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The Launching Ladies
Maria Polias, the widow of Boatswain Lucas Polias, wept emotional tears at the end
of the ship-launching ceremony of the Zim Hong Kong in February 1992. Choosing
women to launch ships – to break a bottle of champagne over the bow of the ship
and wish it calm seas and a successful voyage – is an age-old seafaring tradition. In
most cases this honor has gone to public figures, however at Zim they chose to stray
from the custom and instead to honor the widows of outstanding seamen who had
contributed to the company. Rhodes-born Polias, who served as a sailor on Zim’s fleet
in the tumultuous early days and tied his fate with the company, was one of these.
Winds of optimism were blowing at Zim. Having survived the vicissitudes of the
1980s, a growing feeling of stability and security prevailed. The gradual process of
normalization with the Arab states brought hopes among the company’s management
for a shift in paradigm: dissolution of the Arab boycott and removal of the restrictions
on Zim, as an Israeli company, from entering certain countries and trade zones.
The commissioning of seven container ships from the HDW shipyard in Germany
was a palpable expression of this optimism. In May 1990 the Zim America made
its maiden voyage to Haifa, where it was greeted with an almost royal ceremony;
festive ship launches once again became a matter of course, and by the time the
Zim Israel, the seventh in the series, came into service, the freight volume of the
fleet had grown by 45%.
In 1994, eight more ships were commissioned. Named HDW-II, they were incorporated
gradually into the fleet by 1997. These were modern, efficient, and fast – best-in-class
ships; according to the crew members who sailed on them, they were also the most
luxurious and comfortable ships in the history of the Israeli fleet – excellent amenities
for the crew, executed with much thought and planning, down to the pictures of
Israeli landscapes that donned the ships’ walls.
The Pendulum
The new ships became part of Zim’s “long line,” which continued to prove itself more
than twenty years after its establishment. The line’s “pendulum” model – an innovation
of Zim – was, according to the leading industry magazine in the world, Containerisation
International, a milestone in the history of container shipping; the model was copied by
other shipping companies, its financial efficiency was verified hundreds of times, and it
remained in place for nearly twenty years.
Modern shipping aims to meet the demands of the market and to provide regular and
precise service that allows for long-term logistical planning. The new ships enabled Zim
to make an important leap to weekly service on a fixed day – the holy grail of shipping.
If in the first days of the container service they joked at Zim about “weekly service every
ten days,” the new ships realized the vision of precise and reliable shipping schedules.
They “enable us to compete in the world’s markets with the shipping giants,” wrote the
head of the container service at the time, Shaul Cohen-Mintz.
There is a well-known axiom in the field that shipping is a volatile industry. The end of the The damage to Zim, which was in the thick of a giant procurement plan, was particularly
90s brought a recession in the industry, and Zim prepared to face it under its new CEO,
Dr. Yoram Sebba, who entered the role in 1997. Sebba, who had joined the company in
1971, accompanied the container service project from its infancy and held a series of
senior positions throughout the years. In 1997 he replaced Matty Morgenstern, who retired
from the company where he had begun his way as a sailor on the first ship, Kedmah,
46 years earlier. “My heart remains with Zim,” Morgenstern wrote in his farewell letter.
Zim entered a process of streamlining, savings, and organizational change, which came
in parallel to significant changes in the company’s ownership structure. In January
1999 control of the Israel Corporation, Zim’s mother company, was transferred from
the Eisenberg Group to the Ofer Group. The Ofer Brothers Group, which began as a
small shipping company, had grown into a global shipping giant; it was destined to
play a critical role in the history of the company. Zim and the Ofer Group already had a
successful network of partnerships and interactions, however the entrance of the group
as the majority shareholder portended what was to come: privatization of the company,
the exit of the government, and the beginning of a fundamentally different path from
everything Zim knew in the past.
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Journey to the New Millennium
The terrorist attacks of September 11, 2001 in the United States cast their shadow over
the years to follow; Zim’s offices, which had been based for many years in New York’s
World Trade Center, were moved, for purposes of savings, to Norfolk, just two weeks
before the fall of the Twin Towers. The pendulum swung once again toward a period of
recession in the market. Nevertheless, the 2000s opened with the commissioning of six
new container ships from Korean shipyards, and with cautious optimism: Zim continued
to grow, in particular on the international trade routes, which already constituted 80%
of its operations.
The catchword hovering over Zim at the dawn of the third millennium was privatization.
Economic, social, and political processes catalyzed a sea change in the state of Israel,
one of whose salient expressions was the privatization of government companies. Zim,
as a centralized national and governmental company, was at the heart of an intense
public debate. When the privatization was finally completed, on February 5, 2004, and
the government’s stocks – with the exception of the “golden share” – were sold to the
Ofer Group, there was a feeling of celebration at Zim. The government had been a passive
partner in the management of the company, and Zim’s management had often complained
about its lack of support; the transition to private ownership appeared to be a step that
would open up new horizons for the company and give it important strategic advantages.
The new owners were determined to make changes and generate unprecedented
momentum for the company. As a first step they moved Zim’s head offices from the
historical building in downtown Haifa, which had become a familiar landmark, to new
and modern offices on the outskirts of the city. In 2005 a new CEO, Doron Goder, entered
the picture. Unlike his predecessors, Goder had not built his career at Zim. As he worked
on creating ambitious strategic plans for the company, he had to deal with a tragic
maritime accident in which the Zim Asia collided with a Japanese fishing boat. Goder
and representatives of Zim, in a gesture that was widely appreciated, paid a condolence
visit to the families of the victims. Zim compensated the families, despite the fact that
the company was exonerated in the incident.
The new management presented a vast growth and procurement plan. Eleven mega-
container vessels were commissioned from the Hyundai shipyards in Korea. The slogan:
doubling the carrying volume, tripling profits, and placing Zim at the pinnacle of global
shipping. The frenzy of activity brought about optimism and a belief that even a period
of temporary recession would not frustrate the achievement of the company’s goals.
“2008 is going to be a very difficult year,” Goder wrote, “but it does not divert us from our
strategic plan.” But even the most pessimistic forecasts were dwarfed in the presence of
the storm brewing on the horizon. What began as the subprime mortgage crisis in the
United States developed quickly into the worst world economic crisis since the Great
Depression of the 1930s. For the shipping industry, this was a perfect storm: international
trade, in particular exports from China, froze. The surplus of ships reached unprecedented
dimensions. Hundreds of vessels sat idly anchored at exotic sites, because there was no
economic profitability in operating them. Freight rates dropped so low that salespeople
joked that the shipping companies should pay the clients in order to take their cargo.
severe. In 2014, after a global effort, a debt settlement was attained that would stabilize
the company. CEO Rafi Danieli, who led Zim during the years of the longest crisis in the
shipping industry since the Second World War, said at the time: “Zim is embarking upon
a new era, and this time it is not just empty words. The settlement has improved Zim’s
situation, but the crisis has not ended.”
In 2016 a new settlement was signed, which included reorganization of the ownership
and financial structure of the company. In order to attain the settlement, Zim presented
a detailed business plan, one of whose pillars was to stabilize Zim as an independent
company. The financial situation, coupled by political and economic factors, left it outside
of the alliances created in the global shipping industry, which were established in order
to help the shipping companies deal with the surplus of ships and the tanking of prices.
Zim succeeded in making lemonade from its bowl of lemons – to work independently
and to maximize its advantages. Zim inaugurated a new network of independent lines
and aggressively marketed its advantages as a relatively small, client-focused company.