Q4 2023 ZIM Integrated Shipping Services Ltd Earnings Call

Operator: Hello, and welcome to the ZIM Integrated Shipping Services Q4 and Full Year 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Hello, and welcome to the Zim integrated shipping services Q4, and full year 'twenty twenty-three earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star one on your telephone keypad.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. I will now turn the conference over to Elana Holzman, Head of Investor Relations.

I will now turn the conference over to Atlanta Hoffmann head of Investor Relations. Please go ahead.

Thank you operator, and welcome to <unk> fourth quarter and full year 2023 financial results Conference call.

Joining me on the call today are president and CEO and stuff.

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 results, we believe that our expectations and assumptions are reasonable.

Operator: Events, always. We believe that our expectations and assumptions are... If you wish to cross...

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.

Operator: Statements reflect only the company's current views and that actual events or results may differ, including the are kindly referred to consider the risk factors in cautionary language. Thank you. Thank you. Thank you.

You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2023 annual report filed today on form 20-F.

Operator: Files with the Securities, including our 2023 annual, file today on form. We undertake no obligation to update these four. Before turning the call over to Eli, one house...

We undertake no obligation to update these forward looking statements.

Before turning the call over to Eddie one housekeeping point.

Operator: Announcing the relevant Charter Agreements, we have referred to the 18 smaller LNG vessels, a $7,000 voucher to you for their original design name and prior. The phenomenal capacity of these vessels. Approximately $8,000.

Since announcing the relevant charter agreements, we have referred to the 18th smaller LNG vessels at <unk>.

7000, Teu vessels for their original design name and prior to their construction.

I'm an old capacity of these vessels is approximately 8000 teus.

Eliyahu Glickman: As such, going forward, we will refer to these vessels as 8,000. At this time, I would like to call over to ZIM's CEO, Eli Glickman. Welcome everyone to today's call.

As such going forward, we were referred to these vessels as 8000 Teu vessels at this time I would like to turn the call over to Vince C O illegally.

Yeah.

Welcome everyone to today's call.

Eliyahu Glickman: Reflecting on a challenging year, we at ZIM have proven to be resilient and committed to excellence throughout our operations, as we deliver the highest level of customer care even in the face of industry disruption and other operational challenges. The war situation in Israel is ongoing and continues to affect our employees here. We mourn the loss of all innocent lives.

Reflecting on the challenging U <unk> proven to be resilient and committed to excellent swatow operation as we deliver that.

This level of customer care.

Turning to face the industry disruptions and other operational challenges.

The world situation in each zone is ongoing and continues to affect our employees view.

Youre mowing the lawn shortfall in Mustang.

Eliyahu Glickman: And we continue to pray for the safe return of all Israelis who remain held hostage by Hamas in Gaza. Since the tragic events of October 7th, our priority has been to ensure the safety and well-being of our employees and to minimize any service disruptions to our customers. I'm incredibly proud of the unwavering commitment that I have seen from our people throughout the organization during this challenging time and the collective spirit to continue to drive our business forward. Before this cutscene, The Coven.

And we continue to wait for the safety of all Israelis, who remains held hostage by Hamas in Gaza.

Three of the tragic events of October the seven <unk>.

Our priority has been to ensure the safety and wellbeing for employees and to minimize any service disruptions to our customers.

Incredibly proud of the unwavering commitment that I've.

She informal people slowed organization during this challenging time.

The collective experience to continue to drive our business forward.

Before discussion.

The carbon.

Eliyahu Glickman: The State of the Market and ZIM Strategic Transformation, I will briefly address our financial results. Consistent with our latest expectations, our fully-adjusted EBITDA was $1.05 billion, and a 23% adjusted EBIT loss was $422 million.

State of the market in zinc strategic transformation.

Quickly address our financial results.

Consistent with our latest expectations, our full year adjusted EBITDA was $1.05 billion.

23, adjusted EBIT loss was $422 million.

Eliyahu Glickman: These results were in line with the outlook we provided on November 23 and reflected the ongoing market weakness. We ended the year with substantial liquidity of approximately $2.7 billion. Turn to slide 4.

These results were in line with the outlook, we provided in November 23.

And reflected the ongoing market weakness.

Importantly.

We ended the year with substantial liquidity of approximately $2 $7 billion.

Turning to slide four.

Eliyahu Glickman: Turning to the market environment, we've seen dramatic changes in recent months, demonstrating the volatility and dynamic nature of our industry. For example, the escalating tensions in the Red Sea have had broad implications for container liners. In late November 2023, to ensure the safety of our seafarers, our customers' cargo, and the vessels we operate, we made the decision to divert all ZIM vessels due to pass through the Red Sea around the Cape of Good Hope until further notice. These Red Sea Diversions, which others have also implemented, have been a destructive force across the industry, absorbing some of the overcapacity in the market and driving freight rates in certain trades higher. On January 24, trigger draft restrictions enforced in the Panama Canal, including on container vessels, added to the supply squeeze we are currently experiencing.

Turning to the market environment.

<unk> seen dramatic changes in recent months, demonstrating the volatility and dynamic nature of our industry.

The escalating tensions in the Red Sea.

What implications for container liners.

In late November 'twenty, three to ensure the safety of our seafarers, our customers' cargo and the vessels. We operate we made the decision to divert all zoom versus June.

So does that see around the Cape of good hope until further notice.

These spreadsheets diversions, which others have also implemented.

It's been a disruptive force across the industry.

Absorbing some of the overcapacity in the market and driving freight rates and certain trades.

In general as plentiful.

The friction and enforcing the Panama canal, including on container vessels added to the supply squeeze we are currently experiencing.

Eliyahu Glickman: While this disruption had a minimal impact on our Q4 results, we expect first quarter and potentially second quarter earnings in 2024 to reflect the improved spot rate. Yet, as we look toward the remainder of the year, it is worth noting that there is a fundamental difference between the current disruptions and the prevailing market conditions during the COVID-19 pandemic. The COVID-era market was characterized by a significant increase in consumer demand, accompanied by unprecedented supply chain disruption. Current market conditions, on the other hand, are primarily supply-driven, and the portrayed increases remain somewhat limited to trades more directly impacted by the disruption.

While it is disruption at the minimal impact on our Q4 results, we expect first quarter potentially second quarter earnings and plentiful due reflect gainful spot rates.

Yet as we look toward the remainder of this it is worth noting that there is a fundamental difference between the current disruptions and the prevailing market conditions during the COVID-19 pandemic.

They called me the other market was characterized by a significant increase in consumers demand accompanied by unprecedented supply chain disruptions.

Current market conditions on the other end, primarily supply driven and significant spot rate.

In cases remains somewhat limited to trade more directly impacted by the disruption.

Eliyahu Glickman: Once the Red Sea crisis is resolved, we will likely revert to the supply-demand scenario that began to play out in 2023, setting up a more challenging third and fourth quarter of 2024 for the industry, including us. Given that market dynamics in the area will depend largely on the duration of the Red Sea disruption, we are taking a cautious approach in establishing our guidance for the year. As such, in 2024, we expect to generate adjusted EBITDA of $850 million to $1.45 billion and adjusted EBIT of negative $300 million to positive $300 million. Xavier, our CFO, will discuss the other line assumptions for 24 guidance in his prepared comments. I'm going to slide number five.

One is the Red Sea crisis is resolved, we will likely revert to the supply demand scenario that they've begun to play out in 'twenty three setting up a more challenging third and fourth quarter of <unk> 24 for the industry, including us gear.

Given that the market dynamics and David will depend largely on the duration of the Red Sea disruption, we are taking a cautious approach and establishing our 'twenty full guidance.

As such.

24, we expect to generate adjusted EBITDA of $850 million to 145 billion and adjusted EBIT.

Negative 300 million to positive 300 million.

<unk>, our CFO will discuss the other line assumption for 'twenty for guidance in his prepared comments.

Going to slide number five.

