Q1 2022 ZIM Integrated Shipping Services Ltd Earnings Call
Okay.
[music] assuming.
Ladies and gentlemen, thank you for standing by and.
And that's how they use your chorus call operator, welcome and thank you for joining us integrated Chipping services. After the Q1 2022 earnings conference call.
Two other basic called presentation, all participants are in a listen only mode.
She will be followed by question and answer session. If you would like to ask question. You May Press Star followed by one on you touched on the telephone.
Please press the stock equal otherwise you will operate that system.
I will now like to turn the conference over to a lot of Hudson <unk> head of Investor Relations. Please go ahead.
Thank you Natalie and welcome to <unk> first quarter 2022 financial results Conference call.
Joining me on the call today are illegally.
President and CEO and.
Then CFO .
Before we begin I would like to remind you that during the course of this call. We will make forward looking statements regarding expectations predictions projections or future events or so we believe that our expectations and assumptions are reasonable.
We wish to caution you that such statements reflect only the company's current expectations and that.
Absolutely Ben.
It may differ including maturity.
You are kindly referred to consider the risks risk factors and cautionary language described in the documents the company filed with Securities and Exchange Commission, including our 2021 and then of course well.
On form 20-F on March nine 2020.
We undertake no obligation to update these forward looking statements.
At this time I would like to turn the call over to the CEO elect lithium Eddie.
And welcome everyone.
Very good.
Following an extraordinarily strong for 'twenty one.
Mkay, though our strong momentum into 2022.
Oh, well to prevent another quarter with good results.
Exactly the situation.
I've been married with.
Very well positioned to do well.
I mean, the way People's lives is absurd.
Sure.
You got to the lives of multifamily.
Continued delivering renewable Pennsylvania.
Before I dive into the highlights I would like to address the situation.
The container volume surgeon herself briefly.
To support the people of peer group.
And I just want you and.
Okay.
To cope with those affected by the world.
Also continuing to support our.
Ukraine.
Customers.
Is there any way we could.
As I've stated previously.
How do you do well reserved human life exceed all the other considerations.
No.
Yes.
Have you baked accomplishments.
It was my mistake.
These slides slide number three.
Women 30, no stone trajectory.
It won't be too delivering another outstanding quarter of financial results.
You do the work stoppages.
Memphis to capitalize on both good idea across these markets.
In Cherokee strategy.
In Q1.
We generated record revenues of 317 billion below what goes to adjusted EBITDA.
$5 billion in there.
Let's walk with one 7 billion shares.
Sure.
Well spoke one 3 billion below again.
Uh huh.
Well she is still moving so quickly.
We got you.
So it's your own margins as well.
Next year at this time.
For adjusted EBITDA.
Well done.
We continue to outperform the library.
As we've done for several quarters.
Oh well results.
Also stems out operationally.
Oh, there is volume by 5% in Q1 compared to Q1 last year.
Me too.
Let's see the children, well, particularly given the global volume declined by almost 2%.
Slide number four.
With the strong performance to date.
Combining this once it won't just do long term contract rates.
Q what was the confidence.
So it won't it won't get to guidance.
Great.
Long term, Guangdong, which people get started.
About two weeks ago mentally.
Great.
It's just a 100%.
In other words more than doubling as compared to 2021.
These loans have gone both ways.
That's below expectation for sustained demand for capacity as well as the continuation of the daily Dog racing Roland.
As such we are raising our full newsworthy.
Guidance and now expect to generate adjusted EBITDA between Sildenafil.
He is going to be done.
You bet.
You're exporting route.
261, 7 billion below what.
Just wanted to.
It is also noteworthy that sets them up to a four months allows us to continue to return substantial capital to shareholders.
Oh boy.
This was done to show a dose on a quarterly basis.
The net income.
Although the Tamil.
Our Q1 really does so well try to do a lot there sure.
Slide number five.
We remain focused on executing a cosmo so did you see those improving operational excellence.
The Coke company.
It's always been a commercial proposition and what we know of course talk to your basic fuel efficient capacity.
Or are we won't talk long term charter agreement for Qantas in Belgium, you LNG field visits and tenant himself. So there's you have to use good service our focus shifted to our new recipes.
Since the beginning of 2022 we announced charters in humans before.
Most all of sudden it seemed a little bit.
The vessels, we spoke to you capacity proportionately 96000.
We added 7000 Teu.
Jude bronchial container lessors.
It seems like there's all of this if you want you want it's winter.
1300, Teu vessels and six 5000 Teu vessels.
