So a few things…
1. ZIM’s biggest market is transpacific - Red Sea impact on that is fairly small to start with. They only recently started to see it play out in their favor yet aggressive raised forecasts. European shipping is far more impacted by Red Sea volatility at this time.
2. FDX is indicating a slowdown in international shipping. This either means poor macro economics which would depress consumer demand - so less shipping overall needed OR companies feel in a good position on container freight they don’t need the more expensive air freight component.
3. Maersk isn’t shopping the same overall outlook. So ZIM being they are 10th in size in the industry, it seems counterintuitive they would have such an aggressive outlook.
4. They are Israeli and given internal Israeli issues, they tend to over project outward strength - thus the aggressive realignment. Between Bibi and Gaza, a large portion of the international community is losing patience. So when there is signs of weakness they double down and always want to project strength (even if nonexistent). This has a bigger potential negative impact on European shipping (which would offset any gains from Red Sea issues).
5. Their CFO spun the spot instance strategy - contracts are down since rates are down overall. Their contract/spot split is usually 50-50 to begin with. Contract rates were not compelling (cause they were low) so they only went with 35 contract and the rest spot. So 15% less on contracts due to lower overall rates, so spot pricing isn’t necessarily grabbing higher yields but preserving most of what they are trying to grab anyways.
An almost doubling of pricing seems pretty fantastical. Maersk reports 8/7 I think and will set the tone for the rest of the year for shippers. Citi just recently issued a downgrade based on the spot rates forecast for the rest of the year decreasing (which would align with what Maersk is saying). If there is anymore upside left, it’s in the 5-10 range and would be speculative in nature.
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So a few things… 1. ZIM’s biggest market is transpacific - Red Sea impact on that is fairly small to start with. They only recently started to see it play out in their favor yet aggressive raised forecasts. European shipping is far more impacted by Red Sea volatility at this time. 2. FDX is indicating a slowdown in international shipping. This either means poor macro economics which would depress consumer demand - so less shipping overall needed OR companies feel in a good position on container freight they don’t need the more expensive air freight component. 3. Maersk isn’t shopping the same overall outlook. So ZIM being they are 10th in size in the industry, it seems counterintuitive they would have such an aggressive outlook. 4. They are Israeli and given internal Israeli issues, they tend to over project outward strength - thus the aggressive realignment. Between Bibi and Gaza, a large portion of the international community is losing patience. So when there is signs of weakness they double down and always want to project strength (even if nonexistent). This has a bigger potential negative impact on European shipping (which would offset any gains from Red Sea issues). 5. Their CFO spun the spot instance strategy - contracts are down since rates are down overall. Their contract/spot split is usually 50-50 to begin with. Contract rates were not compelling (cause they were low) so they only went with 35 contract and the rest spot. So 15% less on contracts due to lower overall rates, so spot pricing isn’t necessarily grabbing higher yields but preserving most of what they are trying to grab anyways. An almost doubling of pricing seems pretty fantastical. Maersk reports 8/7 I think and will set the tone for the rest of the year for shippers. Citi just recently issued a downgrade based on the spot rates forecast for the rest of the year decreasing (which would align with what Maersk is saying). If there is anymore upside left, it’s in the 5-10 range and would be speculative in nature.
Holy shit. It's Chad Dickens. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/wallstreetbets) if you have any questions or concerns.*