Pirate Busters - American Shipper

Troubled
waters
Zim, CSAV and Hapag-Lloyd
fight for their lives as shareholders
double down on struggling lines.
A
group of shareholders of the parent company of
embattled Israeli liner carrier Zim posited a simple
theory to executives of the line in late August.
The only reason Zim was in trouble right now, the shareholders
said, was because of the ship-ordering binge it embarked
upon in 2004. The context of this accusation was a meeting
of Israel Corp.’s shareholders, where they were being asked to
essentially provide the sandbags to Zim’s overflowing river.
36 AMERICAN SHIPPER: OCTOBER 2009
ANALYSIS BY ERIC JOHNSON
The line has been leaking cash the past
two years and sorely needs an injection of
capital that will see it through the leanest
period in the container shipping industry
since the cargo box was invented.
Zim is not alone. From Haifa to Valparaiso
to Hamburg, some of the most
famous names in ocean shipping are severely
teetering.
Chilean line CSAV has needed its own
shareholders and ship charterers to provide
some $700 million in relief, after first half
losses hit $413 million.
German carrier Hapag-Lloyd, meanwhile,
has needed the financial backing of
its two groups of major shareholders — a
consortium of Hamburg businessmen who
bought a 57 percent stake in the line in
fall 2008, and tourism giant TUI, which
formerly owned Hapag-Lloyd, but now
has a 43 percent stake. The two groups
have committed to inject $1.3 billion into
the line in order to secure additional state
backing from the German government
worth $1.2 billion.
What all these scenarios have in common
is the swiftness with which multibilliondollar
brands have been placed in peril,
and the extent to which shareholders are
being asked to retain faith in their business
models.
But back to the shareholders being asked
to bolster Zim. Their statement — that the
line’s own ambitious expansion problem
was to blame — was quickly rebuffed by
Zim, according to a report Aug. 20 in the
Israeli business newspaper Globes.
“The company would have been in crisis,
irrespective of the procurement plan,” said
Alon Raveh, Zim chief financial officer, in
response to the shareholders’ worries. “The
crisis is affecting all companies.”
Much the same sentiment was put
forward by Rainer Feuerhake, CFO of
TUI, the 43-percent stakeholder in Hapag-
Lloyd.
“What we are doing with Hapag-Lloyd
is safeguarding our investment,” he said.
“There is a very serious situation. If we
do not give them a very stable financial
framework, Hapag-Lloyd could be in immediate
danger.”
Feuerhake was describing to industry
analysts the reasons why Hapag-Lloyd’s
shareholders were engrossed in make-orbreak
talks about providing a cash infusion
to the line.
The words may have been different, but
the message was the same: save us now,
and you’ll thank us later.
Or more precisely, late 2008 and the
whole of 2009 is a historically bad passage
of time for liner carriers and companies
involved in this business deserve not to