Q2 2023 ZIM Integrated Shipping Services Ltd Earnings Call
Speaker 1: Thank you for standing by and welcome to the ZIM Integrated Shipping Services second quarter 2023 earnings 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.
Speaker 1: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. Alana Holtsman, Head of Investor Relations, you may begin your conference.
Speaker 2: Thank you Rob and welcome everyone to Zip's second quarter, 2023 Financial Results Conference call. Joining me on the call today are Ellie Glick-Mundling's President and CEO and Saviour Disriones and CSO. Before we begin, I would like to remind you that during the course of this call
Speaker 2: We will make forward-looking statements regarding expectations, predictions, projections, or future events or results. 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 actual events or results may differ including materially. You are kind of referred to consider the risk factors and cautionary language to describe the documents the company files with the Securities and Exchange Commission including our 2022 annual report filed on form 20F in March. We undertake no obligation to update these forward-looking statements. At this time I would like to turn the call over to the CEO , Ellie Glickman. Ellie? Thank you, Ilana and welcome everyone to today's course.
Speaker 3: During the second quarter, and here today, new-term container shipping market conditions continue to be challenging. Our performance in the second quarter of 2023 reflected this reality. In Q2, we generated a just a debida of $275 million.
Speaker 3: an adjusted EBITLOS of $147 million. Tesla of form operations was $347 million.
Speaker 3: All cross position
Speaker 3: of $3.2 billion at quarter and the main throne.
Speaker 3: going to slide forward. This is currently in transition period. In early 2021, we embarked on our fleet renewal program to improve our cost structure and support long-term profitable goals.
Speaker 3: During this period, we secure through a series of chartered agreements, a highly competitive fleet and one that is optimally suited for our commercial strategy.
Speaker 3: This fleet is made up of 46 new-bit buses, including 28 energy powered containers.
Speaker 3: Of the 46 new bins, eggs are already part of our fleet today.
Speaker 3: 4, 12,000 Tio vs and 4, and in G powered 15,000 Tio vs.
Speaker 3: We expect the delivery of three additional 16,000 TULNG vessels, DC, and the remains are expected in the first few months of 2024.
Speaker 3: The commercial environmental benefits of this cost competitive capacity
Speaker 3: I'll also mention it again.
Speaker 3: Our 1015,000 TUNG fuel vessels were designed and built to serve on the Asia- to US and it still fences our car to the waters on the mile.
Speaker 3: This is a strategic service for ZIM and one in which our market share exceeds 10%.
Speaker 3: When we operate, I was at CP service with all 10 new builds, 15,000 new vessels.
Speaker 3: We expect to benefit from a very competitive cost per Tio on this street.
Speaker 4: Place a
Speaker 3: ZIM is the first liner to operate NNG power buses on the Azure to USISCostral, which we are confident will increasingly become a significant commercial differentiator. We view it as imperative that we provide customer with a service offering.
Speaker 3: that enables them to reduce their carbon footprint. At the same time, adding state of the out-energy fuel vessels, father's ring on sustainability goals, and support of commitment to reduce greenhouse gas emissions to net zero by 2050.
Speaker 3: I'll flip it in your program also included.
Speaker 3: 32 smaller, more versatile new build vases, Out of reach 18 RNG power 7000 TU vases.
Speaker 3: This model has a support of global niche commercial strategy.
Speaker 3: Today, we operate the youngest river fleet in the industry, which is a competitive advantage with this higher value cargo. We are also early to identify the attractive dynamics of cargo rich, caused by tight supply. We successfully grew our operated capacity from two cargo carriers in early 2021.
Speaker 3: serving the local Israeli market, operating 16 car carriers today with global coverage and benefiting from strong demand.
Speaker 3: In the near time, during this downturn period, as you await the delivery of the Reminder of our cost effective new build capacity.
Speaker 3: Improving our constructions remains an other line priority for ZIM.
Speaker 3: We continuously review our network and services and take action to rationalize our existing capacity to minimize our cash term.
Speaker 3: Today, in 2023, we read the level 7 container vessels to adapt our fleet to current demand levels and maximize utilization.
Speaker 3: Xavier, our CEO will provide additional information about our fleet in this repaired comment in his repaired comments.
Speaker 3: During this challenging market, we continue to look for opportunities to establish resilience in our business and focus on optimizing profitability.