This is more inefficient donuts, particularly well suited to serve on our extensive network.
What's the best services.
Although these remote services.
It's about 15 fleet will allow us to maintain all flexibility and so it's been a market position in commercial prospects.
In total.
We secured 46, new big vessels sure.
Literally starting Q4 'twenty to 'twenty two.
Well, we have plentiful.
Oh, please chartering strategy, what do you mean, the last based on prevailing market conditions in the future.
To decide whether this new boats.
Is that an expansion okay.
All right.
It is also important to highlight.
With all this focus is new versus what the a.
And <unk> consistently show sustainability goldberger.
Continued good positions, but the bulk of the Dunkin' Donuts U K reduction among global lineup.
Well look I got to meet their own ESG objectives, we anticipate becoming the first container shipping company to deploy LNG vessels on the Asia to U S East coast.
When we take delivery of this.
LNG vessels, which will represent the fortunately itself.
Certain capacity.
There will be more problem in a cost efficient way.
Good day.
No competitive position.
I will also remind you that the royalty because organization you know industry available given people's soon given all mostly chartered in capacity, we can easily replace all causes the positive demand environment.
What do you need to launch mobile order <unk> to charter your vessels other than one of them. We also maintain the flexibility to transition to new technology.
When they become commercially viable.
While the number of Skus.
You can see that the ability to adjust our fleet.
The market condition and identify market opportunities.
Right.
Its all operational and commercial agility.
Another strategic pillar.
No.
Suddenly stopped vehicle, making reasonable adjustment to meet changing market conditions.
Martin.
London supporting high utilization of buses and it's working specific days advantages.
Outstanding results and superior profitability.
Since the beginning of the year.
But it seems okay.
Fortunately, 11% and we.
We operate 137.
Seven vessels.
It's important to remember that you.
And that's significant because it's the bus with you in recent weeks.
Anticipation of the changes to our collaboration with the pause button.
Zoom exceptional success is based on our ability to act decisively and adjust quickly.
We continue to identify new market opportunities.
Advancing our global new strategy to meet customer demand.
Well it sounds like it will get to we have launched a new line.
Since the suspension of our Nashville and food.
For replacement line to better meet our customer.
Waterloo Kimpton, so focus on promoting alternative modes of transport for E. Commerce customers. We recently launched our Baltimore export love the H B.
So that's good news.
Hum.
China and South East.
Yeah.
In the U S East Coast operations.
Excluding extremely smooth.
Sure.
As part of our vision strategy were notified this opportunity towards another building block you know you don't want to expose and launch the bulk normal service.
One customer or kicked in a competitive alternative to <unk>.
Importantly, <unk>.
We also saw similar wide range of advantages.
Really nice about rail air and voice connection.
And then just you mentioned.
Finally.
As we discussed on our business.
Oh Boy show local abortion is the two of them alone and there is just you used in schools and youth workers.
While we move to independent services.
Just two Meg and Tim Dugan.
The celebration is now operating on the basis of the slope of change and vessel sharing 19 equal quantum it will just John services, we will continue to meet growing demand.
Okay.
So our customers, particularly on Pik non specific words.
I will now turn the call over to.
So be it.
Cheerful voice remote and all financial results and market development.
Yeah.
Thank you Randy and again welcome everyone.
We delivered another quarter of outstanding financial performance as a result of both historically high quickly as well as our differentiated and proactive approach.
The Florida.
With our strong results and significant improvement across key operational and financial indicators versus the prior year quarter.
All right. The results were once again, driven by continued positive market condition, which kept frankly significantly higher than prior year.
You know continues to prioritize better paying cargo and other state initiatives to capitalize on e-commerce demand.
<unk> enabled us to improve economics.
So typically on average.
The U of $3848 in the first quarter was how does the spend is higher compared to the first quarter of 2021.
Were also higher.
Higher than our average freight rates in the preceding quarter.
Our free cash flow in the first quarter totaled one $5 million compared to $645 million.
The comparable quarter of 2021, an increase of 30%.
Turning to our balance sheet total debt increased by $184 million since prior year, mainly driven by the increased number of fixture.
Longer charter duration as well are you didn't talk about it.
Over the same period, our cash position grew substantially by approximately $1 $3 billion.
As a result of a second consecutive quarter.
That has been driven down to a level of which the company closed the period.
And if it is positive net cash position.
Our food medical supplies used to maintain optionality to match capacity with demand remains intact.
We believe that as we think the ability to adapt our response to.
The changing demand fundamentals.
The average remaining duration of our term chocolate capacity today.
