Q2 2026 A.P. Moeller - Maersk AS Earnings Call

Speaker #1: Welcome, everyone, and thank you for joining us on this earnings call today as we present our second quarter results for 2026. My name is Vincent Clerc, and I'm the CEO of A.P. Moller - Maersk.

Vincent Clerc (A.P. Moller: Welcome everyone, and thank you for joining us on this earning call today as we present our Q2 results for 2026. My name is Vincent Clerc, I'm the CEO of A.P. Moller - Maersk, and with me in the room today is our CFO, Robert Erni. Let me start with the overall highlights for the Q2. At the macro level, market demand continued unabated despite the disruptions from the war in the Gulf, driven by Far East exports on almost all trade lanes. Exports from the Far East grew for the third consecutive years, while the backhaul volumes were stagnant or negative. This has led to significantly more imbalanced trade flows and increased congestions in various regions, including Europe, the East Coast of South America, West Africa, and the Middle East, as volume levels are challenging the limits of ports and land-side infrastructures in these regions.

Speaker #1: Moller - Maersk, and with me in the room today is our CFO, Robert Erni. Let me start with the overall highlights for the second quarter.

Speaker #1: At the macro level, market demand continued unabated, despite the disruptions from the war in the Gulf, driven by Far East exports on almost all trade lanes.

Speaker #1: Exports from the Far East grew for the third consecutive year, while the backhaul volumes were stagnant or negative. This has led to significantly more imbalanced trade flows and increased congestion in various regions, including Europe, the East Coast of South America, West Africa, and the Middle East, as volume levels are challenging the limits of ports and landside infrastructures in these regions.

Speaker #1: These bottlenecks quickly translated into significant and sustained increases in the spot rate from mid-May, which not only had a significant effect on this quarter but we expect will affect the outlook for the rest of the year, which I will get to shortly.

Vincent Clerc (A.P. Moller: These bottlenecks quickly translated into significant and sustained increases in the spot rate from mid-May, which not only had a significant effect on this quarter, but we expect will affect the outlook for the rest of the year, which I will get to shortly. If we look at the financials, on the back of higher spot rates in Ocean, we delivered an EBITDA of $3 billion and an EBIT of $1.6 billion. Free cash flow turned positive again at $549 million, supported by higher earnings, albeit partially offset by a buildup in working capital driven by higher receivables as a consequence of higher rates and by bunker inventory because of higher energy prices. As you may have seen, we have upgraded our guidance for the full year.

Speaker #1: If we look at the financials, on the back of higher spot rates in ocean, we delivered an EBITDA of $3 billion and an EBIT of $1.6 billion.

Speaker #1: Free cash flow turned positive again at $549 million, supported by higher earnings, albeit partially offset by a buildup in worthy or in working capital driven by higher receivables as a consequence of higher rates and by bunker inventory because of higher energy prices.

Speaker #1: As you may have seen, we have upgraded our guidance for the full year. Based on market volume growth of about 4%, we now guide for an underlying EBIT of $4.5 to $6.5 billion and positive free cash flow.

Vincent Clerc (A.P. Moller: Based on market volumes growth of about 4%, we now guide for an underlying EBIT of $4.5 to $6.5 billion and a positive free cash flow. We will return to the guidance later in the presentation. Looking at the operational highlights by segments, in Ocean, we leveraged the agility of our network and made the necessary operational adjustments to adjust to the new situation in the Middle East, and successfully increased volumes in other corridors. Weekly volumes are now consistently above pre-war levels. As we indicated last quarter, we successfully implemented commercial measures during March to recover elevated costs linked to the Middle East situation on contracts as well as on our spot business. Separately, the continued strong market demand and more imbalanced trade flows have led to increased congestions in multiple geographies and a second round of increased in a spot rate from mid-May.

Speaker #1: We'll return to the guidance later in the presentation. But looking at the operational highlights by segments—in Ocean, we leveraged the agility of our network and made the necessary operational adjustments to adapt to the new situation in the Middle East, and successfully increased volumes in other corridors.

Speaker #1: Weekly volumes are now consistently above pre-war levels. As we indicated last quarter, we successfully implemented commercial measures during March to recover elevated costs linked to the Middle East situation on contracts, as well as our spot business.

Speaker #1: Separately, the continued strong market demand and more imbalanced trade flows have led to increased congestion in multiple geographies, and a second round of increased intra spot rates from mid-May.

Speaker #1: On the Red Sea, we have gradually been reintroducing services through the Bab-el-Mandeb Strait, with four services to date; the first one being announced on July 6.

Vincent Clerc (A.P. Moller: On the Red Sea, we have gradually been reintroducing services through the Bab el-Mandeb Strait with four services to date, the first one being announced on 6 July. These make up about a third of the volumes that would ordinarily be transiting through the strait and the Suez Canal. We continue to monitor the security situation in the region and are prioritizing the safety of crews, cargo, and vessels in every transit that we make, and in the decisions on the return of other services. In Logistics & Services, the broad commercial momentum that the team has built over the past quarters supported growth across the portfolio. We saw continued margin improvement in both of our new segments of forwarding and landside, which contributing to further EBIT margin improvements to 5.1% for this quarter.

Speaker #1: These make up about a third of the volumes that would ordinarily be transiting through the Strait and the Suez Canal. We continue to monitor the security situation in the region, and our priority is the safety of crews, cargo, and vessels in every transit that we make.

Speaker #1: And in the decisions on the return of other services, in Logistics and Services, the broad commercial momentum that the team has built over the past quarter supported growth across the portfolio.

Speaker #1: We saw continued margin improvement in both of our new segments, forwarding and landside, which contributed to further EBIT margin improvements to 5.1% for this quarter.

Speaker #1: The Gulf region has been impacted by the effective closure of the Strait of Hormuz, but we have managed to protect our customers' supply chains through the use of land bridge solutions.

Vincent Clerc (A.P. Moller: The Gulf region has been impacted by the effective closure of the Strait of Hormuz, but we have managed to protect our customers' supply chains through the use of land bridge solutions. In Terminals, we continue to grow the portfolio through a new greenfield investment that we announced in Da Nang in central Vietnam. As far as the existing portfolio goes, we delivered strong top-line growth while demonstrating disciplined cost control to drive improvement in both profit and margins. Looking at the strategic priorities we had set for ourselves at the start of the year, starting with Ocean. On Grow, we have delivered good volumes growth at around 4% on the back of strong market demand and operational delivery as we quickly adjusted for the disruption in the Middle East.

Speaker #1: In terminals, we continue to grow the portfolio through a new greenfield investment that we announced in Danang in Central Vietnam. And as far as the existing portfolio goes, we delivered strong top-line growth while demonstrating disciplined cost control to drive improvement in both profit and margins.

Speaker #1: Now, looking at the strategic priorities we had set for ourselves at the start of the year, starting with Ocean. On Grow, we have delivered good volume growth at around 4% on the back of strong market demand and operational delivery, as we quickly adjusted for the disruptions in the Middle East.

Speaker #1: On protecting our high asset turns, the volume growth has outpaced the fleet growth by 2 percentage points, thanks to the efficiencies that Gemini has delivered.