Eliyahu Glickman: This strategic transformation is progressing as planned and is already yielding the favorable outcomes we projected. As we have communicated previously, 23 and 24 were always expected to be in a transition period. We are pleased with the decisive steps we have taken to enhance ZIM's future commercial and operational resilience. As a result of these actions, we expect ZIM to emerge in a stronger position than ever in 2025 and beyond, as our strategic transformation continues to deliver gradual benefits. Most importantly, we've executed a fuel renewal program that will enable ZIM to operate more efficiently and competitively. Through a series of long-term charter agreements, we secured a total of 46 new container ships, of which 28 are LNG powered. 24 vessels have already been delivered to us, and another 22 are expected to be delivered through the remainder of 24. The advantages of this fleet are worth highlighting again. The goal was to shift ZIM's reliance on older, less fuel-efficient, and less green capacity to a cost and fuel-efficient, largely LNG-powered new-build fleet.

This strategic transformation is full.

Progression is.

Lynn and is already yielding the favorable outcomes we projected.

As we have communicated previously 23 and 'twenty four we're always expected to be in transition period.

We're pleased with the decisive steps we have taken to manage these future commercial and operational resilience.

As a result of these actions, we expect zinc to emerge in a stronger position than ever in 'twenty five and beyond.

Our strategic transformation continues to deliver gradual benefits.

Most importantly, we've executed a fuel renewal program that will enable zim to operate more efficiently.

And competitively.

Through a series of long term charter agreement, we secured a total of 46, new built containership.

Which 28 are LNG power.

24 vessels have already been delivered to US and then another 22 are expected to be delivered through the remainder of 'twenty four.

The advantages of this fleet was highlighting again.

The goal was to shift zoom rely rely on some older less fuel efficient and less grim capacity.

Cost and fuel efficiency, largely LNG LNG powered Newbuild fleet.

Eliyahu Glickman: Our core fleet will be modern, larger, and better suited to the trades in which we operate. Our cost per TU is declining as we continue to take delivery of cost-effective new-built tonnage and re-deliver expensive COVID-era vessels. We expect further improvement moving forward. From an environmental perspective, we expect approximately one-third of our operating capacity will be LNG-powered in 2025. Establishing ZIM as a clear industry leader in terms of carbon intensity reduction. We are pleased to offer our customers a pathway to more eco-friendly shipping options and reduce carbon emissions. Today, ZIM is the only carrier to operate LNG vessels from Asia to the U.S. East Coast.

Hopefully it will be modern larger and better suited to the strategy in which we operate.

Cost per Teu is declining as we continue to take delivery of the cost effective new build tonnage and we deliver expensive corporate Arab vessels, we expect further improvement moving forward.

Forming mental perspective, we expect a bulk cynically one third of our operating capacity will be LNG powered in 'twenty five.

<unk> is the clear industry leader in terms of carbon intensity reduction.

We are pleased to offer our customers the best way to more eco friendly shipping options and reduce carbon emissions.

Today <unk> is the only carrier to operate LNG vessels from Asia to the USD East Coast.

Eliyahu Glickman: We are deploying 15,000TU and 8,000TU LNG-powered vessels on two different key services. We believe this further enhances our competitive position in this strategic trade for ZIM. As I already mentioned, during the remainder of the year, we have 22 outstanding new build deliveries that, once completed, will further enhance our fleet and complete our fleet renewal program. Our decision to charter these LNG vessels was part of our long-term strategic plan to enhance our market position, particularly in the trans-Pacific trade, partly in anticipation of the termination of the two M-Lines, which did, in fact, happen. We wanted to ensure that ZIM operates a competitive fleet that would allow us to operate independently, if needed, and at the same time, would also make us an attractive potential partner to other liners. Our collaboration with 2M will end at the end of January 25 as a result of the termination of the 2M Alliance.

Deploying 15000 Teu.

8000, Teu LNG powered vessels on two different key services.

We believe this further enhance our competitive position on this strategic grateful Zim.

As I already mentioned during the reminder of the year with 22 outstanding new build deliveries.

Once completed we will further enhance our fleet and complete.

Fleet renewal program.

Our decision to charter. These LNG vessels was part of our long term strategic plan to enhance our market position.

Particularly in the transport Pacific trade, partly in anticipation of the termination of the two of them in lines, which did in fact happen.

We wanted to ensure zoom operates a competitive fleet the tool will allow us to operate independently if needed and at the same time would also make us an attractive potential partner to other liners.

Our collaboration with <unk> will end.

End of January 'twenty, five as per the termination of the two airlines.

Eliyahu Glickman: Yet, we are confident that our new cost and fuel-efficient new build capacity better positions us to reach new operational collaborations in the future. And we continue to believe in Mutually Beneficial Operational Partnerships, which we'll continue to seek when possible. We are focused on ensuring our fleet is in the best alignment with demand levels. To this end, we are committed to rationalizing our capacity whenever necessary to minimize cash burns.

Yet we are confident that our new cost and fuel efficient new build capacity better positioning us to reach new operational collaborations in the future.

And we continue to believe mutually beneficial, but if you've got operational partnership.

Which will continue to seek when possible.

We are focused on ensuring our fleet in the best in line with demand levels to do said, we are committed to rationalizing our capacity whenever necessary.

To minimize cash burn.

Eliyahu Glickman: In 2023, we re-delivered 32 vessels, and we have a total of 32 charter vessels up for renewal in 2024. Turning to our network, we are constantly reviewing our service to best address customers' evolving needs and take advantage of new commercial opportunities with growth and profitability potential. Our decision to reinstate our ZTX service in late 2023, connecting South China to Los Angeles, was very timely, and we are now benefiting from volume growth reaching the U.S. West Coast. We proved our agility once again when we launched a second ZIM-operated West Coast Bound service early in the first quarter of 2024, in addition to our collaboration with MSC on this trade. This service connects Asia, Canada, and the U.S. via the Vancouver Gateway and includes expanded rail connections across North America.

In 2003, we redeliver 32 vessels and we have a total of.

32 charter vessels up for renewal in 'twenty four.

Turning to our network, we are constantly reviewing our services to best address customers' evolving needs and take advantage of new commercial opportunities with growth and profitability potential.

Our decision to reinstate our <unk> service in late 'twenty, three connecting South China to Los Angeles was very timely and we are now benefiting from volume growth, reaching the U S West coast.

We bought our agility once again, when we launched our second Zim operated West Coast Bond service early in the first quarter of 2004 in addition.

Collaboration with <unk>.

This service connect ICF, Canada, and the U S via the Vancouver Gateway and include expanded rail connection across North America.

Eliyahu Glickman: This service is also benefiting from recent market tailwinds. Latin America, where we see long-term growth and profitability potential, has been a focal point for us throughout 2016. We opened a number of different services, and we are pleased with our growing volume in this region. We also made adjustments to services calling East Mediterranean ports to address changes resulting from the Red Sea crisis and capture market share. We redeployed existing capacity to this service and did not charter additional capacity to maintain a weekly service on our Asia tourist Med service. Delivering our signature Z-factor customer care, which combines a personal touch with advanced digital tools, remains a high focus for us. This year, especially against the personal challenges.

This service is also benefiting from recent market tailwind.

Latin America, where we see long term growth and profitability potential has been a focal point for us throughout 'twenty three.

We opened a number of different services and we're pleased we saw growing volume in this region.

We also made the adjustment to services, calling eastern Mediterranean ports to address changes, resulting from the Red Sea crisis and capture market share.

We deployed <unk>.

<unk> capacity to do service and did not charter or additional capacity to maintain the weekly service.

Net service.

Delivering a signature.

Delivering our Sigma chose Z factor customer care, which combines personal touch with advanced digital tools.

Jane a high focus this year, especially against the Ed, but the personal challenges.

Eliyahu Glickman: We are especially pleased to receive a better-than-ever result from our 23-annual Customer Experience Survey. We see positive trends in the important parameters, such as satisfaction with ZIM, customer loyalty, and how customers view our services versus our competitors.

We are especially pleased to receive better than ever result.

<unk> 23 in all customer experience service we.

We see positive trends in the boardman parameters, such as satisfaction with zim customer loyalty and how customers view our service.

This outcome.

Our competitors.

Eliyahu Glickman: Moving to slide numbers, our capital allocation strategy for 2024 remains unchanged and equally cautious. We intend to invest our resources to enhance our long-term value for the benefit of shareholders, namely our fleet, our equipment, as well as our gross engine, while at the same time, we continue to pursue cost savings and cost avoidance initiatives to preserve cash. Therefore, preserving cash remains a top priority. We believe there continues to be value in investing in gross engines, namely selectively investing in early-stage companies developing disruptive technologies in our core shipping activities and broader logistics ecosystem and assisting these companies to reach their potential as active strategic investors. An excellent example is our recent announcement to install a cutting-edge tracking device on our dry van containers developed by Hupo Systems, one of our portfolio companies. We are excited to see our investment in Hooper's unique technological solution mature into what we believe is the most advanced tracking device for dry containers. At ZIM, the use of technology and digital tools, combined with our agility, are core strengths which promote our operational and commercial resilience and efficiency.