28, six months slightly up from the 26, one months in March 2022.
And reaching our current operating capacity to the scheduled delivery of our Newbuild vessels.
Also only 11 of our chartered vessels are scheduled for renewal between now and the end of 2022.
And 28 will be renewed in 2023 and 34 potentially also in 2017.
Next on slide eight you can see that we are delivering consistent improvement in earnings at the same time, our net leverage has trended downward from three four in Q1 2012.
Europe .
Importantly, we continue to be positioned in the top tier of our industry.
Reflecting the strength of our balance sheet.
Moving on to the next slide slide.
Slide nine our thoughts and strategy continues to generate record results.
Revenue for the fourth quarter was $3 7 million compared to $1 7 billion in Q1 2021.
Driven primarily by improved systems and to a lesser extent also an increase in California.
Most importantly, we grew positively with she wants net profit of $1 7 billion, representing 491% year over year increase.
Adjusted EBITDA was $2 $5 billion for the quarter compared to $841 million in the first quarter of last year, but an improvement on all that.
Consistent it was all focused on delivering industry leading margins.
EBITDA margin was 68% and 60%, respectively as compared to 47% and 79% in the first quarter of last year.
Those volumes were comparable to margins we delivered in the prior calls.
I would like to note that I've anticipated really east, Tennessee, and carry 23% corporate income tax rate to visa.
In Q1 consolidated constitute company began dating back to them to you in our call.
During the first quarter, we paid tax events is a total of $246 million.
We don't dislike family continued to outpace the industry in terms of growth in kellys volume without compromising our profitability.
With that is 859000 teus in the first quarter as compared to 818000 Teu during the same period last year.
So we grew our carriage voted by 5%, while the general market contracted by almost 2%.
Volume growth in Q1, not transpacific trade it compensates for the decline in transpacific volume, which was negatively impacted by conjecture.
Sequentially or do you want to solve and uncertainty to current volumes were flat compared to Q4 2021, one against the overall market shrunk by over 6%.
While we are absolutely I think Q1 2072 with a total cash position of $5 $1 billion, which includes cash and cash equivalents and investment bank deposits and other investments in the streets.
I would remind you that in April we paid a dividend totaling approximately $2 billion.
During the first quarter adjusted EBITDA of $2 $5 billion converted into $1 7 billion cash flow from operation.
Other cash flow items in the first quarter, including 177 million of net.
Yes.
$241 million of vector.
The first quarter of 2022, Capex, mainly related to the secondhand vessels with the case in Q4 of last year.
Got delivered in the fourth quarter of this year.
Moving to our guidance, we are raising our full year guidance I know you expect to generate adjusted EBITDA between seven.
And $8 $2 billion, and obviously that is between six eight and $6 $7 million.
They use it for improve our critical 2022 is better than initially anticipated contracting.
What's the growth expected this year to be approximately 5%.
Other assumptions, we provided in March due remain largely unchanged.
Turning to walk with an industry first and our positive view moving forward.
The combination of port congestion and strong demand, especially in the United States all the underlying factors shaping the strong market. We are currently experiencing.
Poor congestion and supply chain disruptions has been a persistent strength on container shipping operations for over a year now.
This reality is not expected to be resolved in the near future and they even spill into 2023.
Julia Peanuts, but love to use of ships waiting outside port and slowly.
Iraq is.
As noted in F&B container ship capacity being 17% below its potential in 2021.
The forecast for 2022, although improved from 12% in March to 50% of today.
And the project port congestion to absorb 7% obviously is capacity in 2023.
Let's sports Ocean timeliness indicator demonstrate the depth of port congestion.
As you can see the end to end transport time of the exporters location.
A destination in China to U S routes.
Which stood at 45 days people demand.
More than double than it is currently estimated to be around one in three days.
As long as supply chain creates even more vessels and containers to absorbed with significantly longer voyages.
It is important to remember that objective cannot be viewed as port specific rather more global holistic view should be taken.
That was total.
Our Q outside the affordability of luggage shortened.
Gesture East coast ports happy to do that.
These measures show no signs that the supply chain clarksons as fast.
The next one shows that demand in the United States is expected to remain robust in the near future.
Continued disruption of global supply chain are expected to support high demand for container shipping and shippers are looking to guarantee space to date.
Hey, Nick why eventually.
Despite growing virtually the United States. So the net result inventory to sales ratio remaining at a level, which is far below pre COVID-19 or normal levels.
You can also see on the right that global light volume in March 2022 is higher by 6% and talk after 2019 the last bill.
