ZIM Integrated Shipping Services (NYSE:ZIM) Q3 2025 Earnings Call November 20, 2025 08:00 AM ET Speaker1Thank you for standing by. My name is Kate, and I'll be your conference operator today. At this time, I would like to welcome everyone to the ZIM Integrated Shipping Services Third Quarter 2025 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question d ...

Core Insights - The company is experiencing a significant decline in US-bound volumes due to changes in regulations and tariffs, impacting both imports and exports [1][2] - There is a decoupling of the US economy, but the company is seeing good growth in Asia and is focusing on that region [2] - Weak economic conditions persist in Europe, particularly in Germany, which has seen three years of zero growth [3][4] Industry Trends - The company is investing in growth sectors and emerging markets to manage capacity according to market requirements [4] - Ongoing trade agreements have not provided the hoped-for certainty, and the company is preparing for a volatile environment [5][6] - The company is closely supporting customers to optimize supply chains amid changing regulations and geopolitical implications [7] Legal and Regulatory Environment - There are ongoing legal questions regarding the legality of tariffs imposed by the US government, which complicates the outlook for the company [8][9] - The president has multiple legal grounds to impose tariffs, suggesting that the fundamental stance of the US administration is unlikely to change significantly [10]

Core Viewpoint - The EU is prepared to take strong measures against China if it continues to restrict rare earth exports, which have significantly impacted European industries [1][5]. Group 1: Rare Earth Resources - Rare earth resources are critical raw materials for high-tech industries, widely used in electric vehicles, smartphones, wind power equipment, and military technology [5]. - China has historically held a dominant position in the rare earth sector, making it a core part of the global supply chain [5]. - The EU perceives China's export restrictions as a serious threat to its industrial development, particularly in the new energy and high-tech sectors [5][6]. Group 2: EU's Response - The EU is collaborating with allies such as the US, Japan, and Australia to accelerate the establishment of its own rare earth supply chain [6]. - Building a complete rare earth industry chain will require substantial financial investment, technological accumulation, and time [6]. Group 3: Semiconductor Industry - The lithography machine, essential for high-end chip manufacturing, is primarily produced by ASML in the Netherlands [7]. - The US and EU have restricted ASML from exporting advanced lithography machines to China, aiming to hinder China's semiconductor industry development [7]. - The potential ban on lithography machines may become a final leverage point for the US and EU against China [7]. Group 4: China's Technological Progress - China has made significant progress in the independent research and development of lithography machines [8][9]. - Domestic companies like SMIC are achieving breakthroughs in technology, and there has been rapid development in other semiconductor industry segments such as photoresists and chip packaging [9]. Group 5: Global Economic Implications - The competition between China and the West in rare earth and high-tech sectors has profound implications for the global economic landscape [10]. - Despite Western efforts to decouple from China, the latter's critical role in the global supply chain makes this goal challenging [11]. - China's strategic advantages in rare earth resources and high-tech fields position it favorably in the ongoing competition with the US and EU [12][14].

Core Viewpoint - The ongoing trade tensions between the US and China have led to significant fluctuations in trade policies, with recent announcements from Trump regarding a potential 100% tariff on Chinese goods, which could impact both economies significantly [2][6][12]. Trade Dynamics - The trade volume between the US and China has been decreasing, with projections indicating that by 2024, the US share of China's total trade will drop to around 10%, the lowest in 25 years [4][10]. - In the first three quarters of the year, China's total trade value reached 33.61 trillion yuan, with exports growing by 7.1% and imports slightly declining by 0.2% [2][4]. Market Adjustments - Chinese companies have proactively diversified their markets away from the US, focusing on regions such as Central Asia, Southeast Asia, Africa, and South America, leading to significant growth in exports to these areas [4][12][15]. - High-tech products have seen a notable increase in exports, with industrial robots up by 54.9% and cross-border e-commerce growing by 10.3% [4][12]. Economic Resilience - China's economy has shown resilience with a steady growth rate of around 5%, low unemployment, and a significant trade surplus, indicating a robust external trade environment [10][15]. - The diversification strategy has proven effective, with exports to ASEAN countries increasing by 8.5% and trade with Belt and Road Initiative countries exceeding 10 trillion yuan [10][12]. Supply Chain Dependencies - The US remains heavily reliant on Chinese supply chains, particularly in sectors like technology, where companies like Apple and Tesla benefit from Chinese manufacturing [8][10]. - A complete decoupling would have adverse effects on the US economy, potentially reducing GDP growth by 0.5% annually and increasing inflation [8][10]. Future Outlook - The WTO is expected to restart trade negotiations in 2025, focusing on tariff reductions and intellectual property issues, indicating a potential for improved trade relations despite current tensions [18][20]. - The long-term outlook for China's economy remains positive, with expectations of continued growth driven by domestic demand and high-tech self-sufficiency [15][20].

