Jerusalem: Israel Corporation has lent its container shipping unit Zim Integrated Shipping $50 million to help the troubled Israeli carrier survive tumbling cargo volume and sliding freight rates, writes the Journal of Commerce. The long term loan is the first tranche of a $150 million facility Israel Corp. has set aside for Zim as the carrier struggles to stem mounting losses by axing services,
laying up ships, trimming its payroll and seeking to delay or cancel orders for new vessels.
The loan from Israel Corp. comes a week after Zim announced first quarter 2009 losses widened to $119 million from $29 million in the year-earlier period and revenue shrank to $622 million from just over $1 billion. It lost $322 million in 2008.
Zim is also facing a claim for $151 million from an ocean carrier - reported to be China Shipping Container Lines - in a dispute over joint venture agreements on the Asia-Europe liner trades.
Zim is scaling back plans for a large increase in capacity in 2009-2012 that were undermined by the slump in ocean container traffic and freight rates since the second half of 2008.
The carrier is negotiating with its banks to change or waive financial covenants and is also talking with Asian shipyards about scrapping or deferring ship orders. Israel Corp. recently reached an agreement to cancel the construction of six 1,700teu vessels at a cost of $38.6 million.
Zim has idled 20% of its fleet capacity and is returning chartered ships as they come off hire. [04/06/09]
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