MSC enters its second vessel-sharing agreement (VSA) with Zim

MSC has recently entered into its second vessel-sharing agreement (VSA) with Zim within a week, with Zim now acting as a ship provider for the North Europe-Mediterranean Israel Express Service. This collaboration will involve five vessels of the 6,700 teu-type, with MSC managing three of them. Although an MSC customer advisory has shared this news, an official confirmation from Zim is still pending.

The updated rotation for the Israel Express Service, as stated by MSC, will cover the route: London Gateway-Rotterdam-Hamburg-Antwerp-Le Havre-Ashdod-Haifa-Damietta-Valencia-London Gateway.

This new partnership marks a renewal of Zim’s previous collaboration with MSC and its 2M partner Maersk, which ended in January 2022. This separation pushed Zim to make alternate arrangements to fulfill its commitments. Zim is currently undergoing a restructuring of its liner network after reporting a net loss of $213 million in the second quarter and reiterating its full-year prediction of an ebit loss up to $500 million.

Zim had terminated its Asia-US west coast services in favor of concentrating on the more profitable Asia-US east coast route, which it now operates in conjunction with the 2M Alliance. Additionally, Zim recently announced the suspension of its Asia-Australia CAX service starting October. Pending regulatory approval, the carrier will join MSC’s Panda service, contributing three 5,000 nominal teu ships to the seven-vessel loop. The carrier also plans to replace its Oceania TFX and N2A loops with newly branded ZAO and ZOX services, seemingly slot charters on MSC’s Kiwi Express and Capricorn strings.

Zim’s EVP for intra-Asia, Danny Hoffman, sees this move as an exciting new phase for the carrier. He explained that the restructuring of their Oceania services network in collaboration with MSC aims to enhance reliability and improve customer offerings. Following the agreement with MSC, industry analysts noted that Zim would need to find new employment for approximately ten 2,500-2,800 teu chartered-in vessels currently operating on the soon-to-be-discontinued Oceania loops.

Zim has been actively engaged in the sub-let charter market, successfully re-leasing surplus ships to offset the daily hire liabilities with vessel owners. However, the demand for tonnage, especially in smaller sizes, has shifted to an oversupplied condition recently, potentially making it more challenging for Zim to sub-let its redundant ships.

According to Alphaliner data, Zim holds the 10th position in the container line league table, with a capacity of 568,577 teu across 130 ships, of which only nine are owned by the carrier. Additionally, Zim has a substantial order book consisting of 38 long-term charter vessels with a nominal capacity of 306,184 teu. In light of stagnant market share growth, Zim will need to either redeliver or sub-let a significant portion of its existing chartered tonnage to accommodate the arrival of newbuild vessels.

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