Group 1 - The upcoming high-level economic talks between China and the U.S. in Madrid will focus on three core issues: U.S. punitive tariffs, export control expansions, and TikTok ownership negotiations [3][5] - The tariff issue is critical as it relates to the U.S. "America First" trade policy initiated by the Trump administration, which has been a cornerstone of its trade strategy since April 2024 [5] - The U.S. has increasingly weaponized economic tools under the guise of national security, particularly in sectors like semiconductors and biotechnology, complicating negotiations on export controls [5][9] Group 2 - The TikTok ownership debate highlights the ideological and economic tensions in the digital economy, with both sides unlikely to compromise due to national pride and political considerations [7] - Recent trade data shows a stark contrast between China's overall trade growth of 5.9% and a 13% drop in U.S.-China trade, indicating a trend of economic decoupling [9] - The U.S. is attempting to form an anti-China tariff coalition, pressuring allies to impose significant tariffs on Chinese goods, while China is focusing on expanding domestic demand and enhancing its strategic positioning [11]

Group 1 - The European Union has officially approved a retaliatory tariff plan against the United States, valued at €93 billion, targeting key economic sectors such as Boeing aircraft, automotive industry, and agricultural products [1][3] - This response is a direct reaction to the high tariffs imposed by the U.S. on the EU since 2025, which have severely impacted the EU economy, particularly Germany's automotive sector and France's aviation industry [3][6] - The EU's decision to implement these tariffs is part of a broader strategic adjustment, influenced by internal and external pressures, including concerns from member states like Hungary regarding reliance on Russian energy [6] Group 2 - The rising tariff barriers indicate a growing trend of economic decoupling between the EU and the U.S., prompting countries like Germany to relocate production lines to avoid tariffs [5] - U.S. agricultural states, such as Kentucky, face significant market shrinkage risks due to these tariffs, particularly affecting industries like bourbon whiskey [5] - Despite existing fundamental differences, the EU is strengthening its cooperation with China, particularly in areas like climate change and green technology, opening new avenues for collaboration [5]

Group 1 - The European Union has approved retaliatory tariffs against the United States, totaling €93 billion, targeting key industries such as Boeing, automobiles, and agricultural products [1][3] - The EU's response is a countermeasure to the high tariffs imposed by the US on various EU sectors, including steel, aluminum, and agriculture, which have significantly impacted the EU economy, particularly Germany's automotive and France's aerospace industries [3][6] - The EU's decision to impose tariffs is part of a broader strategic adjustment, influenced by recent discussions with China regarding trade imbalances and industrial subsidies, highlighting the need for a rebalancing of EU-China trade relations [3][6] Group 2 - The increasing tariff barriers are accelerating the economic decoupling between the EU and the US, prompting countries like Germany to relocate production lines to avoid tariffs, while US agricultural sectors, such as the bourbon industry in Kentucky, face substantial market losses [5] - Despite existing disputes, cooperation between the EU and China is deepening, particularly in areas like climate change and green technology, which opens new avenues for collaboration [5] - Internal divisions within the EU, particularly from countries like Hungary that rely heavily on Russian energy, pose challenges to the implementation of these tariffs, leading to compensatory measures from core EU countries like Germany and France to maintain unity [6]