Mobile your experienced by our <unk>.
Okay.
Moving onto the next slide the overall supply demand balance remains positive for 2022.
Bard projections for 2020 to be adjusted downward due primarily to the impact of the legal war in Ukraine, and China's zero tolerance policy.
The supply demand balance reversing in 2023, when more significant new deliberate illegally including ours.
Ours are expected.
The order book has also consistently grown over the past several months yet our view of market fundamentals for the near and midterm remain overall positive.
We believe that the increased order book is at least partially a response to the anticipated pressure to Decarbonize shipping and review aging fleets.
With major retailers, taking more aggressive reduction in carbon emission by Monday.
The motivation to scrap older less efficient vessels will grow.
<unk> seen the growth effective capacity.
Supply chain disruptions will also partially offset the effect of new building deliveries in <unk>.
7003.
Next is the more sort of in the most short term we show that the declining quickly since January 2022.
These consistent with typical seasonality impacting the first and second quarters.
The graph on the left shows a similar seasonality trend for the 2022 Sci Fi comprehensive index when compared to previous year prior to and following Chinese new year.
We believe that the Shanghai looked that contributed to the slower recovery this year compared to prior year.
Yes.
Manufactured in China return to normal and didn't see it this evening.
Adam May put additional pressure on already strained supply chain and congested ports in the United States and elsewhere.
The bulk of the right compare the development of slightly from 2019 to 2022 today.
And again demonstrate the price decline in Q1 are consistent with typical seasonality.
The downward trend in 2022 extended longer than prior year again, most likely due to the Shanghai Lockdown.
As we are occupancy rate stabilization in Q2 would.
It would be expected.
With respect to our overall expectation for quickly we would contend that certain factors, including the sustained historically higher than average.
Entering the third year in a row.
Structural changes in container shipping vertical growth strategy being perceived by the unemployment and.
The higher costs from chaired by all players.
Firstly on declining to pre COVID-19 levels when rates finally normalized.
With that I will turn the call back to Eddie for his concluding remarks.
Yeah.
Thank you.
We continue to deliver.
On our commitment to outstanding execution and profitable growth.
While positioning <unk> for long term success.
It's severe just outlined.
Your line market fundamentals support our optimism for the future.
As we leverage our global niche strategy.
Growing customer demand.
Importantly.
We have secured fuel efficient new big capacities that will strengthen our market position and promotional costs.
Moving forward.
While maintaining the flexibility you know quite a bit of capacity.
We're pleased with so incredible August to date as a public company I'm excited to carry our momentum forward continuing one zinc position as you know basically digital leader of seaborne transportation and logistics services to maximize value for all stakeholders.
Yes.
We will now open the call to questions. Thank you very much.
Ladies and gentlemen at this time for taking the question and answer session.
Anyone who wishes to ask the question you May press Star one.
On the phone.
If you wish to remove yourself from the question queue. You May press star followed by two.
With me today, please lift the handset before making us elections.
Anyone who has a question press star followed by one at this time.
One moment for the first question please.
Okay.
And the first question is from Citigroup. Please go ahead hi.
Thanks again for the presentation I've got two questions.
So firstly on the concentrate side, obviously, a very solid almost doubled so if you could give some color on given the spark spreads helped them all so far.
What are you actually seeing on your on time, because Asia too.
U S is probably the negotiation was just talking on Friday, So what do you see that even more further upside as we go into Q2, how should we think about an appropriate settlement alone.
And the second one obviously if you look at your guidance and you can see our EBITDA for Q1.
What does that imply in terms of <unk> do you expect them.
Like the deep.
Keep normalization in rates because of.
One of your slides you do see about.
Descriptions might extend into countries right. So I just wanted to understand what does it mean in the 11th year.
Spot rate expectations, I think old school.
That's true.
And then sorry, if I could ask a third one.
What is your current visibility on demand.
Bookings that you're speaking, yes. This time.
I can do Alex it two months three months visibility and how does that some five associates back in 13 90, Yeah. That's all my questions. Thank you.
Yeah, starting with the first one I think the first one the second one has a quite intertwined.
Sure.
The contract season for it on the Trans Pacific is starting from the first of many will extend up until a series of April next year. So what we have done over the past few weeks is finalized all the discussions with our customers on the transpacific trade to agree on both the allocation.
And the rates that they will prevail for the next step.
That's it for the next 12 months and this is because we have that concluded on average at rates that were higher than what we initially anticipated when we were in the middle of those discussions when we lost.
Talked in March March two months ago that we are predominantly.