Speaker 3: We remain committed to cold trade lands specifically as you are to US East Coast.
Speaker 3: and interact and expect our network will continue to evolve as customer demand change and new commercial opportunities arise.
Speaker 3: For example, in Q1 we suspended our express service from China to Los Angeles as leads to the West Coast collapse and launching Q2 deliberately a new service from South America West Coast to US East Coast.
Speaker 3: In this service, we leverage our stone glitter offering and carrying volumes have been consistently growing.
Speaker 3: Moving to slide 5
Speaker 3: While we remain cautious in our capital location decisions, we believe that it continues to be valuable in investing in growth engines.
Speaker 3: with which complement our call shipping activity.
Speaker 3: In June , we expanded our partnership with Fortices, one of our portfolio companies. Fortices is a innovative Fintech platform designed to modernize cross-border trade financing.
Speaker 3: as a reminder, for this is uses AI tools.
Speaker 3: Excuse me faster and cheaper access to working capital financing needs.
Speaker 3: Then traditional financial institutions.
Speaker 3: Zim now offers this unique financial solution to customer directly.
Speaker 3: as well as via our digital freight forwarder, ship forward.
Speaker 3: But when it comes to this investment, the capital requirements are relatively modest, yet the potential is significant.
Speaker 3: Move into slide 6. In conclusion of my prepared comments, I would like to address our revised guidance for 2023.
Speaker 3: and call the legs... CI
Speaker 3: This previously announced, we now expect to generate in 2020 history adjusted EBDA of $1.2 billion to $1.6 billion and adjusted EBDA close of $500 million to $100 million.
Speaker 3: This revised focus is driven by our expectation that the fix season will be soft.
Speaker 3: Bringing down our expectation for volume growth to low single digit.
Speaker 3: The improvement we have recently seen from Stot Freight Rates is clearly welcome development.
Speaker 3: However, I would like to caution that the significant improvement as it related to Zim is focused on Variation fj3 , equal to 8200 we Dominic were able to perform stronger aer??ol process.
Speaker 3: Whereas other trades, we operate in haven't seen a similar improvement. Moreover, this improvement, even if the stand does not have immediate impact on our financial and does not change our full-eared guidance.
Speaker 3: Marginally, we made benefit from improved sports freight, excuse me, sport freight freight, as long term contracts this year account for only about 30% of total trans-Pacific budget.
Speaker 5: Our current volume of 860,000 TUs in Q2 was slightly up compared to last year's second quarter current volume compared to a market growth of negative 2%. Equentially, our volume was up 12%. Revenue for the second quarter was driven by the continued decrease in freight rates. Q2 revenues were of $1.3 billion. Our revenue for the first half of 2023 of 2.7 billion was 62% lower than the first half of last year. Our free cash flow in second quarter total 321 million.
Speaker 5: compared to 1.6 billion in the second quarter of 2022. Turning now to the balance sheet, so to that increase by 537 million, since prior year end and that is mainly due to the net effect of the incoming vessels with longer term charter duration. Regarding our fleet.
Speaker 5: Excluding the new build capacity, the average remaining duration of our current charter capacity is 24.6 months compared to 25.5 months in May. As we mentioned, out of the 46 new build, the older, eight have been delivered, including 4,000 TU vessels and 4 LNG-powered 15,000 TU vessels.
Speaker 5: We have 13 vessels whose charter period ends before year-end 2023, and another 34 vessels whose charter period ends in 2024.
Speaker 5: converted into $347 million of cash flow generated from operating activities. Other cash flow items included $562 million of debt service mostly related to lease liability repayments. To remind you, we have commitments of approximately $150 million and $340 million in 2023 and 2024 respectively. This is a down payment for new building vessels charted primarily from C-SPAN.
Speaker 5: Moving briefly to review market conditions. Alpha liners supplied demand outlook for 2023 and 2024 remained unchanged, pointing to clear oversupply. Close gaming remains the most meaningful two operators have consistently used in 2023 to absorb the oversupply created in the market with the complete unwinding of both congestion and new vessel delivery.
Speaker 5: More recently, we have seen increased blanking, especially on trans-specific, which may have supported the recent rate increase on this trade. Other possible actions of paradesus could have taken, namely idling or scrapping, have had a negligible effect so far. As the charter market remained relatively strong, the motivation to scrap old-termage remains low.
