Thursday, May 28, 2009
Manila: A court in Manila, the Philippines, has ordered the seizure of shipping containers belonging to Zim Integrated Shipping Services, after Zim's former local agent, Overseas Freighters Shipping, filed a damages suit, writes news website Haaretz. The agent is said to be suing Zim for about NIS 16.6 million, and the containers are worth an estimated 74.5 million pesos (about NIS 6.3 million).
Overseas contends that Zim is in breach of contract for terminating the 30-year business relationship between the two companies, after Overseas agreed to sell 40% of its agency to Liberty Ships, another local company. Zim refused to ratify the agreement, claiming it was not committed to the sales deal. The court ordered the seizure of 475 Zim containers, which Zim claims were undervalued by the court.
Zim and two Israeli nationals, Danny Hoffman and Hani Kalinski, have countered Overseas' suit with a petition to the Manila Regional Trial Court, claiming that the seizure order was issued "maliciously, with evident bad faith, and undue haste." The petitioners have asked that the seizure order be lifted, arguing that the court had no jurisdiction over the case.
Zim's dire financial straits, caused by a sharp decline in marine shipping and the global credit crunch, have prompted the company to look for escape clauses from many of its contracts, in order to lower its liabilities. A few weeks ago China Shipping threatened to sue Zim for $100 million after the Israeli company ostensibly backed out of a leasing agreement for space in the Chinese company's ships that ply the route from China to Europe. Zim also recently announced it would be paying a $30 million fine to a Taiwanese shipbuilder for canceling a purchase contract for six ships worth $230 million.
Zim, an Israel Corporation member company, lost $199 million in the fourth quarter of 2008 and $332 million for the entire year, mainly due to fluctuations in fuel prices and lower revenues from marine shipping services. Before the global economic crisis hit, Zim signed contracts for the construction of 23 ships, at a cost of $3.2 billion, scheduled to be delivered during 2009-2012. Now Zim is trying to cancel those contracts and streamline its operations by leasing space in other companies' ships, reducing activity on certain shipping routes, laying up 20 ships (20% of the company's shipping capacity), and trimming its workforce of 700 by 70-100 employees.
Zim declined to comment on this report. [26/05/09]