Moving to slide number six.

Our capital allocation strategy for 'twenty, four remains unchanged and equally caution.

We intend to invest our resources to enhance our long term value for the benefit of shareholders, namely our fleet.

<unk> as well as our growth engine.

While at the same time, we continue to pursue cost savings and cost avoidance initiatives to preserve cash.

So preserving cash remains a top priority. We believe there continues to be a value and investing in growth engines, mainly selectively investing in early stage companies developing disruptive technologies in our core shipping activities and border logistic.

Ecosystem and assistant these companies to reach potentially the Patel.

Potential is active.

<unk> is active strategic investors.

And that's an example, no recent announcements to install cutting edge tracking device on our dry van containers.

By who persistent one of our portfolio companies.

We are excited to see our investment in <unk> unique technological solution mature into what we believe is the most advanced tracking device for dry containers.

A zoom the use of technology and digital tools combined with our agility, our cost trends, which will promote operational and commercial resilience and efficiency.

Eliyahu Glickman: The upcoming month, team represent, and transition period for our company, but we are excited about what the future holds. During this time, while market conditions remain uncertain, our strong crash position will enable us to maintain a long-term view. Our entire organization is focused on returning ZIM to long-term sustainable profitability. On this note, I will turn the call over to our CFO, Xavier, for a more detailed discussion of our financial results, our 24 guidance, as well as additional comments on the market environment. Thank you, Eli, and again, welcome, everyone.

The upcoming months still represent.

And transition period for our company.

We are excited about what the future holds during this time, while market conditions remain uncertain, our strong cash position will enable us to maintain and long term view.

Our entire organization is focused on returns into long term sustainable profitability.

On this note I will turn the call over to our CFO took servier for a more detailed discussion of our financial results 24 guidance as well as additional comments on the market environment. Please.

Julie and again welcome everyone.

Xavier Destriau: On this slide, we present our key financial and operational highlights. Echoing Eli's earlier comments, 2023 marked a challenging year, but ZIM remains resilient. Due to the weak market, ZIM generated revenue of $5.2 billion in 2020.

On this slide we present, our key financial and operational highlights.

Echoing eddies earlier commenced 2023 marked a challenging year, but remains resilient.

Due to the weak market didn't generated revenue of $5 $2 billion in 2023.

Xavier Destriau: 59% decrease compared to last year. During the year, our average freight rate per T.U. was $1,203.

<unk>, 59% decrease compared to last year.

Yeah.

During the year, our average freight rate per Teu was $1203 60.

Xavier Destriau: 63% lower than in 2020, as we were again adversely impacted by the continued decline in freight rates. In Q4, our average freight rate per TU was $1,102, that is a 48% decline year-over-year and a 3% decline from the prior quarter. Total revenue from non-containerized cargo, which reflects mostly our car carrier services, totaled $534 million for the full year of 2020.

63% lower than in 2022.

As we're again adversity impacted by the continued decline in freight rates.

In Q4, our average freight rate for <unk> was $1102 that is a 48% decline year over year and a 3% decline from the prior quarter.

Total revenue from our non containerized cargo, which reflects mostly our car carrier services totaled $534 million for the full year of 2023.

Xavier Destriau: And that is a 73% increase compared to the prior year. This growth resulted from our expanded capacity in 2023, as well as underlying positive market dynamics. As Eliyahu previously indicated, the Red Sea disruptions had minimal impact on our Q4 results. Our free cash flow in the fourth quarter totaled $128 million compared to $1.05 billion in the fourth quarter of 2020.

And that is 73% increase compared to prior year.

This growth resulted from our expanded capacity in 2023 as well as underlying positive market dynamics.

As also previously indicated the Red Sea disruptions had minimal impact on our Q4 results.

Our free cash flow in the fourth quarter totaled $128 million compared.

Compared to 1.05 billion in the fourth quarter of 2022.

Xavier Destriau: Turning to the balance sheet, total debt increased by $666 million since the prior year-end, mainly due to the net effect of the incoming larger vessels with longer-term charter duration. Regarding our fleet, we currently operate 150 vessels, out of which 16 are car carriers. This increase from November resulted from the delivery of 12 vessels and the scheduled re-delivery of 7 ships. Excluding the new build capacity, the average remaining duration of our current charted tonnage continues to trend down, and is now 20.4 months compared to 22.7 months in mid-November. And as of today's call, 24 of the 46 Nubia Vessels ZIM committed to have joined us. Since our last update in November, we have received 3 15,000 TU LNG vessels. 5 8000TU Energy Vessels, to Widebeam 5.5 thousand T.U. and one Widebeam 5.3000TU. In February 2024, we also completed the purchase of five vessels for a consideration of $129 million, following an early notice for the exercise of purchase options we held from the 2014 restructuring. These vessels range in size from 8,400 TEU to 10,000 TEU.

Turning to the balance sheet total debt increased by $666 million since prior year end, mainly due to the net effect of the incoming larger vessels with longer term charter durations.

Regarding our fleet. We currently operate 150 vessels out of which 16 are car carriers.

This increase from November resulted from the delivery of 12 vessels and the scheduled re delivery of seven ships.

Excluding the Newbuild capacity the average remaining duration of our current charter tonnage continues to trend down and is now 2024 months compared to $22 seven months in mid November.

And as of today's call 24 of their 46 Newbuild vessel Xenia committed to have joined the fleet.

Since our last update in November we received 315000 Teu LNG vessels.

<unk> 8000, Teu LNG vessels.

Too wide to be $5, 5000, Teu vessels, and one whitebeam five 3000 Teu vessels.

February 2024.

We also completed the purchase of five vessels for a consideration of $129 million.

Following an early notice for the exercise of purchase options, we have from the 2014 restructuring.

These vessels range in size from 8400 Teu to 10000 Teu.

Xavier Destriau: The decision to acquire these vessels does not mark a change in our vessel sourcing strategy, but rather it is us taking advantage of beneficial terms to acquire the ships. We have a total of 30 vessels up for charter renewal in the remainder of 2024, as compared to the expected delivery of 22 new builds during this period. In addition, we have another 37 vessels up for renewal in 2025. This gives us ample flexibility to ensure our fleet size matches market opportunities. Again, I would like to highlight that while we may continue to operate a similar number of vessels, or even fewer vessels, our operational capacity has grown and will continue to grow in 2024. The new builds are replacing smaller vessels with larger, more cost-efficient tonnage, thereby contributing to a lowered unit cost per vessel.

The decision to acquire these vessels does not market change in our vessels sourcing strategy, but rather it is us taking advantage of beneficial term to acquire the ships.

We have a total of 30 vessels for charter renewal in the remainder of 2024.

As compared to the expected delivery of 22 Newbuild during this period.

In addition, we have another 37 vessels up for renewal in 2025.

This gives us ample flexibility to ensure our fleet size.

Matches the market opportunities.

Again, I would like to highlight that while we may continue to operate a similar number of vessels or even fewer vessels.

Our operated capacity as growth and will continue to grow in 2024.

The newbuild are replacing smaller vessels less.

Less cost effective tonnage with larger more cost efficient tonnage.

Thereby contributing to lowered unit cost per vessel.

Xavier Destriau: These vessels are also better suited to the trade in which they are being deployed, again, improving our competitive advantage. Turning to our fourth quarter and full year financial performance, Q4 revenue was $1.2 billion compared to $2.2 billion in the fourth quarter of last year.

These vessels also better suited to the trades in which they are being deployed again, improving our competitiveness.

Turning to our fourth quarter and full year financial performance Q4 revenue was $1 2 billion compared to $2 2 billion in the fourth quarter of last year.

Xavier Destriau: Adelphi Debida's revenue in the fourth quarter was $190 million compared to $973 million in Q4 2020. And for the full year, its net loss was $2.69 billion compared to a net income of $4.63 billion in 2020. To remind you, our full-year 2023 net loss includes a $2.1 billion impairment loss recorded in the third quarter. Adjaci de Bida's revenue in 2023 was at $1.05 billion compared to $7.54 billion in 2020. You can see that adjusted EBITDA and EBIT margins were significantly lower this year versus last.