Vincent Clerc (A.P. Moller: On Protect, our high asset turns, the volume growth have outpaced the fleet growth by 2 percentage points thanks to the efficiencies that Gemini has delivered. Utilization remains very high at 96% with strong discipline in our fleet management. Gemini is now fully in the base, so future asset turn uplift will likely be less pronounced, meaning that volume growth will be more in line with fleet growth in the coming quarters. Moreover, with utilization already at a high level, the task for us will be to ensure that we have the capacity to grow, and we will use various lever to ensure that we continue to do so. On focus on profitability, higher spot rates from the strong market demand and the ensuing congestion drove strong Ocean earnings for the quarter. The cost increase from the Middle East conflict on contracts was recovered through surcharges and bunker formula.

Speaker #1: Utilization remains very high at 96%, with strong discipline in our fleet management. Gemini is now fully in the base, so future asset turn uplift will likely be less pronounced, meaning that volume growth will be more in line with fleet growth in the coming quarters.

Speaker #1: Moreover, with utilization already at a high level, the task for us will be to ensure that we have the capacity to grow. And we will use various levers to ensure that we continue to do so.

Speaker #1: On focus on profitability, higher spot rates from the strong market demand and the ensuing congestion drove strong ocean earnings for the quarter. The cost increase from the Middle East conflict on contracts was recovered through surcharges and bunker formula.

Speaker #1: Finally, with Gemini now fully implemented for a 12-month period, we can confirm that the ocean cost benefit came in at about $950 million, just above the upper range previously communicated of $700 to $900 million.

Vincent Clerc (A.P. Moller: Finally, with Gemini now fully implemented for a 12-month period, we can confirm that the Ocean cost benefit came in at about $950 million, just above the upper range previously communicated of $700 to $900 million. Turning to Logistics & Services, this quarter, we have introduced the new reporting structure that we announced earlier in the year. Going forward, we will report Logistics & Services across three segments, namely forwarding, solutions, and landside. At a high level, forwarding comprises air and ocean forwarding products, while solution comprises contract and lead logistics product, and landside comprises inland and ground freight products. This change is designed to give greater value for customers through clearer and better product categorization, simplify our Logistics & Services portfolio and organizational structures internally, and improve comparability with our peers in the industry.

Speaker #1: Turning to logistics and services, this quarter we have introduced the new reporting structure, that we announced earlier in the year. Going forward, we will report logistics and services across three segments, namely forwarding solutions and landside.

Speaker #1: At high level, forwarding comprises air and ocean forwarding product solution, products, while solution comprises contract and lead logistics product, and landside comprises inland and ground freight products.

Speaker #1: This change is designed to give greater value to customers through clearer and better product categorization, simplify our logistics and services portfolio and organizational structures internally, and improve comparability with our peers in the industry.

Speaker #1: Through this, we will also give you a better view and understanding of where growth and margin progressions are coming from across the portfolio. As you will recall, our priorities in logistics and services are to improve growth and accelerate margin improvement.

Vincent Clerc (A.P. Moller: Through this, we will also give you a better view and understanding of where growth and margin progressions are coming from across the portfolio. As you will recall, our priorities in Logistics & Services are to improve growth and accelerate margin improvement. On the first priority, the business delivered very strong revenue growth of 15% in the quarter, driven both by volume growth in most products as well as higher rates. The high growth this quarter is a testament to the growth platform that we have been building over the years. While we are pleased with the growth over the past couple of quarters, we are certainly not complacent and continue to work hard to grow this business sustainably. As I mentioned, land bridge solutions helped mitigate disruptions from the Middle East situation, illustrating the value of the integrated model for our Ocean customers.

Speaker #1: On the first priority, the business delivered very strong revenue growth of 15% in the quarter, driven both by volume growth in most products as well as higher rates.

Speaker #1: The high growth this quarter is a testament to the growth platform that we have been building. Over the years, and once we are pleased with the growth over the past couple of quarters, we are certainly not complacent and continue to work hard to grow this business sustainably.

Speaker #1: As I mentioned, land bridge solutions helped mitigate disruptions from the Middle East situation, illustrating the value of the integrated model for our ocean customers.

Speaker #1: On the margin improvement, we continue to deliver progress with this quarter being the ninth consecutive quarter with year-on-year EBIT margin improvement. On our margins, in forwarding and landside, are strong.

Vincent Clerc (A.P. Moller: On the margin improvement, we continue to deliver progress, with this quarter being the ninth consecutive quarter with year-on-year EBIT margin improvement. Our margins in forwarding and landside are strong, but we have to acknowledge that solutions still needs improvement. The focus here is on converting the warehousing pipeline, reducing white space, and improving operational efficiencies as the new business is won and ramps up. Overall, the business has shown that it can grow and improve margins at the same time, and these remain key priorities for us for the remainder of the year. Turning to Terminals, the priorities remain to grow through existing and new locations and to maintain long-term profitability. The segment continues to perform well in that regard. It delivered strong revenue growth of 11%, driven mainly by revenue per move, illustrating the strong pricing power on the terminal side now as most terminals are full.

Speaker #1: But we have to acknowledge that solutions still needs improvement. The focus here is on converting the warehousing pipeline, reducing white space, and improving operational efficiencies, as the new business is one and ramps up.

Speaker #1: Overall, the business has shown that it can grow and improve margins at the same time. These remain key priorities for us for the remainder of the year.

Speaker #1: Turning to terminals, the priorities remain to grow through existing and new locations, and to maintain long-term profitability. The segment continues to perform well in that regard.

Speaker #1: It delivered strong revenue growth of 11%, driven mainly by revenue per move. Illustrating the strong pricing power on the terminal side now, as most terminals are full.

Speaker #1: New locations, including Rijeka in Croatia, are ramping up and helping compensate for volume impacts from disruptions in the Middle East, most notably our lower volumes in our gateway terminal in Bahrain.

Vincent Clerc (A.P. Moller: New locations, including Rijeka in Croatia, are ramping up and helping compensate for volume impacts from disruptions in the Middle East, most notably our lower volumes in our gateway terminal in Bahrain. We also continue to expand our portfolio with our greenfield investment in Da Nang, Vietnam. I will add a few more words on this one very shortly. On profitability, Terminals continue to deliver strong return on invested capital of 14.8%, while at the same time investing for growth. As we have signaled, with the series of new investment we undertake, we expect some pressure on the ROIC during the build-up phase, but return on the existing portfolio will remain strong. Let me briefly highlight the Da Nang facility, which is an excellent example of the type of long-term infrastructure investments we want to achieve in Terminals.

Speaker #1: We also continue to expand our portfolio with our greenfield investment in Danang, Vietnam. I'll add a few more words on this one very shortly.

Speaker #1: On profitability, terminals continue to deliver strong return on invested capital of 14.8%, while at the same time investing for growth. As we have signals, with the series of new investment we undertake, we expect some pressure on the ROIC during the build-up phase, but return on the existing portfolio will remain strong.

Speaker #1: Let me briefly highlight that Danang let me briefly highlight the Danang facility which is an excellent example of the type of long-term infrastructure investments we want to achieve in terminals.

Speaker #1: APM terminals, together with our local partner Hateko Group, won a competitive tender process to develop a new multi-user terminal in Danang in central Vietnam.

Vincent Clerc (A.P. Moller: APM Terminals, together with our local partner Hateco Group, won a competitive tender process to develop a new multi-user terminal in Da Nang in central Vietnam. The port is strategically located in a region of Vietnam that is growing fast and is poised for long-term economic growth. The concession agreement with the Da Nang government gives our consortium exclusive rights to operate and expand Da Nang container ports for 50 years. This builds on the partnership with Hateco following the opening of the Hai Phong Terminal in north Vietnam last year. The terminal will include eight deepwater berths with a total throughput capacity of more than 5.7 million TEU per year, once fully built out. Our terminal will serve the growing central Vietnam gateway market, as well as the neighboring countries of Laos and Cambodia, Thailand, and Myanmar, as indicated on the map.