Group 1 - Trump's recent shift in tone towards China, expressing a desire for friendly competition, indicates a significant change from his previous hardline stance, suggesting he may be responding to internal and external pressures [7][9][11] - The U.S. stock market reacted negatively to Trump's comments about the Federal Reserve, leading to a drop in stock prices, a decline in the dollar, and a rise in bond yields, reflecting investor concerns about his influence over monetary policy [5][9] - The U.S. administration is facing operational challenges, including staff layoffs and protests from former employees, which may hinder its effectiveness in foreign policy [5][11] Group 2 - China's recent actions, such as restricting rare earth exports and reducing LNG imports, have significantly impacted U.S. military and energy sectors, prompting a reevaluation of trade relations [9][11][13] - Trump's approach to China appears to be motivated by the need to stabilize agricultural exports and maintain support from key voter demographics, particularly in the Midwest [13][15] - The U.S. administration's strategy may involve using improved relations with China as leverage to negotiate with other allies, although this could backfire given China's current stance and capabilities [15][17]

Core Viewpoint - The recent U.S. tariff imposition on China has led to a swift response from the U.S. government, indicating a potential willingness to negotiate after only a few days of enforcement [1][9]. Group 1: Economic Impact - The U.S. and China are both suffering from the trade conflict, but China is better positioned to endure short-term economic pressures due to its role as a seller, while the U.S. faces immediate needs for essential goods [4]. - The U.S. is struggling to find alternative sources for critical components, such as chips and semiconductors, which are primarily sourced from China, leading to potential business failures in the U.S. if the situation persists [5]. - The Oxford Economics expert suggests that while China may not immediately offset the impacts of a complete economic decoupling, it has long-term strategies to adapt, including diversifying its export markets through initiatives like the Belt and Road [7]. Group 2: U.S. Policy Adjustments - On November 11, the U.S. announced a list of nearly 1,000 products, including electronics and raw materials, that would be subject to lower tariffs, effectively exempting them from the high tariffs previously imposed [9]. - This exemption is seen as a significant concession from the Trump administration, aimed at facilitating negotiations with China, as the U.S. relies heavily on Chinese imports for many essential goods [10]. - The U.S. media has interpreted this move as a sign of Trump's desire to negotiate, although he still seeks to maintain a strong position domestically by not appearing to back down [12]. Group 3: Agricultural Shifts - China has historically relied on the U.S. for agricultural imports, particularly soybeans, but has begun to shift its sourcing to countries like Brazil and Argentina, which are now major suppliers [14][15]. - Brazil's soybean exports to China are projected to reach 74.65 million tons in 2024, accounting for 71.1% of China's total soybean imports, indicating a significant shift in trade dynamics [15]. - The U.S. agricultural sector's reliance on China has diminished, as China has prepared for these changes, highlighting the contrasting adaptability of both nations in response to trade pressures [16][18].

Group 1 - The article highlights the positive impact of the recent US-China tariff adjustments on global markets, indicating a shift towards improved trade relations [2][4][11] - Following the announcement of mutual tariff reductions, global stock markets experienced significant gains, with major indices in the US, Europe, and China all rising [5][10] - The easing of trade tensions has led to increased confidence among investors, prompting upgrades in stock ratings and target indices by financial institutions [5][11] Group 2 - The article notes a decline in demand for safe-haven assets, particularly gold, which saw a sharp drop in price following the tariff news [6][8] - The reduction in tariffs has spurred a rapid increase in cross-border trade, with US companies quickly moving to ship goods that had been delayed in China [10][11] - The article emphasizes that the tariff adjustments are expected to benefit various sectors, including agriculture, as producers anticipate reduced uncertainty in trade [10][11]