Speaker 5: However, as chartered capacity comes up for renewal and IMO 2023 enforcement coming to play, the motivation to scrap may increase in 2024 and beyond. Delay deliveries of new builds capacity have also been minimal and are not expected to fully impact the growth of the supply. On the demand side,
Speaker 5: Consumer spending remained relatively healthy, despite rising inflation and greater macroeconomic risk. Yet high inventory levels built over 2021 and 2022 and continued concerns over economic growth.
Speaker 5: have caused importers to be cautious and limit any meaningful renewal of inventory.
Speaker 5: Demand development is positive globally compared to the recent six months of downturn, but this talking seems to have been prolonged into 2024.
Speaker 5: And here today the mandate evolved seem to track 2019. On that note, we will open the call to Q&A.
Speaker 1: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Speaker 5: What is clear to us today is that the spot market now is more beneficial to the liners than the average rates that were contracted during the contract season. As far as we are concerned, we have in terms of cargo mix a greater exposure to spot.
Speaker 5: than we have to contract. 70% spot exposure to be compared to maybe 30% contract. So, for as long as the spot rate today continues to be more elevated compared to the average of the contract, yes, this is going to benefit the company.
Speaker 6: But again, I would remain extremely cautious because we only have seen today only a few weeks of improvement in the trade. We know that this trade has been struggling for a long period. So hopefully it will stick, but time will tell. Okay. Yeah. And then just final one for me. Clearly your volumes were up quite a bit, you know, significantly sequentially and notably above industry averages. You know, transpacific volumes were their highest for youth since 21. Can we expect a similar sort of, is this a new baseline, at least here in the near term, what you did in the second quarter? Is that achievable? I think so far from what you're saying.
Speaker 5: So the 15 large capacity vessels that we take delivery of, those ones are being deployed on Asia to the US East Coast trade and they come and replace the 9,000, 10,000 TU ships that are being cascaded to a line which is also serving the US East Coast, that's the service to Baltimore which we have or we are.
Speaker 5: employed on the Trans-Pacific is increasing and will continue to increase up until we get the final delivery of the 10,000-15,000 TU sheet that we have ordered with C-SPAN. So yes, we think that the volume increase that we've experienced in the second quarter for the second quarter, will increase up into 6Device Energy and 9 Rule Spelling Out B Ji Flower Sn Likely
Speaker 5: at least from a capacity-operated perspective, providing that the volume continue to be there, should allow us to maintain this type of volume if not more.
Speaker 6: Thank you for that, Carlos, Javier, and Anilay. I'll turn it over. Thank you. Thank you.
Speaker 1: And your next question comes from the line of Sam Bland from JP Morgan. Your line is open.
Speaker 7: Thanks for the question. I think I've got two please. Actually both on contracts again. In Q3 is there a...
Speaker 7: sort of profit step down from contracted rates being rebased lower or I think you had said in previous calls that you had already sort of taken the pain on those earlier than the sort of traditional first of May step down.
Speaker 7: And the second question is, I think you just said that your share of volume on contract on the transpacific is now about 30%. Has that, that's come down quite a bit in my right in thinking it used to be a much higher number. I'll maybe leave it there just being with thanks.
Speaker 5: So, for us, there is, when we look in early Q3 and even late Q1, there's been no tailwind from potential higherora quotes from C. Frank G.....
Speaker 5: revenue generated by contract cargo. That was already long gone for us. We were already in Q1, operating predominantly on the sport market with very little tailwind from contract. That is also very much the case in Q2, where we've been booking very much on sport. What is happening in Q2...
Speaker 5: is that now we are shifting to the new contract season in a way which starts the 1st of May. And so the second part of the Q2 and now going into Q3, this is where we now say that we are loading pretty much on a 70-30% mix between spots.
Speaker 5: contracts. So the 30% contract we're the one volume and the rate that we have discussed and agreed upon with our customers earlier on this year around the around March-April timeframe. And you're right in saying that 3070 is lower than what the company used to...
Speaker 5: used to secure or lock in terms of contractual commitments because we were more towards 50-50 in the past, at least last year and the year before. The reason why we ended up this time around at 30-70 is because we were not willing to agree to rates that were below a certain threshold.