Speaker #1: The port is strategically located in a region of Vietnam that is growing fast and is poised for long-term economic growth. The concession agreement with the Danang government gives our consortium exclusive rights to operate and expand Danang container ports for 50 years.

Speaker #1: This builds on the partnership with Hateko, following the opening of the Haiphong terminal in North Vietnam last year. The terminal will include eight deep-water berths with a total throughput capacity of more than 7.57 million TEU per year, once fully built out.

Speaker #1: Our terminal will serve the growing Central Vietnam gateway market, as well as the neighboring countries of Laos, Cambodia, Thailand, and Myanmar, as indicated on the map.

Vincent Clerc (A.P. Moller: The phase 1, comprising berth 1 and 2, will already go live in 2029. This is exactly the type of locations where we see long-term value creation, a strategic gateway for a growing market, and an opportunity to build a state-of-the-art green and smart container terminal with a partner we know well. Before I hand over to Robert for the financial review, let me take a step back and talk more broadly about the developments in the Ocean markets that have led to the change in outlook and financial guidance for the year. Container market demand has been extremely resilient, this growth being driven by exports from Asia. This has continued relentlessly despite various events such as the war in the Middle East or a new round of tariffs.

Speaker #1: The phase one comprising berth one and two will already go live in 2029. This is exactly the type of locations where we see long-term value creation, a strategic gateway for growing market and an opportunity to build a state-of-the-art green and smart container terminal with a partner we know well.

Speaker #1: Before I hand over to Robert for the financial review, let me take a step back and talk more broadly about the developments in the ocean markets that have led to the change in outlook and financial guidance for the year.

Speaker #1: Container market demand has been extremely resilient, with growth being driven by exports from Asia. This has continued relentlessly, despite various events such as the war in the Middle East or a new round of tariffs.

Speaker #1: Demand out of Asia grew 6.2% in Q2 alone, and our weekly volumes today are above what they were prior to these events. This is not a pull forward, but real underlying demand and has led us to increase our expectation of growth in the container market from 2 to 4% earlier in the year to around 4% at the end of June.

Vincent Clerc (A.P. Moller: Demand out of Asia grew 6.2% in Q2 alone, and our weekly volumes today are above what they were prior to these events. This is not a pull forward, but real underlying demand, and has led us to increase our expectation of growth in the container market from 2% to 4% earlier in the year to around 4% at the end of June. Additionally, that growth continues to be imbalanced, with head haul's growth far outpacing backhaul. This means that terminal volumes are growing far faster than container market volume growth, given the need to return an ever-increasing number of empty containers on the backhaul. This growth and increasing trade imbalances comes on the heels of about 15 years since the financial crisis, where investment into terminal capacity has lagged. With market demand growing faster than terminal capacity, we were bound to hit a bottleneck at some point.

Speaker #1: Additionally, that growth continues to be imbalanced with head holds growth far outpacing backhaul. This means that terminal volumes are growing far, faster than container market volume growth, given the need to return an ever-increasing number of empty containers on the backhaul.

Speaker #1: This growth and increasing trade imbalances comes on the heels of about 15 years since the financial crisis where investment into terminal capacity has lagged.

Speaker #1: With market demand growing faster than terminal capacity, we were bound to hit a bottleneck at some point. To illustrate this, cumulative head hold growth from the Far East over the past three years, so since 2024, has now been around 25%, with the cumulative global terminal capacity growth only at 10% over the same period.

Vincent Clerc (A.P. Moller: To illustrate this, cumulative head haul growth from the Far East over the past three years, so since 2024, has now been around 25%, with the cumulative global terminal capacity growth only at 10% over the same period. This clearly shows the extreme challenges that some Terminals are facing today. Many of them are completely full, resulting in growing congestions in some of the key nodes of our network, which is impacting the global network and not just the local situation because of their criticality. The effect of these disruptions will not be linear, and when a key node like Shanghai, which today has a 12-days waiting time, is affected, this will result in sharp rises in rates.

Speaker #1: This clearly shows the extreme challenges that some terminals are facing today. Many of them are completely full, resulting in growing congestions in some of the key nodes of our network, which is impacting the global network and not just the local situation because of their criticality.

Speaker #1: The effect of these disruptions will not be linear, and when a key node like Shanghai, which today has a 12 days waiting time, is affected, this will result in sharp rises in rates.

Speaker #1: Given the resilience of demand, the degree of underinvestment into terminal, and the time that it will take to bring terminal capacity online to match this demand, it means that rate events such as what has happened since May will become more frequent in the years to come.

Vincent Clerc (A.P. Moller: Given the resilience of demand, the degree of underinvestment into terminal, and the time that it will take to bring terminal capacity online to match this demand, it means that rate events such as what has happened since May will become more frequent in the years to come. As we look at this year, this is what we've been seeing. The combination of strong head haul demand led to increasing congestions in many key ports, which in turn led to sharp increases in freight rate and finally led to our upgraded guidance. In effect, the bottleneck in the supply chain is now moving from ships to the land side. This cannot be debottlenecked quickly. So we believe that we are seeing right now a structural change with the rate environment becoming more benign, albeit still with a lot of volatility remaining.

Speaker #1: As we look at this year, this is what we've been seeing. The combination of strong head hold demand, led to increasing congestions, and in many key ports, which in turn led to sharp increases in freight rate, and finally led to our upgraded guidance.

Speaker #1: In effect, the bottleneck in the supply chain has now moved from ships to the landside. This cannot be debottlenecked quickly, and so we believe that we are seeing right now a structural change, with the rate environment becoming more benign, albeit still with a lot of volatility remaining.

Speaker #1: With that broader market perspective, I will now hand over to Robert, who will take you through the financial review.

Vincent Clerc (A.P. Moller: With that broader market perspective, I will now hand over to Robert, who will take you through the financial review.

Speaker #2: Thank you, Vincent. We had a good second quarter, with results stronger in comparison to both the prior year and the first quarter. This performance was driven by all three segments, but in particular Ocean, as higher spot rates and volumes translated into better earnings and stronger cash generation.

Robert Erni (A.P. Moller: Thank you, Vincent. We had a good Q2, with results stronger in comparison to both the prior year and the Q1. This performance was driven by all three segments, but in particular Ocean, as higher spot rates and volumes translated into better earnings and stronger cash generation. We delivered revenue of $15.8 billion, up 20% year-on-year, supported by strong demand in the container market, higher spot rates in Ocean, and continued growth across all our segments. The strong revenue growth translated into higher profitability. We delivered EBITDA of $3 billion and EBIT of $1.6 billion, driven mainly by Ocean, while Logistics & Services and Terminals also continued to perform well. Free cash flow was positive at $549 million, compared with negative $373 million last year, reflecting the stronger earnings.

Speaker #2: We delivered revenue of $15.8 billion, up 20% year on year, supported by strong demand in the container market, the highest spot rates in ocean, and continued growth across all our segments.

Speaker #2: The strong revenue growth translated into higher profitability. We delivered EBITDA of $3 billion and EBIT of $1.6 billion, driven mainly by Ocean, while Logistics & Services and Terminals also continued to perform well.

Speaker #2: Fresh free cash flow was positive at 549 million dollars, compared with negative 373 million dollars last year, reflecting the stronger earnings. Our balance sheet remained strong, with 18.5 billion dollars of cash and deposits and a net cash position of 1.5 billion.