We can explain why we are increasing our guidance. So we increased the guidance.
The backlog higher than anticipated contract rates that will start to kick started to kick in in the first of May So we largely impact Q3, and Q4 for the second half of 2022.
With respect to what we anticipate in terms of the spot market, what the spot market might do it and again, there's a lot of uncertainty today, but we need to make assumptions and work with those and we.
We've made this year.
Assumptions in our embedded in our guidance that said the spot rates would start to normalize in the second half of this year and that to some extent the reduction in the spot market would be upset by the incremental revenue that we will generate of the contract cargo compared to.
Compared to last year, so we still take a conservative view in that sense that we believe that it is a possibility that the.
The spot market with a cup normalizing in the second half.
Of this year.
And when I'm talking about the third aspect of your question what do we see in terms of the demand currently.
You know that is the situation that has been affecting the other.
All of the industry, especially relevant in Shanghai with the Lockdown.
Alright.
Yes.
And preventing exports out of China. So there's been a reduction in volume out of our out of Shanghai, We all saw a hearing and reading the same as I think you do that.
Yes, I do.
Is that fair.
This situation should start to resume and production should start to resume and looked out should start to ease so that by the end of June and predictions should go back to normal as far as our Shanghai's concept FMT them execute today, we have managed to compensate the shortfall of export cargo from.
Shanghai by reallocating some of our some of our volume to our sellers to sell.
China and also southeast Asia, but at some point indeed, if the situation was to was to remain as is and if the manufacturing sites, they're not allowed to go back to production debit situations.
But we see it we don't see that happening and incentives of booking forecast looking at offsetting factors the vessels for the weeks to come in for the year.
A few months or couple of months to come.
<unk> to.
<unk> CFO .
But you do have visibility up to two two.
Cool.
That's correct Yep.
I'm, sorry, say that again I just wanted to clarify so you got about two months of visibility in terms of demand.
Yeah, I'll just start and then Andy on the contract we have a little bit more than that due to the contract not only does the negotiated contract rates.
More importantly, our customers today.
And because of the volume.
Okay got it.
Follow up actually you outperformed on volume growth.
And listen if the overall market or does it actually driving that as well.
Because they'll get exposure to trends specific or how should we think about let's say about it.
And if we look at the first quarter, where we generated an increase of 5% versus the same quarter last year, we were affected by the.
The congestion on the transpacific. So we carry less cargo that we initially anticipated, but where we have been extremely active in the growing network is on the intra Asia trade, we've opened quite a few new line.
The entire Asia region, including this weakness Southeast Asia, Australia. So the growth on intra Asia as there has been a quite dynamic and that allows us to compensate for the.
Slight reduction we've seen in volumes due to the congestion.
Okay on the U S.
Okay. Thank you that's quite helpful. Thanks, so much.
The next question is from the line of money like a young from Bank of America. Please go ahead.
Thank you I was wondering if you could talk about the union negotiations at the Port of long Beach, what are you getting and what is your expectation for that and is that a risk for further disruption going into peak season, and then secondly intensive like new deliveries for the market.
And that I expected in 'twenty three could do it.
Because of the Lockdowns in China, and disruption in supply chain and kids.
Yes first the first question with regard to the current discussions.
Sufficient follow their lead.
Very difficult for us to comment on the what could be the outcome, what we can say that.
As is always the case, we hope for the best and get ready for the work.
So it is a threat or a potential risk to.
Two of the current existing.
<unk> disruption, we've seen that some of our customers be directing some of their cargo already in anticipation of what could be a kind.
Kind of a discussion or if there was to be some some some actually most of the interaction on the <unk> in the form of late so some of the cargo has been a move away from the U S. Gulf Coast to the U S East Coast, which also explains to some extent why there is an increase in the congestion of the.
The U S East coast terminals.
With respect to your second question as we all know 2022 is not going to be a year, where we will see a significant new building being delivered in <unk>.
And this fits the sovereign 23 on paper at least <unk> 24.
Indeed, there are all used to be years, where a significant amount of new tonnage that I expect it.
To be delivered it is possible.
And time will tell it is possible that the initial planning and we are at the center.
And the thing Thats, so much shipyard, especially into China, maybe more than that then the shipyards in Korea are are being are being affected as you suggested by the zero carbon policy that is being enforced in China.
They are struggling to deliver the vessels.
As per the original schedule. So there might be some are slightly in terms of delivery of our new building capacity in that 2023 to two two a little bit later as well.
The vessels are concerned because we know that we are expecting some vessels.