Adjusted EBITDA in the fourth quarter was $190 million compared to $973 million in Q4 2022.

And therefore, the full year net loss was $2 69 billion.

Compared to a net income of $4 $63 billion in 2022.

To remind you our full year 2023 net loss includes a $2 1 billion dollar impairment loss recorded in the third quarter.

Adjusted EBITDA in 2023 was at 1.05 billion compared to $7 $54 billion in 2022.

You can see that adjusted EBITDA and EBIT margins were significantly lower this year versus last year.

Xavier Destriau: Turning to slide 10, we carried 786,000 TUs in the fourth quarter, compared to 823,000 TUs during the same period last year. That is a decrease of 5% compared to market growth of 7%. For the full year, we carried 3.3 million TUs, a 3% decline compared to 2022 and the overall market, which was more or less flat. However, importantly, our transpacific volume grew 9% in 2023, and we expect to see growth in 2024 as we upsize our capacity. Growth in Latin America was driven by our expanded presence in this trade.

Turning to slide 10.

We carried 786000 teus in the fourth quarter.

Two 823000 Teu during the same period last year.

A decrease of 5% compared to a market growth of 7%.

For the full year, we carried three 3 million Teus, a 3% decline compared to 2022.

The overall market, which was more of a flat.

Importantly, our transpacific volume grew 9% in 2023, and we expect to see growth in 2024, as we have sized our capacity.

Growth in Latin America was driven by our expanded presence in the streets.

Xavier Destriau: And conversely, intra-Asia volume is down, as we cut our capacity in this region, including services to Australia and New Zealand, and also Africa, due to weaker demand. Next, we present our cash flow bridge. For the full year, our adjusted EBITDA of $1.05 billion was converted into $1.02 billion of cash flow generated from operating activity.

And Conversely, intra Asia volume is down as we kept our capacity in this region.

<unk> services to Australia, New Zealand and also Africa due to weaker demand.

Next day, we presented our cash flow bridge for the full year, our adjusted EBITDA of 1.05 billion converted into $1.02 billion.

Cash flow generated from operating activities.

Xavier Destriau: Other cash flow items for 2023 included dividend payments of $769 million made in April 2023 and 2.09 billion dollars of debt service, mostly related to our lease liability repayment. Moving now to our 2024 guidance, we expect to generate adjusted EBITDA between $850 million and $1.45 billion in 2024, and adjusted EBIT between negative $300 million and a positive $300 million. Overall, we assume average freight rates to be slightly higher in 2024 as compared to 2026. We also expect the 1st quarter and potentially 2nd quarter to benefit from current higher spot rates in certain trades, while the second half is expected to be weaker than the first half of the year. We also expect our volume to grow in 2024 versus 2023 as we receive our new build capacity and are able to better optimize our fleet, coupled with potentially better demand than in 2020. As for our bunker cost, we expect a lower cost per ton in 2024 versus the last year, 2023, as we shift towards more LNG consumption.

Other cash flow items for 2023 included dividend payments of 769 million made in April 2023.

And the $2 $9 billion of debt service, mostly related to our lease liability repayments.

Moving now to our 2024 guidance, we expect to generate adjusted EBITDA between head on with a $50 million and $1 45 billion in 2024.

Adjusted EBITDA between negative $300 million and a positive $300 million.

Overall, we assume average freight rates to be slightly higher than in 2024 as compared to 2023.

We also expect first quarter and potentially second quarter to benefit from current higher spot rates in certain trade, while the second half is expected to be weaker than the first half of the year.

Okay.

We also expect our volume to grow in 2024 versus <unk> versus 2023, as we receive our newbuild capacity and are able to better optimize our fleet, coupled with potentially better demand than in 2023.

As for our bunker cost, we expect a lower cost per ton in 2024 versus last year 2023.

As we shift towards more LNG consumption.

Xavier Destriau: As Eliyahu mentioned, the crisis that has evolved in the Red Sea over the past three months, which caused most global carriers to divert their vessels away from the Suez Canal and around the Cape, demonstrated the fast pace at which market conditions can change in our industry. If, in November 2023, we anticipated rates to remain flat through 2024 amid a supply-demand imbalance, today the SCFI is over 80% higher. As the longer voyages around the Cape are estimated to have absorbed 6-7% of global capacity, creating a more balanced supply-demand equilibrium. Yet, the long-term impact of the Red Sea crisis remains unknown.

As Eddie had mentioned the crisis that has evolved in the Red sea over the past three months, which caused most global carriers to divert their vessels away from the <unk>, Canada and around the Cape demonstrated the fast pace at which market conditions can change in our industry.

In November 2023, we anticipated rates to remain flat through 2024 amid a supply demand imbalance.

<unk> is over 80% higher.

As the longer voyages around the Cape are estimated to have absorbed 6% to 7% of global capacity, creating a more balanced supply demand equilibrium.

Yet the long term impact of the Red Sea crisis remains unknown.

Xavier Destriau: First, it remains unclear under what circumstances trade through Suez would resume. And although there doesn't appear to be a military or political resolution of the crisis in sight, that could change as quickly as the crisis itself has evolved, causing rates to drop quickly back to their November-December 2023 levels. Moreover, even if the crisis persists, the long-term impact on rates also remains to be seen.

First it remains unclear under what circumstances.

<unk> would resume.

And although there are there doesn't appear to be a military or political resolution of the crisis in sites that could change as quickly that could change sorry as quickly as the crisis itself has evolved causing rates to drop quickly back to November December 2023 levels.

Moreover, even if the crisis persists the long term impact on rates also remains to be seen.

Xavier Destriau: Rates in January seem to have peaked in conjunction with a seasonal cargo rush prior to Chinese New Year and Hudson's Beach. In other words, strong demand could potentially keep rates higher, but if demand is weak, as shippers remain cautious on inventory levels throughout 2024, rates could continue to slide down. The underlying supply-demand balance in 2024 points to clear oversupply with over 3 million TEUs or approximately 10% of current global capacity expected to be delivered during the year. The Red Sea crisis has created a more balanced market; however, it should be noted that of the expected deliveries in 2024, 1.9 million TEUs, or 120 container ships, are 10,000 TEUs or larger in terms of size. These are large-capacity vessels that could be deployed on east-west trades that have been impacted by the Red Sea crisis.

Rates in January seemed to have peaked in conjunction with our seasonal cargo rush prior to Chinese new year and.

It has since abated.

In other words strong demand could potentially keep the rates higher but if demand is weak as shippers remain cautious on inventory levels throughout 2024 rates could continue to slide down.

The underlying supply demand balance in $2024, two clear oversupply with over 3 million teus or approximately 10% of current global capacity expected to be delivered during the year.

The Red Sea crisis has created a more balanced market. However, it should be noted that of the expected deliveries of 2024, $1 9 million Teus or 120 container ships, our 10000 teu or larger in terms of size.

These are large capacity vessels that could be deployed on east west trades that have been impacted by the Red Sea crisis.

Xavier Destriau: As such, new build deliveries could alleviate the supply pressure that currently exists on some vessel segments. The change in market conditions has also impacted capacity management actions taken by carriers. The Simultaneous Restrictive Passage through both the Suez and Panama Canals, though for different reasons, has sidelined flow steaming, which was used in 2023 to absorb some capacity, as well as idling and blanking, which were used more modestly.

As such Newbuild deliveries could alleviate the supply pressure that currently exist on some vessel segments.

The change in market conditions also impacted capacity management actions taken by carriers.

The simultaneous restrictive passage through both the sweat and Panama Canal.

So for different reasons.

Sidelined slow steaming, which was used in 2023 to absorb some capacity as.

As well as idling and blanking, which were used more modestly.

Operator: Expectations for scrapping in 2024 also remain limited at only approximately 357,000 TEUs, less than 2% of current global capacity, compared to the 10% scheduled delivery. Although current market conditions may have put a hold on the various capacity management actions available to carriers, longer term, we believe IMO 2023 and the decarbonization agenda may motivate liners and vessel owners to retire older vessels earlier than in the past, resulting in a step up in scrapping and helping the market to offset some of the new build capacity. In the short term, however, the current market condition, we believe, creates significant uncertainty for carriers in 2024 and warrants a cautious view of potential outcomes this year. And on this note, we will open the call for questions. Thank you. If you have a question, please press star one on your telephone keypad. If you have queued up and want to withdraw your question, simply press star one again.