Robert Erni (A.P. Moller: Our balance sheet remains strong, with $18.5 billion of cash and deposits and a net cash position of $1.5 billion. Turning to cash flow, the stronger results also translated into improved cash generation in the quarter. Operating cash flow was $2.3 billion, supported by EBITDA of $3 billion. Relative to EBITDA, this implies cash conversion of 75%. The lower cash conversion compared to the last quarter was mainly due to the increased working capital, reflecting higher receivables following the increase in Ocean rates and higher bunker inventory because of higher bunker prices. Gross CapEx was $931 million, in line with our annual guidance, while repayments of lease liabilities amounted to $863 million. After all of this, free cash flow was positive and better than both last quarter and the same period last year.

Speaker #2: Turning to cash flow, the stronger results also translated into improved cash generation in the quarter. Operating cash flow was $2.3 billion, supported by EBITDA of $3 billion.

Speaker #2: Relative to EBITDA, this implies a cash conversion of 75%. The lower cash conversion compared to the last quarter was mainly due to increased working capital, reflecting higher receivables following the increase in ocean rates, and higher bunker inventory because of higher bunker prices.

Speaker #2: Gross capex was $931 million, in line with our annual guidance, while repayments of lease liabilities amounted to $863 million. After all of this, free cash flow was positive, and better than both last quarter and the same period last year.

Speaker #2: In addition, we returned $367 million to shareholders during the quarter, of which the majority was through the ongoing share buyback program. As I mentioned, the increased earnings were mainly driven by Ocean, so let me spend a few minutes on what happened during the quarter.

Robert Erni (A.P. Moller: In addition, we returned $367 million to shareholders during the quarter, which the majority was through the ongoing share buyback program. As I mentioned, the increased earnings was mainly driven by Ocean. So let me spend a few minutes on what happened during the quarter. Revenue increased to $10.5 billion, up 23% year-on-year, mainly driven by rates and further supported by good volumes. Average loaded freight rates increased by 22% year-on-year and 32% sequentially, driven by strong spot rates across most of our trade clusters, particularly Latin America and intra-Asia. Loaded volumes increased by 4.1% year-on-year to 3.4 million FEU, supported by strong market demand driven mainly by Far East exports. Despite various cost headwinds, unit costs at fixed energy decreased by 1% year-on-year.

Speaker #2: Revenue increased to $10.5 billion, up 23% year on year, mainly driven by rates and further supported by good volumes. Average loaded freight rates increased by 22% year on year and 32% sequentially, driven by strong spot rates across most of our trade clusters, particularly Latin America and InterAsia.

Speaker #2: Loaded volumes increased by 4.1% year-on-year to 3.4 million FFE, supported by strong market demand driven mainly by Far East exports. Despite various cost headwinds, unit costs at fixed energy decreased by 1% year-on-year.

Speaker #2: Note that if you exclude the positive impact from the extended useful life of our vessels, which was implemented this year, unit costs would be slightly up year-on-year.

Robert Erni (A.P. Moller: Note that if you exclude the positive impact from the extended useful life of our vessels, which was implemented this year, unit costs would be slightly up year-on-year. As a result, earnings increased significantly over the Q1, and we delivered EBITDA of $2 billion and EBIT of $935 million. The increased profitability was mainly driven by the strong development in spot rates, while the commercial measures with contractual customers compensated for the higher operating costs resulting from the Middle East disruption. Finally, gross CapEx was $663 million, and while it's lower than last year, remains within the scope of our annual guidance. The year-on-year improvement in Ocean earnings becomes clearer when we break down the main moving parts of the bridge. The largest positive contributor was freight rates, which alone had a positive impact of around $1.6 billion on EBITDA.

Speaker #2: As a result, earnings increased significantly over the first quarter, and we delivered EBITDA of $2 billion and EBIT of $935 million. The increased profitability was mainly driven by the strong development in spot rates, while the commercial measures with contractual customers compensated for the higher operating costs resulting from the Middle East disruption.

Speaker #2: Finally, gross capex was $663 million, and why it's lower than last year remains within the scope of our annual guidance. The year-on-year improvement in Ocean earnings becomes clearer when we break down the main moving parts of the bridge.

Speaker #2: The largest positive contributor was freight rates, which alone had a positive impact of around $1.6 billion on EBITDA. This included compensation for higher bunker costs, elevated insurance premiums, longer dwell times, as well as other transshipment and network costs associated with contingency routing.

Robert Erni (A.P. Moller: This included compensation for higher bunker costs, elevated insurance premiums, longer dwell times, as well as other transshipment and network costs associated with contingency routing. Strong volume growth also contributed positively, adding $185 million. These benefits were partly offset by significantly higher bunker prices following the oil price surge back in May. Bunker prices were up 44% year-on-year, resulting in a negative impact of around -$612 million. Container handling costs also increased, mainly reflecting congestion in Terminals and higher storage costs across the network. Network costs were broadly stable as higher port charter and transshipment costs were offset by 4% lower year-on-year bunker consumption owing to Gemini network efficiencies. Taking everything together, the strong spot rate environment and continued volume growth more than compensated for the elevated cost base during the quarter. Turning to Logistics & Services. Logistics & Services continued to make steady progress during the quarter.

Speaker #2: Strong volume growth also contributed positively, adding $185 million. These benefits were partly offset by significantly higher bunker prices, following the oil price surge back in May.

Speaker #2: Bunker prices were up 44% year-on-year, resulting in a negative impact of around $612 million. Container handling costs also increased, mainly reflecting congestion in terminals and higher storage costs across the network.

Speaker #2: Network costs were broadly stable, as higher port, charter, and transshipment costs were offset by 4% lower year-on-year bunker consumption, owing to Gemini network efficiencies.

Speaker #2: Taking everything together, the strong spot rate environment and continued volume growth more than compensated for the elevated cost base during the quarter. Turning to Logistics and Services, Logistics and Services continued to make steady progress during the quarter.

Speaker #2: The business is growing and, importantly, continuing to improve profitability at the same time. Revenue increased by 15% year-on-year to $4.2 billion, driven by volume growth across most of the portfolio.

Robert Erni (A.P. Moller: The business is growing and importantly, continuing to improve profitability at the same time. Revenue increased by 15% year-on-year to $4.2 billion, driven by volume growth across most of the portfolio. EBIT was up 24% to $217 million, up both sequentially and compared to the previous year. Likewise, the EBIT margin increased to 5.1%. The improvement was driven by top-line growth, productivity gains, cost discipline, and continued efficiency improvements across the business. This was also the ninth consecutive quarter of year-on-year improvement in EBIT margin, reflecting continued operational progress across the portfolio. As we said before, our focus remains on profitable growth and continued margin expansion, particularly in the parts of the portfolio where we still see significant improvement opportunities. On a segment basis, Landside was the strongest contributor to margin improvement, benefiting from land bridge solutions offered across the Gulf region.

Speaker #2: EBIT was up 24% to $217 million, increasing both sequentially and compared to the previous year. Likewise, the EBIT margin increased to 5.1%. The improvement was driven by top-line growth, productivity gains, cost discipline, and continued efficiency improvements across the business.

Speaker #2: This was also the ninth consecutive quarter of year-on-year improvement in EBIT margin, reflecting continued operational progress across the portfolio. As I said before, our focus remains on profitable growth and continued margin expansion, particularly in the parts of the portfolio where we still see significant improvement opportunities.

