Debt-laden Israeli shipping company Zim said it has received support from its creditors as it continues to lose money during one of the worst and longest downturns to hit the industry.
Zim, which owes close to $3 billion, on Thursday said it reached an agreement with banks to delay payment of principal on its loans due at the end of 2014 to July 1, 2015.
"We are still enjoying support from creditors. They know the market is not doing well," Guy Eldar, Zim's chief financial officer, told Reuters on Thursday. "Financial institutions are giving us more concessions to carry out our restructuring."
Ship owners, too, have agreed to a $70 million reduction in repayment on the view the industry will ultimately rebound.
Zim, the world's 17th largest shipping company with a 2 percent market share, is owned by conglomerate Israel Corp . Zim lost $97 million in the second quarter, compared with a $47 million loss a year earlier.
The company had been banking on a jump in freight shipping rates in the second quarter but the increase of around $500 per container was smaller than expected. Rates, Eldar noted, were effectively lower in the April-June period than a year earlier.
"It is still premature but the overall trend in the third quarter is a little better than the second quarter," he said. "But the market still suffers from over capacity and that keeps freight rates low."
Some 130 new vessels have come into the market since the start of the year, he added.
Owners had ordered large numbers of new vessels between 2007 and 2009, just in time for the collapse of the global economy after the 2008 financial crisis.
Still, the main problem in the industry remains a poor global economy, with consumer demand for electronics in the West remaining subdued. Eldar said Zim, whose largest market is Asia to the United States, is working to increase the amount of higher quality cargo to increase revenue.
Typically, the second and third quarters are the strongest in the sector but Eldar said so far demand for the holiday season is low.
"We have no influence over the market so we are trying to be in a more favourable position in the market and trying to get better types of cargo," Eldar said.
Reporting by Steven Scheer (C) Reuters 2013.