Expectations for scrapping in 2024 also remain limited.

Only approximately 357000 teus less than 2% of current global capacity compared to the 10% scheduled deliveries.

Although current market conditions may have put a hold on the various capacity management actions available to carriers.

Longer term, we believe I know 2023, and the decarbonization agenda megawatts, EBIT liners and vessel owners to retire all the vessels earlier that in the past, resulting in a step up in scrapping and helping the market to offset some of the new build capacity.

Short term however, the current market condition, we believe create significant uncertainty for carriers in 2024.

Warrant a cautious view of potential outcomes this year.

Please note we will open the call for questions.

Thank you if you have a question. Please press star one on your telephone keypad.

Queued up and want to withdraw your question Press Star one again.

Omar Mostafa Nokta: Your first question comes from the line of Omar Nokta with Jeffreys. Your line is open. Thank you. Good afternoon, Eliyahu and Xavier.

Your first question comes from the line of Omar <unk> with Jefferies. Your line is open.

Thank you.

Good afternoon, Amy ends up here.

Xavier Destriau: Just a couple questions for me. Obviously, first, on the guidance for 2024, you guys both discussed kind of the backdrop for that, but just kind of getting thinking into that just a bit deeper. It looks like the lion's share of the guidance range could be achieved in the first half of the year. So, just in general, I wanted to see what sort of baked in a bit for, say, the second half. You mentioned being conservative in the second half of the year.

A couple of questions for me.

Obviously first I think on the guidance for 2020 for you guys. Both discussed the kind of the backdrop of that but just kind of getting that.

Taking into that just a bit deeper it looks like the lion's share of the guidance range to be achieved in the first half of the year.

Just in general wanted to see what's sort of baked in a bit preceded the second half.

You mentioned being conservative in the second half of the year.

Omar Mostafa Nokta: Are you assuming, basically, a solid first half based on what's going on in the market? And then in the second half, do you assume EBITDA, do they fall to where they were in the second half of last year, or do they get much worse?

Are you assuming basically.

Our solid first half based off of what's going on in the market and then in the second half we assume EBIT EBITDA do they fall to where they were in the second half of last year.

Or do they go much worse or are you assuming a moderation any color you can give basically on the second half would be helpful.

Xavier Destriau: Or are you assuming moderation? Any color you can give, basically, in the second half of the year. Yes, clearly today we live in uncertain times, but we have seen already towards the end of last year and continuing into the beginning of this year, 2024, that the spot market has been going up quite significantly on the trades that are very relevant to us, obviously the crossways, for one, but also the Trans-Pacific, as a ripple effect of the redeployment of some capacity. So the spot market has gone up quite significantly. Let's not forget that we are also bound by some volumes that are contracted, so we are less benefiting from the surge in the spot market. Now, this is a fact for the first quarter, at least in 2024.

Yes, clearly today, we lever in <unk>.

Certain times Abbott, we have seen already towards the end of last year and continuing into the beginning of this year 2024, that's the spot market has been going up quite significantly on a trade that are very relevant to us obviously the cross sells for one but also the transpacific.

<unk> as a ripple effect of the redeployment of some capacity so spot market went up quite significantly let's not forget that we also.

A bound by some volume that are contracted that we're less benefiting from the from the surge in the spot market. Now. This is a fact for for their first.

At least 2024, we anticipate that it will continue to.

Xavier Destriau: We anticipate that we will continue to be in a rate environment that is a better one compared to the one of last year towards the second quarter. And then, I think, what we are suggesting in our guidance is that there is a scenario according to which the minute the situation in the Red Sea gets solved, then, obviously, liners will go back to crossing via Suez. And as we've seen already in the past, after the very good years of 2021 and 2022, when the situation started to get better, the rates collapsed quite significantly, quite sharply, quite quickly. So we think there is a scenario according to which the rates might go back clearly to where they were in the October-November timeframe of 2023, towards the second half of 2021. Okay, thank you for that color.

We'll continue to be in a rate environment that is a better one compared to the one of last year towards the second quarter and then I think.

We are suggesting in our guidance is that there is a scenario according to which is the minute the situation in the Red Sea gets solved then most likely obviously liners will go back to we're crossing a crossing of yes.

Yes, Suez and as a result, we will go back into the market dynamics fundamentals that prevailed before the Red Sea crisis started to erupt.

Towards in November of last year, and with the significant threat of oversupply and as we've seen.

Already in the past after the very good years of.

21, and 'twenty two when the situation started to get better the rates there.

<unk> quite significantly in quite sharply.

Quite quite quickly. So we think there is a scenario according to which the rates might go back.

Clearly to where they were towards the October November timeframe of 2023 at towards the second half of 2024.

Okay. Thank you for that color and then I guess just.

Omar Mostafa Nokta: And then I guess just, you know, the, you've mentioned a few times that the first quarter's looking, it's gonna be a solid 2Q, potentially also healthy. Do you think that there is potential for an actual, you know, a shift into positive earnings territory, at least in one Q? And then, any color on what that means for the dividend policy? I know there's no mention of that, I think, in the release, but is there, is the intention still, if you have a profitable quarter to pay out, you know, 30% of earnings? You start by saying that we forecast that Q1-Q2 will be healthy. I don't know what you mean by "healthy."

<unk>.

You've mentioned a few times that the first quarter is looking at is going to be solid <unk>.

But potentially also healthy do you think that there is potential for actual shift into positive earnings territory at least in <unk>.

And then any color then on what that means for the dividend policy.

There is no mention of that I think in the release, but is there is the intention still if we have a profitable quarter to pay out 30% of earnings.

Yes.

You start by saying that we guide that Q1, Q2 will be healthy and I don't know what you mean by healthy what we suggest is better than what we generated in the fourth quarter of 2023.

Xavier Destriau: What we suggest is better than what we generated in the first quarter of 2023. And, as we did say, the second half is going to be more challenging. So clearly, in terms of the calendarization of the guidance that we provide, a shift towards the early part of the year is to be expected compared to the second part of the year. Now when it comes to the dividend, and maybe a little bit early to talk about dividends at this stage, but our policy stands, and so the distribution dividend policy remains unchanged. And, of course, the board will continue to review the capital allocation strategy every quarter and decide on a possible distribution to shareholders.

And as as we did say at the SEC.

He is going to be more more challenging so clearly in terms of the characterization of the guidance that we provide.

<unk>.

A shift towards the early part of the year is to be expected compared to the second part of the year nowhere close to where the dividend and maybe a little bit early to talk about dividend at this stage, but our policy stance and so the distribution dividend policy remains unchanged and of course, the board will continue to review every quarter.

Allocation of strategy and decide on the possible our distribution to shareholders.

Xavier Destriau: I understand. Thank you. And one final one for me just on the, you know, we're coming up here on contracting season in the Trans-Pacific. I'm guessing it's probably a little early for you to give us an incentive, you know, but I wanted to ask you about that and, just in general, one of the things that we saw last year perhaps was, you know, shippers being able to get out of contracts and leaving you and many operators in the Any kind of color on how things are developing? And then, is there any situation in which if you were to enter into contracts this year, there would be more of a take or pay variety, or would they still, you think, revert to the traditional way of contracting?

Understood. Thank you and one final one for me just on the.

Coming up here on contracting season in the Trans Pacific I'm guessing, it's probably a little early for me to give us a sense about what.

Wanted to ask you about that and just in general one of the things that we saw last year, perhaps with shippers being able to get out of contracts.

And leaving you in many operators in the spot market more so than anticipated.

Any kind of color on how things are developing and then is there any.

Situation, which if you were to enter into contracts. This year that there would be more of a take or pay variety or would they slowly franck revert to the traditional way of contract.