Speaker #2: On a segment basis, Landside was the strongest contributor to margin improvement, benefiting from land bridge solutions offered across the Gulf region. Overall, this was a good quarter, with revenue growth of 15% and EBIT growth of 24%.

Robert Erni (A.P. Moller: Overall, this was a good quarter with revenue growth of 15% and EBIT growth of 24%. We are not complacent and continue to target further growth and improved profitability. Looking at our new segments performance across Logistics & Services, the performance differs across Logistics & Services. We continue to see strong performance in both Forwarding and Landside, where revenue growth has translated into solid profitability and margin progression. Forwarding delivered revenue growth of 32% and an EBIT margin of 6.4%, supported by good development in both air and ocean forwarding activities. Landside also delivered a strong quarter with revenue growth of 14% and an EBIT margin of 6.3%, reflecting solid execution across the portfolio. The picture is different in Solutions, where revenue increased by 11% but profitability remains too low.

Speaker #2: But we are not complacent and continue to target further growth and improved profitability. So, looking at our new segments, performance across Logistics and Services—the performance differs across Logistics and Services.

Speaker #2: We continue to see strong performance in both forwarding and landside, where revenue growth has translated into solid profitability and margin progression. Forwarding delivered revenue growth of 32% and an EBIT margin of 6.4%, supported by good development in both air and ocean forwarding activities.

Speaker #2: Landside also delivered a strong quarter, with revenue growth of 14% and an EBIT margin of 6.3%, reflecting solid execution across the portfolio. The picture is different in Solutions, where revenue increased by 11%, but profitability remains too low.

Speaker #2: The EBIT margin decreased to 1.7%, which primarily reflects wide space associated with new warehouse capacity, together with the slow conversion of the commercial pipeline.

Robert Erni (A.P. Moller: The EBIT margin decreased to 1.7%, which primarily reflects white space associated with new warehouse capacity, together with the slow conversion of the commercial pipeline. As a result, our focus remains on improving pipeline conversion, increasing utilization across the network, and reusing white space costs. While there is still work to do in Solutions, the performing in Forwarding and Landside demonstrates the earning potential of the portfolio when scale, productivity, and disciplined execution come together. Overall, the message from this slide is that Logistics & Services continues to move in the right direction, with the next stage of margin improvement coming from improving the profitability of Solutions. The final segment that I'd like to cover is Terminals, which once again delivered a solid performance during the quarter. Revenue increased by 11% year-on-year to $1.4 billion, supported by both volume growth and higher revenue per move.

Speaker #2: As a result, our focus remains on improving pipeline conversion, increasing utilization across the network, and reducing whitespace costs. While there is still work to do in Solutions, the performance in Ocean and Landside demonstrates the earning potential of the portfolio when scale, productivity, and disciplined execution come together.

Speaker #2: So overall, the message from this slide is that Logistics & Services continues to move in the right direction, with the next stage of margin improvement coming from improving the profitability of Solutions.

Speaker #2: The final segment I'd like to cover is Terminals, which once again delivered a solid performance during the quarter. Revenue increased by 11% year-on-year to $1.4 billion, supported by both volume growth and higher revenue per move.

Speaker #2: Revenue per move increased by 7.1%, reflecting higher rates and increased storage revenue. At the same time, volumes increased by 2.2%, driven mainly by North America and the continued consolidation of Gemini volumes into Lazaro Cardenas.

Robert Erni (A.P. Moller: Revenue per move increased by 7.1%, reflecting higher rates and increased storage revenue. At the same time, volumes increased by 2.2%, driven mainly by North America and the continued consolidation of Gemini volumes into Lázaro Cárdenas. On a cost side, cost per move increased by 5.3%, mainly driven by labor inflation across the portfolio. Taking these together, EBIT reached $458 million, equivalent to an EBIT margin of 31.6%. Compared with last year, absolute EBIT is broadly stable, while the margin decreased. It is important to remember that Q2 2025 benefited from a positive joint venture one-off of $45 million. Excluding that item, the EBIT margin was roughly stable year-on-year, despite the inflationary cost environment. Return on invested capital was 14.8%, compared with 15.4% a year ago. The slight decline reflects the ramp-up of new investments where capital is employed ahead of the full earnings contribution.

Speaker #2: On the cost side, cost per move increased by 5.3%, mainly driven by labor inflation across the portfolio. Taking these together, EBIT reached $458 million, equivalent to an EBIT margin of 31.6%.

Speaker #2: Compared with last year, absolute EBIT is broadly stable, while the margin decreased. It is important to remember that the second quarter of 2025 benefited from a positive joint venture one-off of €45 million.

Speaker #2: Excluding that item, the EBIT margin was roughly stable year on year, despite the inflationary cost environment. Return on invested capital was 14.8%, compared with 15.4% a year ago.

Speaker #2: The slight decline reflects the ramp-up of new investments, where capital is employed ahead of the full earnings contribution. Gross capex was $122 million, compared with $141 million in the same quarter last year.

Robert Erni (A.P. Moller: Gross CapEx was $122 million, compared with $141 million in the same quarter last year. Overall, the business continues to combine resilient earnings, attractive returns, and disciplined investment in future growth. Having reviewed the performance across the business, let me finish with our updated outlook for the year. We continue to see a fundamentally stronger and tighter market backdrop than we expected at the beginning of the year. Since our June guidance upgrade, the market dynamics Vincent Clerc described have become more evident, reinforcing our confidence in the outlook for the remainder of the year. Based on the strong H1 performance, better visibility for the remainder of 2026, and our continued expectation of container market volume growth of around 4%, we are upgrading our financial guidance for the full year.

Speaker #2: Overall, the business continues to combine resilient earnings, attractive returns, and disciplined investment in future growth. Having reviewed the performance across the business, let me finish with our updated outlook for the year.

Speaker #2: We continue to see a fundamentally stronger and tighter market backdrop than we expected at the beginning of the year. Since our June guidance upgrade, the market dynamics Winsent described have become more evident, reinforcing our confidence in the outlook for the remainder of the year.

Speaker #2: Based on the strong first-half performance, better visibility for the remainder of 2026, and our continued expectation of container market volume growth of around 4%, we are upgrading our financial guidance for the full year.

Speaker #2: We now guide for underlying EBITDA of $10.5 to $12.5 billion, underlying EBIT of $4.5 to $6.5 billion, and a positive free cash flow.

Robert Erni (A.P. Moller: We now guide for underlying EBITDA of $10.5 to $12.5 billion, underlying EBIT of $4.5 to $6.5 billion, and a positive free cash flow. Our cumulative CapEx guidance has remained the same. It stays at $10 to 11 billion for 2025 to 2026, and the same for 2026 to 2027. With that, we conclude the financial review and will proceed to the Q&A. Operator, please go ahead.

Speaker #2: Our cumulative capex guidance has remained the same. It stays at $10 to $11 billion for 2025 to 2026, and the same for 2026 to 2027.

Speaker #2: With that, we conclude the financial review and will proceed to the Q&A. Operator, please go ahead.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the questions queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. We kindly ask you to limit yourself to one question per turn and to rejoin the queue for further questions. Anyone with a question may press star one at this time. Our first question comes from Parash Jain, HSBC. Please go ahead.

Speaker #1: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. If your question is on the phone, we request you disable the loudspeaker mode while asking your question.

Speaker #1: We kindly ask you to limit yourself to one question per turn and to rejoin the queue for further questions. Anyone who has a question may press star one at this time.

