Zim consolidates its global niche
Zim Integrated Shipping Services Ltd. has recently merged two of its feeder loops based in Kingston, Jamaica, to form a new end-to-end U.S. Gulf/East Coast South America service. This draws attention to an unusual global liner network.
Zim is the container arm of Israel's largest diversified private shipping holding, the Ofer Group, controlled by the Ofer family. Prior to 1999 Zim was Israel's national flag carrier and a very early pioneer of containerization. The Zim Container Service, launched in 1972, is the industry's oldest brand name loop still in operation, and it still exhibits many features which, when conceived, were well ahead of their time.
ZCS is a 15-ship (average 4,900 TEUs) pendulum loop connecting Israel and the Mediterranean with North America, continuing through the Caribbean and Panama Canal, to Asia. Zim had worked out that a single loop of containerships could serve several trades in a row more efficiently than in a series of end-to-end loops. Along the ZCS route it incorporated key hubs in the West Mediterranean (now Tarragona) and another in Kingston. It reasoned that a mid-point hub would always be twice as efficient for feeding as an end point, allowing double the size of feeder vessel. This was because the same feeder ship could simultaneously deliver cargo arriving from both sides of the pendulum and return to the hub with cargo for subsequent vessels headed in opposite directions.
Following the launch of ZCS, Zim went on to containerize an extensive legacy of conventional routes. It set itself a patriotic goal, supported by Jewish shippers worldwide, to find ways of remaining profitable as a liner cross-trader while also making sure that Israel would have secure connections to key markets around the world.
ZCS was a shining example of this strategy. The loop started from Haifa and ended in Hong Kong, traveling the 'wrong way' around the world. On leaving Haifa, ZCS mother ships connected Israeli shippers with the West Mediterranean, North America and Kingston. However as East Mediterranean cargo was discharged in the West Mediterranean, Zim reloaded there with non-Israeli transatlantic boxes for North America and the Caribbean. By the time the ZCS ships entered the transpacific trade there was little or no Israeli cargo on them. (It was much quicker to reach Asia from Israel on an alternative service traveling the opposite way.)
Many of Zim's early services radiated from Israel to:
' The Black Sea.
' North Europe.
' East Coast South America.
' East Africa.
' Australia.
' It also had, and still has, a Hong Kong-based subsidiary, Gold Star Line, with rights to run from Asia to South and West Africa.
Since then, and particularly lately, Zim has been building on its early connections by developing new services between areas originally served only from Israel.
In order to achieve this network growth, new services had to be cleverly evolved and the latest U.S. Gulf/East Coast South America loop is a good example. Before Zim could directly enter this trade it would have used its ZCS feeder hub in Kingston to aggregate strong transshipment flows separately to both the U.S. Gulf and East Coast South America.
As ComPair Data's database clearly shows, these would have included ZCS cargo from Asia, from non-U.S. Gulf ports in the United States and Canada, as well as via Kingston feeder links to/from all parts of the Caribbean, Central America and North Coast South America.
Zim also had to use transshipment to grow the intended new direct trade itself. This cargo flow is now strong enough to justify joining the two separate feeder arms together in a single loop, improving end-to-end service and cutting out the cost and delay of transshipment. However, the new loop still calls at Kingston both ways and still benefits from transshipment volumes to/from all other Kingston-connected destinations as well.
Zim already had a presence in East Coast South America, based on a direct service operating from the Mediterranean. So by building on its organization in South America, Zim has achieved a good initial foothold in the entire North America/East Coast South America trade. ZCS ships feed down to Kingston from Halifax, New York and Savannah, calling westbound at Los Angeles and Long Beach as well. The new SAX loop calls directly in Tampa, Mobile and Houston, while Port Everglades and Mexico enjoy regular feeder connections from Kingston. Zim can now rail boxes from California to Houston for a direct connection southbound to East Coast South America.
The benefit derived from the new loop increases when considering the East Coast South America cross-trade from Asia. Here Zim now has two routes available. ZCS loads eastbound in Hong Kong, Ningbo Shanghai and Busan express to Kingston for transshipment via SAX. Meanwhile, a new direct westbound loop around Africa (shared with Hanjin, Wan Hai, CCNI and Hapag-Lloyd), loads in the opposite port order before adding calls in Shekou and Singapore. Zim provides three of the 11 4,100-TEU ships on this ASE service, which calls at Durban on the return leg from South America to Asia.
Durban, in addition to Zim's key hubs in Haifa, Tarragona and Kingston, has long been an important stop. Gold Star's FAX loop connects it with Colombo, and Port Kelang and Singapore on one side and West Africa on the other. A Gold Star joint service with PIL also connects Durban with West Africa, this time from India/Pakistan and Dubai. A monthly two-ship East Africa feeder loop from Haifa terminates in Durban. Now there is the eastbound ASE call as well.
Meanwhile Zim is building upon Gold Star's longstanding West Africa presence with comparatively recent joint services from there to the West Mediterranean and North Europe.
In the major east/west trades Zim has two more pendulum-style services of its own, both serving Israel in mid-rotation, and it is also heavily involved in alliance-style partnerships. It has extensive slot exchange agreements and tonnage placements with both the Grand Alliance and China Shipping Container Line. Similarly Gold Star Line is well established in the intra-Asian market and is present in Asia/Australia.
A Containerisation International survey of top container lines in September showed that Zim's new ship deliveries and its ships on order could lift it from 18th position in 2009 to 11th by 2014. The fleet-based league table projected a 51 percent growth in Zim's size beyond 2010. It has 16 ships on order, including nine deliveries averaging 12,550 TEUs due in 2013. Adapting ZCS and the rest of its network to an expanded Panama Canal in 2014 will clearly pose a challenge, but all the evidence points to Zim having given much thought to that already. ' Francis Phillips