Following the 7 October attack on Israel, Israeli carrier Zim has been dealing with numerous operational disruptions. The carrier has been faced with increased insurance costs for coverage in Israeli waters and is passing its new war-risk surcharge to customers. Additionally, the carrier has the new challenge of managing the risk of an attack by Houthi militants in the Red Sea.
Since the Israeli operation in Gaza, the route Zim operates along – from the Far East through Suez and the Bab el-Mandeb Strait – has become increasingly hazardous for ships with ties to Israel. Zim announced last week it is taking “temporary proactive measures” to reroute some of its ships. As such, longer transit times are anticipated.
Rerouted ships will add extra costs in fuel and wages to the company’s already taxed finances. Said Clarksons Securities analyst Frode Mørkedal, “Our analysis indicates that Zim’s quarterly cash burn rate is approximately $300 million, suggesting that its existing cash reserves could sustain operations for roughly 2.3 years… This duration should be sufficient to weather market challenges at least through 2025.”