Speaker #1: Our first question comes from Parash Jane at HSBC. Please go ahead.

Parash Jain: Okay. Thank you for taking my question, and congratulations on the solid set of results, Vincent and team. My question is if you can help us understand your decision of returning to Suez Canal, although gradually. What has changed in the last several quarters or years? Because if anything, what we have seen is heightened tension, not only on the Strait of Hormuz, but also on the Red Sea. In fact, the vessels flowing through have come down to a pretty low level. We have not seen a similar move by many of your industry peers also. If you can help us guide, how shall we think about this? Is it a beginning of bringing all the vessels into it, or you are testing the water with a few vessels at this point of time? If you can share any color. Thank you so much.

Speaker #3: Okay, thank you for taking my question, and congratulations on a solid set of results in certain themes. My question is, if you can help us understand your decision to return to the Suez Canal—although gradually—what has changed in the last several quarters or years?

Speaker #3: Because if anything, what we have seen is heightened tension, not only on the Strait of Hormuz but also on the Red Sea. In fact, the vessels flowing through has come down to a pretty low level.

Speaker #3: We have not seen a similar move by many of your industry peers, also. So, if you can help us, could you guide us on how we should think about this?

Speaker #3: Is this the beginning of bringing all the vessels into it, or are you testing the waters with just a few vessels at this point in time?

Speaker #3: If you can share any color, thank you so much.

Speaker #4: Yes, thank you. Thank you for the question. So, today we have about a third of the volumes, or a third of the services that we normally would have going through the canal, that are sailing through the canal in both directions every week.

Vincent Clerc (A.P. Moller: Yes. Thank you for the question. We have today about a third of the volumes or a third of the services that we normally would have going through the canal that are sailing through the canal in both directions every week. That is the part of a gradual return, full return, through Suez. All the analysis that we make and all the stakeholders on the military and intelligence side that we speak to will tell us that as it is today, the conditions for a full return through the Red Sea are met, and that is why we are sending these services through. We don't test the water. We don't compromise on the safety of our crew, on the safety of our ships, or on our customers' cargo.

Speaker #4: And that is the part of a gradual return, full return through Suez. All the analysis that we make and all the stakeholders on the military and intelligence side that we speak to will tell us that, as it is today, the conditions for a full return through the Red Sea are met, and that is why we are sending these services through.

Speaker #4: We don't test the water. We don't compromise on the safety of our crew, the safety of our ships, or our customers' cargo.

Speaker #4: But we feel that these—we believe that these conditions are met, and that the recent developments in rhetorics and attacks on the ground from the Houthis are targeted at different segments and different products than what we—than what we exercise, and therefore that we are not a target at this stage.

Vincent Clerc (A.P. Moller: But we believe that these conditions are met and that the recent developments in rhetorics and attacks on the ground from the Houthis are targeted at different segments and different products than what we Than what we exercise, and therefore that we are not a target at this stage. I have also to say that this is a very volatile situation. This is an assessment that we make every day, every time we send a ship. We make the assessment whether the situation is still what we believe that it is for that day, and then decide to send the ship on a. Every day we can start to decide to go back around the side of Africa if we felt that the security situation would change. For us, we will see, we will move towards a gradual full return to Bab el-Mandab and Suez.

Speaker #4: I also have to say that this is a very volatile situation, and this is an assessment that we make every day, every time we send a ship.

Speaker #4: We make the assessment whether the situation is still what we believe it is for that day, and then decide to send a ship on. Every day, we can start to decide to go back around the side of Africa if we felt that the security situation would change.

Speaker #4: So for us, we will see—we will move towards a gradual, full return to Bab al-Mandab and Suez.

Speaker #1: Perfect, thank you so much. And all the best. The next question comes from Christian Novelko, UBS. Please go ahead.

Parash Jain: Perfect. Thank you so much, and all the best.

Operator: The next question comes from Cristian Nedelcu, UBS. Please go ahead.

Speaker #3: Hi, thank you very much for taking my question. I have one question on ocean capital allocation for the next few years. If I analyze your order book and the age profile of your fleet, I calculate that you're going to have roughly around a 12% market share in ocean by 2030.

Cristian Nedelcu: Hi. Thank you very much for taking my question. I have one question on Ocean capital allocation for the next few years. If I analyze your order book and the age profile of your fleet, I calculate that you are going to have roughly around 12% market share in Ocean by 2030. I believe it used to be 18%, 19% pre-COVID. You also flagged today the structural congestion that helped Ocean rates. I guess my question is, in terms of capital allocation, how should we think about the next couple of years? Are you happy with having just 12% market share in a few years, or do you think you need to step up and allocate more capital to Ocean? Thank you.

Speaker #3: And I believe it used to be 18–19% pre-COVID. You also flagged today the structural congestion that helped ocean rates. So I guess my question is: in terms of capital allocation, how should we think about the next couple of years?

Speaker #3: Are you happy with having just 12% market share in a few years, or do you think you need to step up and allocate more capital to Ocean?

Speaker #3: Thank you.

Speaker #4: Thank you, Christian. It's a very good question because, as I mentioned in the speech—I think, or in the presentation—what we have been able to do with Gemini is actually break this and be able to gain and carry more volumes on a fleet that is growing slower than we are actually able to grow the volumes. But with the current utilization and asset turn, we're starting to reach the limit of what the current fleet can do.

Vincent Clerc (A.P. Moller: Thank you, Cristian. It is a very good question because, as I mentioned in the speech, I think we, or in the presentation, what we have been able to do with Gemini is actually break this and be able to gain and carry more volumes on a fleet that is growing slower than we are actually able to grow the volumes. But with the current utilization and asset turn, we are starting to reach the limit of what the current fleet can do.

Speaker #4: And if we want to, if we believe that the rate environment is going to be more benign in the years to come because of the landside bottlenecks that we see, and we want to protect our position, then we will need to continue to renew our fleet and to invest a bit of capital as well into maintaining not only the replacement of the fleet, but also having some level of fleet growth in there.

Vincent Clerc (A.P. Moller: If we want to, if we believe that the rate environment is going to be more benign in the years to come, because of the land side bottlenecks that we see, and that we want to protect our position, then we will need to continue to renew our fleet and to invest a bit of capital as well into maintaining, not only the replacement of the fleet, but having some level of fleet growth in there.

Speaker #1: The next question comes from Alex Irvin, Bernstein. Please go ahead.

Operator: The next question comes from Alex Irving, Bernstein. Please go ahead.

Alex Irving: Hi, good morning. Related question to the previous one. Taking the starting point, insufficient terminal capacity worldwide, what does that mean for the evolution of global fleets? We can all see the record high order books, but do we like to think that fleet growth in here basically just takes down asset productivity because there is not the terminal capacity to serve the expanding amount of ships on the Ocean? Or do you think that we end up with capacity getting built that ultimately ships do result in higher capacity, higher throughput, higher container moves, placing pressure on freight rates? Just trying to understand that dynamic a bit better. Thank you.

Speaker #5: Hi, good morning. I'm ready with a follow-up to the previous question. So, taking the starting point—insufficient terminal capacity worldwide—what does that mean for the evolution of global fleets?

Speaker #5: We can all see the record-high order books, but we would like to think that fleet growth from here basically just takes down asset productivity because there is not the terminal capacity to serve the expanding number of ships on the ocean. Or do you think that we end up with capacity getting built, that ultimately ships do result in higher capacity, higher throughputs, higher container moves, placing question on freight rates?