2023, the first one being expected to be there needs to be delivered in February .
2000, and the <unk> suites, we we seem to be on schedule.
Thank you.
Comment on what sort of demand you're seeing right now kind of the U S and have you seen any change in from central.
The demand is still extremely strong and I think this is what we want to illustrate when we show and we keep on displaying that block, which is the inventory to sales ratio in the U S, which is a key metric.
We track there is what's going on in Asia.
Is the one that was the reference the other one of them to see the prices in the U S.
Ukraine is also having some effect on the Asia Europe trade Lane.
We look at the Asia, the Transpacific trade, which is the one we are exposed to US we are not exposed to Asia Europe . As you know the dynamic is that is not the same the demand in the U. S is excuse me is resilient is still extremely strong and we don't see we haven't experienced so far.
And yet any softening more than we would expect in terms of the seasonality.
On desktop so customers are.
Looking to ensure that the space that we have allocated to them.
It's still a space that they would be able to enjoy in the coming in the coming weeks.
There is all the orders that have been released prior to this Shanghai Lockdown of team there and we need that at some point to be lifted to China Southeast Asia to the U S and they also happen is the <unk> pre Christmas shopping.
You can see them, which is the peak season for us.
In our industry My staff earlier than initially anticipated. So if all the stars are aligned and.
Shanghai look down indeed, ease before or somewhat towards the towards June .
The all the situations that could be that.
The surge in demand.
In early July .
Thank you.
The next question is from the line of Chris Robertson from Jefferies. Please go ahead.
Good morning, and thank you for taking my question.
My first question is on the current average time charter duration could could you talk about the average time charter duration and on average what percent of your operated fleet rolls off charter per quarter or per year.
The average we've made if you look at what we have we haven't I wouldn't say it will be operational within 35 vessels.
Seven vessels today.
Pretty much all of the non chocolate where with the exception of the secondhand vessels that we acquired late last year. So they are all are all.
All on charter and in terms of charter duration. They are all far on charter for more than a more than a year of what's contracted for more than a year.
Remaining duration of the book of charter that we have using our therapy is 48 months when we renew.
Contractual or since already has 2000 in late 2022.
2021, and today still even at 2022, when we renew a chocolate when we fix a vessel. The average charter duration is between sweet three to five years that that has not changed I think since then our three year or five quarters in a row. That's the rule of thumb that issued debt issued.
Keep in mind.
So three years three to five years now.
Now when it comes to you and I think this is a very important point that you're raising and the second part of your question. What is left in terms of the.
A fixture that will come up for renewal in the quarters to come and looking ahead into 'twenty three and then into 2024.
Okay. So 137 vessels today that we operate 11 vessels for which the charter will come to an end between now and the end of the year for them.
Likely that we will want to renew.
Both charter and we might enter into charter contract duration between three to five years for those 11 vessels I'll forget the 135 vessels.
So we're not that exposed to the spot charter market for the remainder of 2022. However, looking ahead into 2023 and in 2024, that's where we recover the flexibility that we need in that.
He was in order to leave room for the new building that we will not be delivered.
I'll leave it to us in 2023 and in 2017 before so in fact, if needed we have 28. Therefore, our charter that we did have come to an end and in 34, we have another 34. So thats 62 vessels all together that will come to an end in terms of chartering agreement.
To put this into perspective to be compared with 46, new building that will be chartered to us over the same the same period.
Yes.
Okay. Yeah. Thanks for that my second question is on the the New Baltimore Express line and you can speak generally to on the other expression and also the e-commerce lines.
How should we think about that in terms of a of earning a premium versus kind of the market average rate.
Yes.
Those guys that are dedicated to time sensitive gabor.
If he is to ensure that the chunk of it is that as short as it can be and also that we have.
Once the vessel arrived at the terminal work on the rigor that we have the chassis is ready.
The inland.
Expectation onto rail can be organized the swiftly but this is the whole service that we provide our customer when they book on those specific line, but yes. They do they do command commanded a premium it is difficult to look.
Surprised people to give an indication as to what is the percentage of premium that we are generating.
Those traded with regenerate on average better income better margin per Teu.
We would on a more traditional traditional lines.
Okay and my final question, it's kind of following up on the on the first question to ask around your EBITDA guidance, what percentage of the EBITDA guidance is kind of locked in based on your contract negotiations versus what is exposed to fluctuations in spot.
D.
When we look at is the casualty for the trade mix, where we currently operate 40, 45% of our volume is transpacific. The rest is non transpacific.
It sounds like Asia.