Omar Mostafa Nokta: Look, the discussions with our customers have started, and really, you know, the kickoff was during the TPM conference on the West Coast that took place last week. So what we can clearly say at this stage is that we have seen a lot of traction, a lot of interest from our existing customer base, but not only, by the way, also new customers that are coming to see us, and they are very interested in our LNG proposition. At the end of the day, just re-emphasizing that we are the only shipping line today deploying two services that are mostly LNG-powered on the U.S. But that triggered clearly a strong interest, and a lot of questions around this strategy of ours were being discussed with our customers and the new customers, potentially a little bit early, as you said, to say or assume as to where we will land when it comes to the contract volume and also the prevailing rates that we managed to secure with our customer base. You know, some are waiting a little bit as well as they potentially want to get more visibility as to what the spot markets might be doing in the coming weeks. They still have a lot of weeks to go before we aim at concluding the negotiations.

Look the discussions with our customers.

Started in really the kickoff during the TPM conference say in in on the West Coast that took place last week. So what we clearly can say at this stage is we have seen a lot of traction and a lot of interest from our existing customer base, but not only by the way also our new customers.

Coming to see us and they are very interested by R. L.

G a proposition at the end of the day.

Just to reemphasize that we are the only youre shipping line today deploying a two services that are mostly LNG LNG powered on the U S. U S East coast, but that triggered the clearly a stronger interest in a lot of questions around around this strategy of ours was.

What's being discussed with our customers and the new customers potentially.

Is it a bit early as you said two to say or to assume as to where we will land when it comes to the contract volume and also the prevailing rates that we will manage to secure with that with our customer base.

Some are waiting a little bit as well as the potentially want to get more visibility as to what the spot markets might be doing in the coming weeks.

You have.

Lot of weeks to go before we aim at concluding the discussions so the pace of our customers might vary from customer to customer, we clearly have our sales at some internal.

Xavier Destriau: So the pace of our customers might vary from customer to customer. We clearly have some internal objectives that we are willing to achieve in this respect. But it's a bit early to say where we will where we will close this contract season. Okay, thank you. Thanks, Xavier. Thanks, Eliyahu. I'll turn it over.

Internal objectives that we are willing to work to achieve in this respect, but a bit early to say, where we will where we will close this this contract season.

Okay. Thank you. Thanks, Javier Thanks, Neely I'll turn it over.

Alexia Dogani: Your next question comes from the line of Alexia Dogani with Barclays. Your line is open. Yes, thank you, gentlemen, for taking my questions. I also had three.

Your next question comes from the line of Alexia <unk> with Barclays. Your line is open.

Yes. Thank you gentlemen for taking my questions. I also had three just firstly on the volume outlook I just gave.

Xavier Destriau: Just firstly, on the volume outlook you've given, can you help us a little bit understand the magnitude of volume growth? Your peers have talked about global trade recovering to 3% to 4%. Should we expect you to significantly higher from this level because of your upsizing, or how should we think about that?

Then can you.

Help us.

I understand the magnitude of volume growth.

Your peers have talked about global trade recovering to 3% to 4% should we expect you significantly higher from this level because of your upsizing or how can how should we think about that.

Alexia Dogani: Secondly, on the spot rate discussion, I mean, we've seen the spot rates kind of peak already, if you like, as carriers are now adjusting their schedules around the Cape of Good Hope. Can you help us understand, at the upper end of your guidance, what is really the trajectory you expect from here? Is it that they stay flat from the current levels, or what is the kind of evolution?

And secondly on <unk>.

Great.

I mean, we've seen the spot rate.

Sure.

Kind of speak already this July.

Those are now.

Adjusting the schedules around the Cape of good hope.

Can you help us understand at the upper end of your guidance what is really the trajectory you expect.

From here is it that could.

Flat from the current levels.

Sure.

Yeah, what is kind of the evolution.

Alexia Dogani: And then finally, I want to understand a little bit your comments around cash preservation in the current market. Clearly, financial leverage increased significantly at the end of the year. It's now 2.2 times net debt to EBDA. If I look at your guidance, which is broadly flat, let's say year over year at the midpoint, how should net debt evolve? And maybe you can give us a little bit of color around CapEx. I see you've bought some vessels. Have you done any more charters in this period to get capacity for the sailings around the Cape of Good Hope? Anything you can help us with that would be great. Thank you. Thank you, Alexia.

Then finally.

I want to understand a little bit your comments around cash preservation in the current market clearly financial leverage increased significantly at the end of the year. It is now 2.2 times net debt to EBITDA.

I look at your guidance.

But broadly flat lets say youre breaking at the midpoint, how should that evolve.

And maybe you can give us a little bit of color around.

Capex and I think you've brought some vessels have you done any more charters in this period, two and debt capacity for the savings around the good hope anything you can.

Help us with that that would be great. Thank you.

Okay.

Thank you Alex so I'll start with the.

Xavier Destriau: So I'll start with the first question around our volume assumptions for 2024. Yes, we are also looking at market growth expected to be around the numbers you quoted, the 3% give or take in terms of potential growth in demand. As far as we are concerned, we have more ambitious objectives in terms of growing our volume of carried TEUs. As a result of us upsizing the vessels that we are deploying in many of the trades where we operate, the Trans-Pacific trade is clearly one where we have significant growth volume assumptions here. We reopened the line that we suspended in 2023, our fast line between South Asia and the US West Coast. We've opened a new line in the Pacific Northwest.

With the first question around our volume assumptions for 2024, Yes. We are also looking at the market growth is expected to be.

Around the numbers you quoted the 3% give or take in terms of the potential growth in demand as far as we're concerned we have more ambitious objectives in terms of the growing.

Volume of.

Carried carry Teu as a result of us upsizing.

Vessels that we are deploying in many of the trades, where we operate at transpacific trade. It is clearly one where we have significant growth volume assumptions here we've opened.

We reopened the line that we suspended in 2023, our first flight between South Asia to the U S. West Coast Southwest Coast, We've opened a new line on the Pacific Northwest. We are upsizing. The vessels that are currently being deployed on our trade between Asia to the U S East coast. So we.

Xavier Destriau: We are upsizing the vessels that are currently being deployed on our trades between Asia and the US East Coast. So we intend to fill those ships, and, as a result, we have growth volume assumptions on those trade lanes. Second, also on the backhaul, back from the US to Asia, we also, as opposed to repositioning empty containers, we are making a lot of commercial efforts in order to capture some of the full cargo that can be moved back from the US to Asia, and that also will count in our volume growth assumptions as opposed to moving back and empty. Third, in terms of region, we are also growing quite rapidly in Latin America.

Tend to fill those ships and as a result, we have.

Gross volume assumptions.

On those trade lanes second also on the on the backhaul back from the U S to Asia. We also as opposed to repositioning empty containers, we are putting a lot of commercial efforts in order to capture some of the year.

Noah.

A full cargo that they can be moved back from the U S to Asia and that also will count in our volume growth assumptions as opposed to moving back identity and third in terms of a region. We also grow.

Growing quite rapidly in Latin America, we have redeployed capacity away from making to Asia also to the Latin America trade Lane, we see growth opportunity in the future and I think we're talking midterm long term here as well, especially between the nose of.

Xavier Destriau: We have redeployed capacity away from Asia and into the Latin America trade lane. We see growth opportunities in the future, and I think we're talking mid-term and long-term here as well, especially between the North of North America and South America, as we see the patterns of our customers willing to diversify also their sourcing base away from the predominance of China. I'm sure you've seen Mexico taking a very strong position in terms of imports into the US this year, outperforming China.

North America, and South America, as we see the year.

Patterns of our customers willing to diversify also there they are sourcing base away from the from the predominance of our China I'm sure you've seen that Mexico, taking a very strong position in terms of imports in the U S. This year outperforming China. So we want also to make sure that we put.

<unk> was early on those trade lanes, where we believe that there is significant growth potential.

Spot rates are your second question in terms of what is our forecast in terms of evolution I think we've talked about two potential scenarios. We think that yes. They may have peaked they will potentially trend down.

Xavier Destriau: So we want also to make sure that we position ourselves early on those trade lanes where we believe that there is significant growth potential. SpotRate, your second question in terms of what our forecast is in terms of evolution. I think, you know, we talked about two potential scenarios. We think that, yes, they may have peaked, and they will potentially trend down. And then now, the pace to which they will trend down and potentially go back to where they were before the Red Sea crisis started to erupt will be in itself a function of when the disruptions in the Red Sea dissipate. And if they dissipate during 2024, we think the rate adjustments might be quite severe and quite rapid.

And then now the pace as to which they will trend down and potentially go back to where they were before the <unk>.

At CES crisis started to rep will be in itself a function of when the disruptions in the in the Red Sea DCP and if the dissipate during.