Speaker #5: Just trying to understand that dynamic a bit better. Thank you.

Speaker #4: I think let me try to see if I can answer that. We saw during we saw during COVID that when the markets volume suddenly increased, we started to hit the or to stretch the limits of what the landside could absorb.

Vincent Clerc (A.P. Moller: Let me try to see if I can answer that. We saw during COVID that when the markets volume suddenly increased, we started to hit the or to stretch the limits of what the land side could absorb. You will remember the long queue that there was in Los Angeles and in many other places around the globe as a result. That's simply because at that time, we hit the ceiling of what the land side could absorb. The normalization after COVID basically alleviated that, and we thought we would be free for this for quite a while because of the normalization. What has happened is over the last 3 years, the exports out of the Far East have grown by the 25% that I mentioned in there.

Speaker #4: And you will remember the long queues that there were in Los Angeles and in many other places around the globe as a result. That's simply because at that time we hit the ceiling of what the landside could absorb.

Speaker #4: After the normalization, after COVID, that was basically alleviated. And we thought we would be free from this for quite a while because of the normalization.

Speaker #4: What has happened is, over the last three years, the exports out of the Far East have grown by the 25% that I mentioned in there.

Speaker #4: And we are now gradually getting to a place where some of the key nodes that we have—the big ports that we have in our network—they are back into a situation where we're stretching the capacity of what they can cope with.

Vincent Clerc (A.P. Moller: We are now getting gradually to a place where some of the key nodes that we have, the big ports that we have in our network, they are back into a situation where we're stretching the capacity of what they can cope with. The fact that trade has become more imbalanced means actually that the demand for volumes is actually bigger for Terminals than it is for us. Because we only count the full loads when we say around 4% market growth. But for Terminals, that around 4% market growth will be 7%, 8% because the trade becomes more imbalanced and they have more empty moves. When you do that 3 years in a row at 7%, 8%, you start quickly to get into more and more places where you start stretching what capacity can cope with.

Speaker #4: And the fact that trade has become more imbalanced means actually that the demand for volumes is actually bigger for terminals than it is for us, because we only count the full loads when we say around 4% market growth.

Speaker #4: But for terminals, that around 4% market growth will be 7 or 8% because the trade becomes more imbalanced, and they have more empty moves. When you do that three years in a row at 7 or 8%, you quickly start to get into more and more places where you begin stretching what capacity can cope with.

Speaker #4: And then you have other disruption, whether it's water levels on the Rhine that disrupt the ability to move containers inland, or whether it's trucking power in Brazil.

Vincent Clerc (A.P. Moller: And then you have other disruption, whether it is water levels on the Rhine that disrupt the ability to move containers inland, whether it is trucking power in Brazil. You have different things like this that only illustrate it is not just a terminal thing. The whole land side has been under-invested compared to the growth that we have had. Investment in ships have followed, maybe even have been ahead of demand, if you look at the order book. But the bottlenecks that we have on the land side are more sticky, and we are starting to feel them. And it is really hard to forecast when we start to have this. But I can give you the example today. The largest port in the world is Shanghai, and ships take 12 days to get through because of how congested and full the port of Shanghai is.

Speaker #4: And you have different things like this that only illustrate it's not just a terminal thing. The whole landside has been underinvested in compared to the growth that we have had.

Speaker #4: Investment in ships has followed—maybe even been ahead of demand if you look at the order book. But the bottlenecks that we have on the landside are more sticky.

Speaker #4: And we're starting to feel them. And it's really hard to forecast when we'll start to have this. But I can give you an example: today, the largest port in the world is Shanghai, and ships take 12 days to get through because of how congested and full the Port of Shanghai is.

Speaker #4: And that's when they need to load the cargo. When they arrive in Brazil and they have to go through Santos, or they have to go through Jeddah in Saudi Arabia, or through the northern continent of Europe, they also get delayed because the ports and the infrastructure there are also stretched to the maximum.

Vincent Clerc (A.P. Moller: And that is when they need to load the cargo. When they arrive in Brazil and they have to go through Santos or they have to go to Jeddah in Saudi Arabia or through the north continent of Europe, they also get delayed because the ports and the infrastructure there is also stretched to the maximum. And so we will hit those, and we will see rate events much more frequently. And the other thing that COVID has changed is when these rate events happened, what is the magnitude of the changes in freight rate and the speed at which they filter through? And you see this clearly if you start comparing the standard deviations of SCFI post-COVID with before COVID, it is very, very different. And it is very hard to forecast, hence, two profit adjustments in six weeks.

Speaker #4: And so, we will hit those, and we will see rate events much more frequently. The other thing that COVID has changed is when these rate events happen, what is the magnitude of the changes in freight rates, and the speed at which they filter through?

Speaker #4: And you see this clearly if you start comparing the standard deviations of SCFI post-COVID with before COVID. It's very, very different, and it's very hard to forecast.

Speaker #4: Hence, to profit adjustments in six weeks. But when it's there—and it's becoming more and more frequent that it's there—and supported by the strong market that we see today, then you will see more of that.

Vincent Clerc (A.P. Moller: But when it is there and it is becoming more and more frequent that it is there and supported by the strong market that we see today, then you will see more of that. And what would need to happen for this not to be here anymore is either a significant weakening of demand, which we believed could happen after an energy shock, and the Gulf War earlier in the year, but has not happened, or catch-up investment round in infrastructure to increase terminal capacity, and to increase land sides capacity, rail, truck, waterways, so that we can move this more fluidly across the supply chain. And you will know that all of those will take a long time. It takes seven to 10 years to get a greenfield terminal, from the idea to have it operational. It is taking that amount of years.

Speaker #4: And what we need to do, or what would need to happen for this not to be here anymore, is either a significant weakening of demand—which we believed could happen after an energy shock and the Gulf War or earlier in the year, but hasn't happened—or a catch-up investment round in infrastructure to increase terminal capacity and to increase landside capacity, rail, truck, waterways, so that we can move this more fluidly across the supply chain.

Speaker #4: And you will know that all of those will take a long time. It takes seven to ten years to get a greenfield terminal from the idea stage to having it operational.

Speaker #4: It's taking that amount of years, and so I think that as long as we're having the type of demand that we're having today, we need to invest in landside capacity to alleviate these bottlenecks.

Vincent Clerc (A.P. Moller: And so I think that as long as we are having the type of demand that we are having today, and we need to invest in land side capacities to alleviate these bottlenecks, and until then, we will see these bottlenecks as a common feature, not constant, but common feature of the markets that we operate in.

Speaker #4: And until then, we'll see these bottlenecks as a common feature—not constant, but a common feature—of the markets that we operate in.

Speaker #5: All right. Thank you for the detail.

Alex Irving: All right. Thank you for the detail.

Speaker #1: The next question comes from Lars Heindorf, Nordea. Please go ahead.

Operator: The next question comes from Lars Heindorff, Nordea. Please go ahead.

Speaker #5: Yeah, morning. Thank you for taking my question and also for your comments on the strong results. I'm trying to get my head around the rate development in the second quarter, which I think surprised most people.

Lars Heindorff: Yeah. Morning. Thank you for taking my question and also congratulations on the strong results. I am trying to get my head around the rate development in Q2, which I think surprised most people. If we look at average between most of the leading rate indices, they are up on average by, I do not know, mid-30s, something like that. You increased your average Ocean rate by 32% quarter-on-quarter. But if you look at most of the peers, ONE, Hapag-Lloyd, OOCL, CMA CGM, they are up by on average around about 13% quarter-on-quarter. The question is, have you done something different this quarter which ensures you this quite significant outperformance versus the peers in terms of the quarter-on-quarter rate growth?

