipping lines that do not join a major carrier alliance are likely not to survive the ever shrinking international shipping competition pool.

Finally, an announcement of Zim working with a major carrier alliance has been announced. Mike Wackett reported on the Loadstar:

THE Alliance and Israeli carrier Zim are to combine Mediterranean-US east coast services next April.

Subject to regulatory approval, the co-operation involves THE Alliance dropping calls at Barcelona, Tarragona, Valencia and the transhipment hub of Algeciras from its AL6 service, which will be served by Zim’s flagship ZCA service, branded AL7 by THE Alliance.

In turn, Zim will co-load on THE Alliance’s rejigged AL6 service, marketing it as its ZC1, which will include a call at Savannah.

This is not exactly Zim joining THE Alliance but instead a limited cooperation with the major carrier alliance that recently lost a one of its prospective members when Hanjin shipping collapsed.

Interestingly, the Loadstar pointed out that Zim did not even mention THE Alliance in its announcement of the service. Here’s Zim’s press release on the enhancement to its Atlantic service:

ZIM is pleased to announce a significant upgrading of its Atlantic network, offering improved connections between US, Canada and the Mediterranean, starting April 2017, subject to FMC approval.

  • ZIM Container Service Italy (ZCI) – A new premium string, offering improved service to the Italian and French markets, connecting with Canada and the US East Coast, with faster transit time, additional ports of call in Italy and a direct call in Fos, France. This service will operate  5 vessels on the following rotation: Salerno – Livorno – La Spezia – Genoa – Fos Sur Mer – Halifax- New York – Norfolk – Savannah – Salerno
  • ZIM’s flagship service, ZIM Container Service Atlantic (ZCA), operating 7 vessels, will focus on the East Med and Spain, with a new call in Algeciras, serving the South Spain market and adding new direct calls in two major Turkish ports- Izmir and Mersin. ZCA upgraded rotation: Ashdod – Haifa – Izmir – Piraeus – Barcelona – Tarragona – Valencia – Algeciras – Halifax – New York – Norfolk – Savannah – Valencia – Tarragona – Mersin – Ashdod

The two current well-established dedicated services, MGX and MPS, will continue to operate as follows:

  • Mediterranean Gulf Express (MGX) providing a fast, direct service between Mexico, US Gulf and the Mediterranean, with connections to the Caribbean and Central America: Cagliari – Livorno – Genoa – Barcelona – Valencia – Port Everglades – Kingston – Veracruz – Altamira – Houston – New Orleans – Tangier – Cagliari
  • Mediterranean Pacific Service (MPS) – a direct service between US West Coast and the Mediterranean:  Cagliari – Livorno – Genoa – Fos Sur Mer – Barcelona – Valencia – Tangier – Los Angeles –  Oakland – Caucedo – Lisbon – Valencia – Cagliari

The improved structure is part of ZIM’s strategy, offering stable and reliable services to customers, while maintaining a flexible partnership policy with major carriers.

Rani Ben Yehuda, VP Cross Suez and Atlantic Business Unit, said: “We are very pleased to launch our upgraded Atlantic services, an improved product with wider port coverage and better service levels to customers.”

It is likely that this move is not the last in THE Alliance’s replacement of the lost Hanjin Shipping. And there is hardly a secure feeling when the alliance moves from a bankrupt shipping company to financially distressed one.

“Zim posted a net loss of $37.6m in the third quarter of the year, following a loss of $74.2m in Q2. In September, it agreed with its creditors to defer $115m of loan repayments until 2018 – 2020,” Wackett wrote in the Loadstar article.

Of course, it seems all carriers are under financial stress as they’ve suffered through years of overcapacity and low freight rates. At least now carrier alliances should be preparing for the possible collapse of partners so there is not a repeat of the cargo disruption that happened with Hanjin’s collapse.

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