Speaker 5: that we did have set for ourselves. So that's the reason. And today, now that for some time the spot market was contributing less to the contract, this seems to be turning now as we speak.
Speaker 5: we'll see and the future weeks and months will tell us whether we made the right decision at the time.
Speaker 7: We can infer that the 30% was at a rate that was at least in line with what you were willing to accept. And I think you also said that at least today the spot rates are above whatever rate was agreed on that 30% that was contracted. Is that right?
Speaker 1: That is correct. Understood. Thank you. And your next question comes from a line of Alexia Dogani from Barclays. Your line is open.
Speaker 8: Yeah, thank you for taking my questions. I also had them a couple. Just first here on the guidance range of an in-bit loss of 100 to 500 million. Can you help us understand the upper and lower end of the range and kind of the second half implications?
Speaker 8: That's my first question. And then secondly, can you elaborate a little bit more on the kind of cost measures you allude in the statement? There's just kind of refocusing.
Speaker 8: Yeah, of course, performance and some capacity or rationalization that you talk about. Thank you.
Speaker 8: Yeah, cost performance and some capacity rationalization that you talk about. Thank you.
Speaker 5: Thank you. Yes, the, you know, when we look at the guidance range, we need to be very careful in the sense that there is still a lot of uncertainty ahead. And this is why it is difficult to be precise in our assessment for the quotas to come. What are our main underlying assumptions? First of all, on the volume perspective, we...
Speaker 5: We visited a little bit downwards, our volume expectations compared to prior assessment. And now we anticipate that on a full year basis, we will be slightly up, low single digit numbers in terms of carried quantities when compared to last year.
Speaker 5: So we have a volume assumptions that if there was to be more demand and a stronger peak season that what we initially anticipate could drive the volume assumptions in one direction of the other.
Speaker 5: Today we look at the peak season and the way it is shaping out and we think that if there is going to be one, it's going to be a very soft peak season to say the least. So volume is one driver. The second driver obviously, and the most meaningful one.
Speaker 5: is clearly the freight rate environment. We've talked about the recent improvement that we have experienced and that we are continuing to experience, at least as of today, on the Trans-Pacific trade lane. That is obviously welcome, but how long that improvement willment will even begin?
Speaker 5: an unknown whether it's going to go beyond October or not is an unknown. So this is also a significant potential driver when you look at the full year outlook for the company. And when we talk about the Trans-Pacific that is improving,
Speaker 5: we should not lose sight of the fact that on some other trades that have so far been more resilient than the Trans-Pacific, there is an intensified pressure to name one, the Atlantic Trade Lane that has been extremely resilient, until recently, is today under more severe pressure, and we see the rates.
Speaker 5: going down as opposed to the rate going up. So there is also here a mixed consideration that may impact where we are going to land the year on the full 12 month basis.
Speaker 5: To your second question, in terms of the cost measures that the company is taking, there are obviously the ones that we already took a couple of years ago and that will take time in order for them to find their way, all the way through the bottom line. And this is really...
Speaker 5: the repo filing of the fleet that we operate and those new building that we ordered, the 3rd 21 and 22 that are coming gradually between now and at the end of 2024. So that's gonna take a few quarters for us to, you know, bringing those ships and for those ships to replace the more expensive tonnage that we are currently today operating.
Speaker 5: Now in the more short term horizon, we are obviously looking at always trying to optimize our fleet and to allocate our capacity the best way we can. So we are looking at a few things, as we always have, by the way, which is the...
Speaker 5: looking at how we can potentially partner with some other shipping lines in order to optimize a fleet network or a structuring of a line so that those partners can be better off by joining forces as opposed to as opposed to operating alone and so we've been quite successful at doing that in the past
Speaker 5: for us maybe to be delivered some of the charter that we have secured back in the 21-22, a little bit ahead of schedule. We'll see if this is something that that can be done. And lastly, but even maybe more importantly, we continue to look at
Speaker 5: a trace that we believe may be on the serve. There might be opportunity for us to enter. Just like we've done on the go, I will be open this service between Latin America, West Coast to the North America East Coast, which has been so far proven to be.
Speaker 6: quite the right decision for us to do. So we will also look at entering into new trends as well. Thank you, I can just ask a clarification on the, sorry, on the Asia-US issue.
Speaker 8: Can you discuss a little bit about load factor or utilization factor and really do you need to?