2024, we think the right.

The rate adjustments might be quite severe and quite or quite rapid.

If the right situation continues we expect that then the new capacity coming into the trade.

We will put additional pressure on today's.

Markets were already some of the capacity has been absorbed by the Baidu.

By the redirection of tonnage around the Cape of good hope, but all incoming vessels coming into the trades between now and the end of the year, even if the Red Sea situation was to last for longer will put pressure on the supply demand equilibrium.

Xavier Destriau: If the Red Sea situation continues, we expect that new capacity coming into the trade will put additional pressure on today's market, where already some of the capacity has been absorbed by the redirection of tonnage around the Cape of Good Hope. But all incoming vessels coming into the trade between now and the end of the year will put pressure on the supply-demand equilibrium. Then I think you had a question about cash preservation and what our objective is or what the capital structure is or what the trend is for the capital structure of the company going forward. You are correct that we are closing in 2023 with leverage over 2.2.

Okay.

Then I think you had a question on the on cash preservation and what is our objective and what is the capital structure or what is the trend of the capital structure of the company going forward. The you are correct that we are closing 2023 with the <unk>.

Leverage over 2.2, clearly are and we've mentioned that I think since.

Since there are quite a few quarters now as a result of the 46% of new build a program that we initiated back in 2021 and 2022, we will see our debt.

Continue to increase and therefore, the balance sheet the lease liability that we have on balance sheet will continue to go up <unk>.

Get delivery of the last vessels towards the end of 2024.

Xavier Destriau: Clearly, and we've mentioned that I think for quite a few quarters now, as a result of the 46th new build program that we initiated back in 2021 and 2022, we will see our debt continue to increase, and so the balance sheet, the lease liability that we have on the balance sheet will continue to go up until we get delivery of the last vessel. So towards the end of 2024, we should see an increase in our lease liability on the balance sheet before it starts to trend back downwards in the years thereafter.

Should see an increase in our lease liability on balance sheet before it starts to trend back downwards.

In the years thereafter, our objective today is indeed to return the vessels that are up for re delivery and we have.

30 vessels up for re delivery between now and the end of the year to make room for the 22 newbuild the tonnage that we are expecting.

To receive also between now and the rest of the year. So I think back to your last question in terms of in terms of charter assumptions.

We don't intend to re charter.

Vessels that between now and the end of the year, rather we will redeliver vessels that are coming up for renewal in order to make room for our new build and cost efficient to vessels.

Xavier Destriau: Our objective today is indeed to return the vessels that are up for re-delivery, and we have 30 vessels up for re-delivery between now and the end of the year to make room for the 22 new build tonnage that we are expecting to receive also between now and the rest of the year. So I think back to your last question; in terms of charter assumptions, we don't intend to re-charter vessels between now and the end of the year. Rather, we will re-deliver vessels that are coming up for renewal in order to make room for our new build and cost-efficient vessels. Thank you.

Thank you and then just.

Yes.

On the volume growth assumptions, I mean should we be thinking high single digits or do you think.

Mike go to double digits because of your comments on new services on those routes.

<unk>.

I have looked at.

We are like I said quite ambitious here, we will grow our operated tonnage double digit.

Hence we will.

Aimed at growing our carrier quantities also double digit.

Thank you.

Your next question comes from the line of Satish Kumar with Citi. Your line is open.

Alexia Dogani: And can I just take a little bit of a follow-up on the volume growth assumptions? I mean, should we be thinking high single digits, or do you think you might go to double digits because of your comments on new services on those routes? Thank you.

Yes. Thanks.

I will echo since Youre, maybe let's start off with the car carriers right, what's happening there in terms of demand.

Even though a lot of news flows on slowdown.

Part of vehicles and such.

If you could share some color on that that'd be helpful.

Sathish Babu Sivakumar: Look, we are, like I said, quite ambitious here. We will grow our operated tonnage double-digit. Hence, we will aim at growing our carried quantities also double-digit. Thank you. Your next question comes from the line of Sathish Sivakumar with Citi. Your line is open. Yeah, thanks, Xavier. I've got three questions here.

And then just going back to be contract is a negotiation.

Obviously it is still too early to comment on my end, but that compared this year versus last year.

What is the like sale.

You are today versus last year are you find more volume or you find less volumes any kind of like a year on year.

Or does it trending.

Very helpful.

Xavier Destriau: Maybe we should start off with car carriers, right? What's happening there in terms of demand, given that a lot of news flows on the slowdown of like auto vehicles as such? If you could share some color on that, that would be helpful.

<unk>.

And then.

The third one is more on the just to your point on the operator.

Like you'd likely to grow in double digits or does it.

Would it come more.

On the based on contracted volumes or would you go into the spot market.

Sathish Babu Sivakumar: And then just going back to the contract season negotiations, obviously, it is still too early to comment on where I end up. But if I had to compare this year versus last year, what is the like where you are today versus last year? Are you signing more volumes, or are you signing less volumes? Any kind of, say, year-on-year, how is it trending?

To prioritize.

Volume on market share.

Make sure that you see coming capacity.

And then.

Can I add one more actually.

In terms of east coast versus the scores there has been growing commentary that shippers are likely to switch on volumes into the schools because of the labor negotiations coming up in the East Coast and you are actually a bigger player in the east coast given that.

Most of them are elevated.

That will lead to capacity or does it.

Sathish Babu Sivakumar: That would be really helpful, and And then the third one is more around your point around the operated tonnage that is likely likely to grow by double digits. So what does it mean? Would it come more on a basis of contracted volumes, or would you go into the spot market and would you like to prioritize volume of market share to make sure that you utilize the incoming capacity? And then, can I add one more?

In terms of volumes.

Okay. Thank you for your question.

Thank you.

So starting with your first question on the car carriers. So we operate today of 16 ships in and we did indeed grow our operated tonnage in this in.

In the in this activity over the past few years, we always said that we saw an opportunity a window of opportunity and we.

Entered that window of opportunity quite aggressively over the past few years as we saw.

Sathish Babu Sivakumar: In terms of East Coast versus West Coast, there has been growing commentary that shippers are likely to switch some volumes into the West Coast because of the labor negotiations coming up on the East Coast. And you are actually a bigger player on the East Coast, given that you're going to, like, almost double-digit capacity. What does that mean, in terms of volume?

And in balance in a way opposite to what's happening today on the container liner, but we.

We saw we saw.

An imbalance between the surge in demand of moving cars from Asia, mostly to the western countries.

And limited available tonnage so.

Xavier Destriau: Okay, thank you, Sathish, for your question. Yeah, thank you. So starting with your first question on the car carriers, we operate 16 ships today, and we have indeed grown our operated tonnage in this activity over the past few years. We always say that we saw an opportunity, a window of opportunity, and we entered that window of opportunity quite aggressively over the past few years as we saw an imbalance in a way opposite to what's happening today on the container liner, but we saw an imbalance between the surge in demand for moving cars from Asia, mostly to western countries, and limited available tonnage. So we today see and expect, as we have seen in 2023, a continuation of those favourable dynamics in 2024 before more vessels are delivered, and we know that a significant number of new tonnage will come into the trades in 2025 and beyond, and this is why we will continue to monitor, you know, Quarter after quarter, year after year, what is happening in this sector and potentially limit our involvement if the market conditions were to change. But when it comes to 2024, for the coming year, we are quite optimistic that it should be a good place to be, just like it was in 2020.

We today see and expect to see as we have seen in 2023, a continuation of those favorable dynamics in 2024 before more vessels are being delivered and we know that.

Significant number of new tonnage will come into the trades in 2025 and beyond and this is why we will continue to monitor.

No.

Quarter after quarter year after year, what is happening in this sector and potentially.

Our involvement if the market conditions were to change, but when it comes to 2024 for the coming year, we are quite optimistic that.

It should it should be.

A good place to be in that just like it was in 2023.

Going to your second question the contract season, Yes, I mean today is still very early days for us to opine as to where we will conclude in terms of.

Committed capacity and rates.

<unk>.

We used to try to seek 50%, 50% in a way 50% exposure on spot and 50% of our intended volume is secured.

Contractual commitment.

We don't know not at any price. So we will clearly need to make the arbitrage and the.