Erica, let's say, so 45% with one specific and that is where we are talking about a long term contract and 50% of our volume will be.
Our contracted on a long term contract basis, and 50% will remain exposed to export to spot. So from a volume perspective, you can think that 25.
More than 75% of our volume is contracted and that we can apply our buyback.
First the sector.
You know we're lineup line of all criteria. The second one that obviously needs to be taken into consideration is that the transpacific in terms of in terms of our profitability may differ to the other lines in terms of volatility in terms of EBIT margin per teu. So from the profit.
The BDC perspective, it is north of the 25% I just talked about that as being locked in already in for the future quarters.
Okay, great Yeah. Thank you for the color and I appreciate the time.
The next question is from the line of products you have to gone from Barclays. Please go ahead.
Good afternoon. Thank you for taking my questions. I also have three firstly have you on your common stock.
Turning to operating a hummer 77 vessels.
Significant increase from the 125.
Talks about.
This call and yet.
Sure.
They are in line with the prior collector.
A little bit about.
Thanks Shannon.
And then most recently.
Hum.
How do you expect that to them.
I had I guess, that's good lines.
Pick up so that's one clarification on the capacity.
That's helpful.
Capacity.
Michelle.
Size of fleet that would be very useful.
Just secondly object costumer make so that makes up the columns you karri if there.
All numbers you gave us in.
In terms of exposure to coal miners are great. They are.
I guess I'm trying to understand why the outcome.
So there is some weakness.
Retail demand I mean.
Some of the largest U S retailers.
A little bit.
Confusing in terms of the sales growth.
And by Brian Robinson.
Hello, gentlemen.
There are associated implications for any.
Correct.
That would be great and then my final question is on.
Labor cost inflation is there something else.
To flag in terms of kind of.
Salaries and wages.
In line with inflation or is it more nuanced.
Thank you.
Alright. Thank you. Thank you Alex maybe the first part of your question with regards to the seat utilization of 137 vessels compared to the 125, we are operating more vessels and remember as well that we increased the size of our fleet also too.
To adjust to the new relationship with this partnership we have with the two and so now we replace also thrilled that we used to buy on board our partners with our own capacity. So that explains also to some extent why we are operating more vessels and you don't see the exact same translation in terms of carriage quantity.
So like I said, we used to be a net buyer of space on board our partners vessels.
Tenement, which is I think important in terms of you asked me about utilization utilization is extremely strong and has been very close to a 100% on every single voyage.
There's one thing that.
Has that had an impact nevertheless is the congestion issues the wasting time, meaning that that translated into a longer transit time to carry the same volume of cargo from one place to the other.
Then let's voyages.
As a result of the.
Congestion that have an effect on the overall transit time.
Moving a box from ACP. So utilization is very strong vessel mobile costs to adapt our phase two is the contribution she visits limp and.
<unk>.
So in line with the impact of the of the congestion.
Looking forward to the capacity plan that is are we want to make sure. We have taken all the necessary steps already to ensure that for the Alcoa along that.
Have a very strong foothold that we have the capacity that.
As we need in order to not only defense. It's also increased our competitive position in those very important figure. Then this is a very much of the 46, new building vessels that we referred to wherever you're wrong that would come our way in 'twenty, three 'twenty, four which will allow us to get.
Yes, very efficient.
We the tonnage that position is very strong we will continue to explore alternative options and where we see opportunities to enter into new trade length. If it does make sense. We will and this is why we are very pleased to see that we will have the option to do so because as I was referring to earlier on in 'twenty three 'twenty four.
Sure.
2062 vessel, let's be fair.
For the year, if we see that there are opportunities for us to enter into new trade. Then we will reduce those charter on top of the one or some of that on top of the new capacity that we are that would get delivery. So we will have the option.
Obligation to.
Operating more vessels into the coming in coming years.
Yeah.
Question that you raised the question about <unk>.
E Commerce.
Percentage of our activity, we've been I think a very very aggressive in our.
And the entry into these these type of trade starting with our all year zone between the Asia Southeast Asia, China towards Q&A, and then we expanded to.
Same type of growth rates between the.
It is yet to Australia, and New Zealand now, we just announced the opening of the Safeway blend between the C series, So it'd be Sweden is yet to the U S East coast. So the reason why we are putting both those.
Those lines is because there is a debate and there are customers that do you.
We provide these type of solutions.
So this is Smith in terms of the E Commerce trade name as we look at.
It was over 2021 and pretty much 25, 25% of our transpacific trade and to a lesser extent on the intra Asia as well with the Australia, maybe 20% of our intra Asia free we're very mature.