Speaker 8: Today, when we sell and because when we need to...
Speaker 5: which we think has participated to allowing for the rates to go up. But when we sell the utilization on the 15,000-TU shifts is extremely good. So this I think is the right strategy for us.
Speaker 5: to promote blanking and to sell at optimum capacity when we do sale. And on the other service, which is the one that is being upsized as a result of the cascading of the 10,000 TU shifts that are now being deployed on these other services.
Speaker 5: We continue to also see the volume ramping up. So there is from a capacity deployment perspective, we think we have today and we continue to hopefully have tomorrow the right vessels for the right trade. Once we have fully completed the upsizing and the cascading that we have engaged in.
Speaker 1: You sent me. Thank you. And your next question comes from a line of Ceci, Civa Kumar from city. Your line is open.
Speaker 9: Yeah, thank you. We are in LA. I've got three questions here. So first one is actually a very basic one. Just to clarify, the contract rates are excluding bunker cost and the spot rates obviously is all in right. So the rate uplift that we have seen in the past couple of weeks, how much of it is actually related to spike in bunker cost to the fuel cost that we have seen.
Speaker 9: So I just wanted to get some clarity around that. And then second question, actually on your volume, obviously, Trans-Pacific, there's a strong momentum in volume, quote, unquote, or actually, obviously, there is a seasonality we're going to do. But we have seen a disruption on the US-based coast. So on which of it, actually, you had customers calling you the last minute.
Speaker 9: wanted to ship some of the volumes that were meant for West Coast into East Coast. And did you have any charges? Last many search charges related to that. And then finally, actually on your cost, unit cost X bunker, you obviously caught on quarter, you've seen significant improvement, even from 860 to 800 odd.
Speaker 9: that were meant for West Coast, into East Coast. And did you have any surcharges, last minute surcharges related to that? And then finally, actually on your cost, unit cost X bunker, you obviously caught on quarter, you've seen significant improvement, even from 860 to 800 odd. And...
Speaker 9: As you continue to up gauge, do you see for this unit costs, the bunker to drop? As you go into quarter three? Yeah, those are my three questions. Thank you. Okay, so your first question you're right, the contract is the bunker escalator, escalator that is embedded into the contract that we signed without customers.
Speaker 5: So that would go up or down with the filtration in Bunkers and the spot does not. The spot is indeed an all-in rate, give or take, even though sometimes we, for internal purposes, divide the ocean freight from the Bunkers element. So the recent changes that we've seen in Bunkers, yes, they may have had an effect on the sea.
Speaker 5: on the sports market, but I would say to a limited extent, if you look at on average how much you are burning per TU that you carry from Asia to the US, you're talking half a ton, give or take. And so when you have a $50 change, that's potentially $25.
Speaker 5: per TU in terms of incremental cost that is obviously being or has to be deducted from the rate improvement at stable bunker assumptions. So your view is correct whether this recent situation in bunker is stable or not.
Speaker 5: We'll have a significant impact on the rate increase. I think not so much. Maybe looking at the second question, you're right that there's been a lot of uncertainties going on in, by the way, on the US West Coast due to the...
Speaker 5: discussions that we are going in the various terminals with the ILOW, you, and also on the east coast with the current issues with the Panama Canal, and you've had
Speaker 5: sometimes some arbitrage between customers moving from one place to the other or by the way also including the including the US the US golf course
Speaker 5: But as far as we're concerned, as you know, today we are no longer operating any service between Asia to LA. We are now focusing on the Asia-US East Coast and US Gulf and we have a service where we load on NSC on PNW.
Speaker 5: So for us really the matters relate more to what's going on in Panama with the current draft restrictions which act as a regulator in terms of capacity being deployed to the trade but requires.
Speaker 5: that we are very up to speed and up to date and that prioritizing light cargo in order to be able to load the vessels the way we want. Also potentially leveraging our network in South America by unloading.
Speaker 5: some of the cargo before the canal and for that cargo to find its way on the service that we recently opened between South America and the US East Coast. So that I think would be what is today driving the market on the transpacific as far as we are concerned.
Speaker 5: With respect to your third question, you need cost X bunker. Yes, we've seen an improvement quarter of a quarter. I think the long-term trend should be that we will continue to see an improvement only because of, again, the change of the profile of the fleet.