Xavier Destriau: Going to your second question, the contract season, yes, I mean, today are still very early days for us to opine as to where we will conclude in terms of committed capacity and rates. We used to try to seek 50-500% in a way, 50% exposure on spot and 50% of our intended volume secured via a contractual commitment. We don't know, not at any price, so we will clearly need to arbitrage between the expectations of some of our customers and what are our own expectations; we need to find the right balance between the various parties here. So we'll see, and again, hopefully, we'll be able to give a little bit more color on that once we have finalized the discussions and we talk again during our Q1 earnings call. But the objective of the company remains to secure a significant percentage, around 50% of contract cargo.

Between the between the expectations of our customers and what are our expectations, we need to find the right balance between the various parties here. So we'll see and again hopefully we'll be able to give you a bit more color into that once we have finalized the discussions and we talk again in <unk>.

During our Q1.

Earnings call, but objective of the company remains to secure significant percentage.

Round, the around 50% of our contractor cargo and like I said very promising.

Discussions already started with our customer base during the TBM conference a week ago.

I think.

The.

What was the third question I cant remember the third question is so good.

Alright on the third one the third one.

Opex.

You are likely to grow double digit what does it mean.

Alright.

On contracted volumes do you prioritize alright.

Spot market.

It's more about volume than pricing.

Xavier Destriau: And like I said, very promising. Discussions already started with our customer base during the TPM conference a week ago. Um, I think, uh, the, uh, the, uh, What was the third question? Now I can't remember the third question. We'll come back on the third one. Now the third question is around optical tonnage. You're likely to grow double digits.

Yes, so I think it's very linked to the second one at the end of the day.

Do not today.

Growing.

Aggressively more than 50%, which has been pretty much the norm in the past for the company.

Don't have a here an objective to to go and lock and secure.

Significantly higher percentage of the of the contractor contract cargo.

We truly believe that our the transpacific, we have a compelling proposition in terms of the lines that we operate to the services that we operate the deployments again of the unique.

Sathish Babu Sivakumar: What does it mean? uh, like on contracted volumes do you prioritize Automarket and more about volume than price. Yes, so I think it's very linked to the second one at the end of the day.

<unk> of LNG tonnage on the main trade between Asia to the U S. East coast that again are attracting a lot of attention from our from our customer base because of course, they see that as a way for them to reduce their own carbon footprint. So so we are hopeful that and are quite optimistic in a way that.

Xavier Destriau: We do not today aim at going, you know, aggressively more than 50 percent, which has been pretty much the norm in the past for the company. We don't have here an objective to go and lock in and secure a significantly higher percentage of contract cargo. We, you know, we truly believe that at Trans-Pacific, we have a compelling proposition in terms of the lines that we operate, the services that we operate, the deployment again of a unique deployment of LNG tonnage on the main trade between Asia and the US East Coast that is again attracting a lot of attention from our customer base because, of course, they see that as a way for them to reduce their own carbon footprint.

We will manage to deliver on our volume assumptions for next year without having to.

Change the philosophy in terms of spot versus contract exposure.

Yes.

And then I think your last question was what about the potential of shift of cargo between the east coast and the West Coast now that the discussions.

With the unions.

Taking place.

For the terminals on the on the East Coast, We don't know I mean, clearly the clearly the discussions are ongoing as we speak.

And we know that said there are some.

Xavier Destriau: So we are hopeful and quite optimistic in a way that we will manage to deliver on our volume assumptions for next year without having to, you know, change the philosophy in terms of spot versus contract exposure. And then I think your last question was, What about the potential shift of cargo between the East Coast and the West Coast now that the discussions with the unions are taking place for the terminals on the East Coast? We don't know for sure.

Timelines and deadlines that some of them are approaching us soon.

We do not feel that.

There is a panic from our customer base to move cargo away from the East coast to the West Coast time will tell what happens and what is the outcome of the discussions, but as we speak as of to date.

Don't see.

Don't feel.

Any significant movements.

From actions taken by our customers to ship cargo from east to West.

Xavier Destriau: I mean, clearly, the discussions are ongoing as we speak, and we know that there are some timelines and deadlines that some of them are approaching soon. But today, we do not feel that there is a panic from our customer base to move cargo away from the East Coast to the West Coast. Time will tell what happens and what the outcome of the discussions is, but as we speak as of today, we don't see or we don't feel any significant movement from actions taken by our customers to shift cargo from East to West. Maybe I would add that we are now also increasingly present on the West Coast, with now three services that we operate between Asia and the US West Coast. Two that we operate, one where we jointly operate with a partner, but that is also us increasing our footprint on the trade between Asia and the US, LA, and also Pacific North.

Maybe I would add that we.

Now also increasingly presence on the West coast with now three services that we operate between Asia to the U S West coast too.

Two that we operate one where we jointly operate with the with a partner but.

Is also increasing our footprint on the trade between Asia to the U S.

And also Pacific Northwest.

Thank you Sylvia and that's quite helpful.

Your next question comes from the line of <unk> Bakken with Fearnley Securities. Your line is open.

Thanks, Tim.

Perhaps your line is on mute.

Hi can you hear me now.

Yes.

Hey, guys.

Just a quick one from me, which kind of relates to the previous question.

Other revenues or call. It non containerized revenues are up quarter on quarter would you be able to give some kind of a split or color on how much car carriers that is and how much demurrage and other.

Xavier Destriau: Thank you, Xavier. That's quite all. Your next question comes from the line of Oistein Wagen with Fernley Securities. Your line is open, voiced in. Perhaps your line is on mute.

Oistein Wagen: Hey, can you hear me now? Yes. Hey guys, just a quick one from me, which kind of relates to the previous question. I see all the revenues, or call them non-containerized revenues, are up quarter on quarter. Would you be able to give some kind of a split or color on how much car ownership that is and how much the marriage and other and, if possible, how we should think about this going forward?

And if possible how we should think about this going forward.

Yes, I think I can be quite precise as to the number the revenue that we generated out of our core carrier activity, which is in excess slightly in excess of $500 million for the full year of 2023.

Xavier Destriau: Yes, I think I can be quite precise as to the number, the revenue that we generated out of our car carrier activity, which is slightly in excess of $500 million for the full year of 2023. And if we were to consider what the outlook for 2024 will be, we're going to be in a similar ballpark, and we will continue to operate at the same capacity, which is 16 ships. Perfect, thank you. This concludes our Q&A session. I'll turn the call over to Eliyahu Glickman for closing remarks. Thank you. You're in a challenging year.

If we were to consider what will be the outlook for 2024, we're going to be in a similar ballpark proceeds used to operate the same the same capacity, which is 16 ships.

Perfect. Thank you.

This concludes our Q&A session I will turn the call Ali Glickman for closing remarks.

Yes.

Sure.

During a challenging view.

Our employees across the globe maintained.

First on.

On achieving the highest operational standards and delivering an exceptional level of customer demos.

Demonstrated by the better than ever results.

<unk> 23 on all customer experience service.

Like to personally sent it.

Eliyahu Glickman: Our employees across the globe maintain a steadfast focus on achieving the highest operational standards and delivering an exceptional level of customer care, demonstrated by the better-than-ever results from our 23 annual customer experience service. We would like to personally thank the entire ZIM team for their commitment and dedication, especially in light of the industry and operational challenges, as well as the ongoing growth. In 2023, we will advance ZIM's strategic transformation as planned and are pleased with the progress we have already made to enhance ZIM's future commercial and operational industry position. Based on our stone liquidity, we will maintain our long-term view and intend to continue to take decisive steps, further benefit from our strategic transformation, and emerge in a stronger position than ever in 2025 and beyond.

Zinc team for their commitment and dedication, especially in light of the industry and operational challenges as well as the ongoing growth.

Obviously, we are advancing strategic transformation plan.

Pleased with the progress we've already made to enhance <unk> future commercial and operational industry position.

Yes.

Our total liquidity.

We will maintain a long term view and intend to continue to take decisive steps.

Further benefit from our strategic transformation and emerging stronger positions in 'twenty five and beyond.

Thank you again for joining us today have a great day.

Thank you. This concludes today's conference call. We thank you for joining you may now disconnect your lines.

Okay.

[music].

Thanks.

[music].

Okay.

Yes.

Yes.

[music].

Operator: Thank you again for joining us today. Have a great day. Thank you. This concludes today's conference call. We thank you for joining us. You may now disconnect your line.

Thanks.

Thank you.

[music].