E Commerce et cetera.
And then the last question, which is what about the.
Cost of employment.
This year with the current situation.
Factoring in Ukraine, and as we all know Ukrainians.
Great to see <unk>.
And there we are.
We have a lot of our seafarers frequency cause onboard for us It has a limited impact because largely as we as we mentioned we are chartering in the capacity that we operate in as part of the charter rates are the daily rates that we pay to the tonnage owner that includes as well.
The mining of the vessel the ship management of the vessels that include the fair wages and the technical support. So if there is and in fact, it's more for the 30th owner than it is than it is for us to work towards to absorb.
Thank you. Thank you very much have you for that.
And then just ask one.
Follow up on the contract portfolio actually haven't really changed your main concern.
Sean.
I mean is there enough.
That's six 2% on the transport.
Higher level Petrohawk.
Hum.
For longer or are you more confident on the spot market.
We could have.
Started to increase the volume that we owned with contract on a long term basis it was not.
A lack of demand in this respect from our from our customers and throw the discussions the the first question that we were addressing with our customers.
The amount of the.
Space.
We could allocate to each and every one of them. So it was more of a strategic decision from the company to stick to the <unk>, 50% allocation between contract and spot as we also like to be able to benefit from the spot market, especially during the peak season, where normally.
He used to be expected that the spot.
Tractor the contract.
Great.
That has been a recipe that has worked for for example over the past few years and we didn't see any reason to.
To change drastically on that front for this very specific contract season.
Great. Thank you very much.
The next question is more on Sam Bland from Jpmorgan. Please go ahead.
Alright. Thank you. Thanks for taking the question I've also got three please.
First one is on the.
Its trunk specific contracts.
We've roughly doubled the rate has doubled could you talk about where the contracted rate. So that's been agreed versus the current.
What rate on that particular line. Please.
The second question is on the 46 vessels I think on at least some of those maybe all of them, there's an option for a sort of upfront.
Hemant.
Could you just kind of confirm if that's an old 46 and if so.
Didn't know how big the upfront payment could be in 'twenty three 'twenty four or is there some flexibility around that.
And the final question is if we assume that you take all of the 46 and renew the charters on the existing ships 77, well, where do you think roughly the lease liability.
Would would Max out that please thank you.
Yes.
Okay.
First question with respect to the Transpacific contract, Yes, we did mention that the.
We said, although we agreed on average at rates that are more than doubled compared to compared to what we assign the same tendency passing from last year, but there is a.
Also some some.
So I'm happy to do so.
The gap between the various states that we've agreed but by and large businesses the spoke today.
And we will we could depending on when you are looking at.
In terms of the past few weeks.
As we constructed is aware of it.
Wasn't that far off from what the spot essentially is today.
And with regards to your second question. This will be the 46 46 vessels.
We did the indeed, the agreed to pay a total tool.
To put upfront some there is some cash at the time when we get the delivery.
Those vessels and that was actually not.
A request from the charter tonnage providers with more.
Right.
To be able to put our cash to produce as opposed to us.
To remunerate the equity of the <unk> of the tonnage of owners that would.
Otherwise the demand is very strong with innovation of that if it goes away for us to reduce the daily charter rate that we.
Would be paying over the duration of the year.
The.
The chartering agreement.
By and large I think we did communicate for the for the first series of vessels or with the Seaspan.
The 10 15000 Teu vessels, we have to think about 13, one $3 million for vessels.
We did $30 million altogether for the 15.
And therefore, and then for the subsequent order of.
7700, Teu vessels 18 of them, we agreed for $20 billion.
Altogether in terms of so if you add everything everything altogether.
Commitments in terms of cash out at the time, we get to the delivery of the Newbuild with visa.
Of the 500 million tonnes.
And to the last question is difficult to answer that one that some because obviously, we don't know what the chartering zero waste will be would be if we were to renew.
The charter.
In 2003, and 'twenty four as opposed to let go of the vessels that we currently operate to make room for the ones that would be delivered to us so that's a bit.
It will be difficult to say that obviously, we would only do it if we felt that this was the right thing to do.
And from a business perspective, as you know it is very high on our agenda to grow profitably and to enter into trades, where we believe that we can generate.
Ongoing and sustainable profit. So we are very pleased to have the.
Option to continue to grow but no no way do we feel we have the <unk>.
Obligation to continue to grow aggressively.
Understood. Thank you very much.
This concludes our Q&A session and the ZIP Q1 earnings call.
For joining and have a pleasant day goodbye.
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