Speaker 5: that we will end up operating and as we take on the new building more efficient and cheaper, a tonnage cheaper PTO in terms of operating capacity, those that will come in and we'll end up replacing a more expensive chart. But that is something that we'll take some time and not gonna be an overnight.
Speaker 5: effect, but it's on the way and every quarter that passes should allow us, if we look at the vessel cost, for that cost to go down. Another element of cost reduction that is quite visible is the fact that now with the ease in the congestion in the...
Speaker 5: door to door from the PNW service. So we also see here, let's cost to you that we carry. And finally, as well, in terms of balancing cost, you know, balancing cost is being defined for us as the cost of repositioning an empty when we have an imbalance straight.
Speaker 5: And we are moving a full from Asia to the US and we don't have as many full to export out of the US back to Asia. We had a line that was heavily in balance, almost 100% in balance. And that was the ZDX line, the express service that we closed into one between Asia to the US West Coast.
Speaker 1: Thank you, Xavier. Thanks for that. And your next question comes from the line of Lars Händer from Nordia. Your line is open.
Speaker 5: Yes, so in terms of capacity, we have increased the overall capacity that we are operating today. As we have taken on board in the quarter of today, we have now a four of the 15,000 EU ships that were delivered over the first six months of 2023. We also received the four 12,000 EU new building that were also delivered. So that's eight for us, eight large capacity ships that were delivered. And we have returned some smaller tonnage.
Speaker 5: to to to To manage providers over the course of the quarter. So today, I think if I'm not wrong We operate the capacity a combined capacity of a roughly shy of 600 thousand to use altogether a little bit A little bit less than that and as we progress throughout the year we will have
Speaker 5: the delivery of another another three 15,000 to you shifts between now and the end of the year. We will also start taking delivery of our 7,000 energy also a few vessels three of them will be delivered between now and the end of the year
Speaker 5: so adding six new bills of tonnage to our operating capacity. That will contribute as well to increase our overall operating tonnage between now and the year end. Have there been any changes in the behaviour of your customers?
Speaker 6: when you engage in contract negotiations. The reason why I asked is that I've been hearing from many other carriers that they now have at least a larger share of contracts which are index linked and not at least in the beginning of the period, contract period, where there are fixed rates. Any views on that? As far as we are concerned, the majority of the contracts that are...
Speaker 5: we have signed, secured and agreed upon with our customers are fixed. So, leave aside, obviously, the bunker adjustment factor that we referred to earlier on during this call for us is the vast majority is agreed upon ocean freight and with no index type of linkage. That doesn't mean that we would not be considering this going forward.
Speaker 5: But if we look at the present time, when I'm talking about the 30% of the capacity or the volume that we are carrying, the contracts are mainly fixed rate. And the last one on the versus speed. Are you slowing down as many other carriers are in terms of average versus speeds, adding more versus to loops in order to keep the savings schedule? Yes, we have done that. So through steaming is something that...
Speaker 5: has been the strategy of the company for already quite some time. And as a result, we indeed, in some of the trades, have added vessels in order to maintain a weekly schedule. That has happened at least on more than two occasions where we have added a vessel to a given service. So without the day increasing,
Speaker 5: are offering on the trade but absorbing some of the capacity and allowing for a slow steaming which is also for us a way to make sure that we meet the IMO 2023 regulation as well when it comes to calculating the carbon intensity index.
Speaker 1: Okay, thank you. Thank you very much. And this concludes the Q&A session. I will now turn the call back over to Mr. Glickman for some final closing remarks.
Speaker 3: Thank you. I will clearly in the midst of the challenging period for our industry. Zim is continuing to take proactive steps in response to this market reality.
Speaker 3: Beginning in early 2021, ZIM began securing through a series of charter agreements, a highly competitive plate that is optimally suited for commercial strategy. And continue to take delivery.
Speaker 3: of this new build vessels this year and next year will improve our cost structure and build further commercial resilience. We are in transition time. We remain committed to minimize cost in this and in the near term continue to review our network.
Speaker 3: and services to rationalize our existing capacity. Additionally, our ample liquidity and solid balance sheet, including a total cash position of $3.2 billion at quarter ends, will enable ZIM to operate from a position of strength and maintain a long-term view. As we look to the future, we believe ZIM is well positioned to further implement our differentiated...