A sharp drop in ZIM’s revenues reveals both lower shipping rates and lower demand for goods. Both speak to a deflationary outlook and, further, analyst estimates point to expectations that these deflationary trends could continue for the next few years.
Commentary
- ZIM Integrated Shipping Services Ltd. provides container shipping and related services. It provides door-to-door and port-to-port transportation services for various types of customers, including end-users, consolidators, and freight forwarders. At the end of 2022, it operated a fleet of 150 vessels, which included 139 container vessels, 11 vehicle transport vessels & a network of 67 weekly lines.
- A look at ZIM’s annual revenue growth shows covid’s impact on shipping costs, which skyrocketed during the ensuing supply chain crisis – thus driving significant inflation for the price of goods.
- However, a look at ZIM’s quarterly revenue performance shows a sharp, recent decline in both shipping demand and shipping charges consistent with a notable shift in consumer spending from goods to services.
- This trend is helping to drive deflationary pressure on the price of goods.
- It is further notable that Wall Street analysts are forecasting subdued revenues & profitability for ZIM over the next several years – suggesting low expectations for the demand for goods (and economic growth) over the foreseeable future.
- This outlook has important valuation implications for ZIM shares.