Speaker #5: If we look at sort of the average between most of the leading rate indices, they're up on average by, I don't know, mid-30s—something like that.

Speaker #5: You increased your average ocean rate by 32% quarter on quarter. But if you look at most of the peers—one, Hapag; two, OOCL; and three, CMA—they’re up on average around about 13% quarter on quarter.

Speaker #5: And so, basically, the question is: Have you done something different this quarter which ensures you this, I mean, quite significant outperformance versus the peers in terms of the quarter-on-quarter rate growth?

Speaker #5: And also, if yes, I mean, is this something that will last, or is this sort of temporary? Again, maybe sort of alluding to what we can expect into the third quarter.

Lars Heindorff: Also, if yes, is this something that will last or is this temporary, again, maybe alluding to what we can expect into Q3?

Speaker #4: Thank you, Lars. It's hard for me to comment on what the competition has done. What I can share with you is what we have done.

Vincent Clerc (A.P. Moller: Thank you, Lars. It's hard for me to comment on what competition has done. What I can share with you is what we have done, and why I think that we are very proud of the quarter, because the quarter actually rests on a lot of work. The first thing is to really leverage, very quickly, the redeployment of assets that were suddenly idle because of the situation in the Middle East, and redeploy them productively so that you maintain the volume and you keep your costs under control. I believe that we are today extremely fast and agile at redeploying networks, adjusting capacity and ensuring very, very high asset turns for our network, given the trade mix that we have. I think that's one of the advantage that we have.

Speaker #4: And why I think that we are very proud of the quarter is because the quarter actually rests on a lot of work. The first thing is to really leverage, very quickly, the redeployment of assets that were suddenly idle because of the situation in the Middle East, and redeploy them productively so that you maintain the volume and you keep your costs under control.

Speaker #4: And I believe that we are today extremely fast and agile at redeploying networks, adjusting capacity, and ensuring very, very high asset turns for our network, given the trade mix that we have.

Speaker #4: I think that's one of the advantages that we have. The other thing is, we have invested for a long time in digital solutions for the spot rate and the spot market, which allow us to react to these sharp rate events.

Vincent Clerc (A.P. Moller: The other thing is we have invested for a long time in digital solutions for the spot rate and the spot market, which allow us to react to these sharp rate events, I think faster than anybody in the market. This allows us, I think, to act with extreme agility in a world that is more unpredictable and where the changes are more and more meaningful because there's no elasticity in demand. So when you start to hit the ceiling, the impact on rates becomes extremely big. It means something how quickly you can act on it and how quickly you can capture it. That's what I think. I don't think at all that we can abstract from market reality. Over time, the market rates are the market rates.

Speaker #4: I think faster than anybody in the market, and this allows us, I think, to act with extreme agility in a world that is more unpredictable, and where the changes are more and more meaningful because there's no elasticity in demand.

Speaker #4: So when you start to hit a ceiling, the impact on rates becomes extremely big. And so it means something—how quickly you can act on it and how quickly you can capture it.

Speaker #4: That's what I think. I don't think we can—I don't think at all that we can abstract from market reality over time. The market rates are the market rates.

Speaker #4: But when the market is very volatile, the ability you have to adjust to that volatility faster than anybody else is a competitive advantage. I think that, tentatively, what I see in the numbers today indicates that we've done a really good job this year.

Vincent Clerc (A.P. Moller: But when market is very volatile, the ability that you have to adjust to that volatility faster than anybody else is a competitive advantage. I think that tentatively what I see in the numbers today say that we've done a really good job this year.

Speaker #5: And if I may, just a brief follow-up, which should we then expect that your rates will be more volatile going forward? Because if you look at it historically, there's been I mean, your rates obtained rates has been far less volatile compared to most of these rate indices.

Lars Heindorff: If I may, just a brief follow-up to which, should we then expect that your rates will be more volatile going forward? Because if you look at it historically, your rates, obtained rates has been far less volatile compared to most of these rate indices.

Speaker #4: So it depends on what time horizon you have, Lars, because if you're thinking in a matter of weeks, or quarters, or years, I think that these bottlenecks that we're up against on the landside—they will appear and resolve themselves as seasonality, trade growth, shifts, and new capacity come online, and so on.

Vincent Clerc (A.P. Moller: So it depends on what time horizon you have, Lars. Because if you're thinking in a matter of weeks or quarters or years, I think that these bottlenecks that we're up against on the land side, they will appear and resolve themselves as seasonality and trade growth and shifts and new capacity comes online and so on. They will not be a constant feature where the rates are just high for longer. As some of these bottlenecks disappear, then the rates will normalize. As they appear somewhere else, they will shoot up again. I think what will be a feature is continued volatility on the rates over the coming years, but with a higher average than what we have seen because of the frequency at which these bottlenecks start to urge.

Speaker #4: So they will not be a constant feature where the rates are just high for longer. And as some of these bottlenecks disappear, then the rates will normalize as they appear somewhere else.

Speaker #4: They will shoot up. They will shoot up again. I think what will be a feature is continued volatility in the rates over the coming years.

Speaker #4: But with a significant, but with a higher average than what we have seen, because of the frequency at which these bottlenecks start to emerge.

Speaker #4: I think that we're moving into something where what constrains or determines the rate levels is more the inland capacity to absorb the volumes that we bring with our ships, rather than how many ships we put in the water.

Vincent Clerc (A.P. Moller: I think that we're moving into something where what constrains or determines the rate levels is more the inland capacity to absorb the volumes that we bring with our ships, more than how many ships we put in the water.

Speaker #5: All right. Thank you.

Lars Heindorff: All right. Thank you.

Speaker #1: The next question is from Alexia Dogani, JP Morgan. Please go ahead.

Operator: The next question is from Alexia Dogani, J.P. Morgan, please go ahead.

Speaker #2: Yeah, good morning. I'm slightly surprised, as an observation, by the big shift in narrative compared to last quarter because now we're talking a lot about structural changes in the market, trading balances persisting, needing more ships, and ongoing port congestion and structural issues.

Alexia Dogani: Yeah, good morning. I am slightly surprised as an observation, the big shift in narrative compared to last quarter, because now we are talking a lot about structural changes in the market, trade imbalance is persisting, needing more ships, given port congestion, structural issues. I guess, what has fundamentally changed? Specifically, I do not quite understand why headhold volume growth has been so strong, especially, let us say, Asia to Europe. Can you explain to us what kind of sector verticals are really growing? What has really driven that kind of step change? We can see typhoons impacting congestion in Asia. Really, my observation is that demand has accelerated substantially. What has driven this substantial acceleration in demand, in your view? Given your comment just now, should we therefore be thinking that the order book of 40% could actually go towards 60%, which is the peak the industry saw in 2009?

Speaker #2: I guess what has fundamentally changed—and specifically, I don't quite understand why headhaul volume growth has been so strong, especially, let's say, Asia to Europe?

Speaker #2: Can you explain to us what kind of sector verticals are really growing? What has really driven that kind of step change? Because we can see typhoons impacting congestion in Asia.

Speaker #2: Really, my observation is that demand has accelerated substantially. What has driven this substantial acceleration in demand, in your view? And given your comment just now, should we therefore be thinking that the order book of 40% could actually go towards 60%, which is the peak the industry saw in 2009?

Speaker #2: Thanks.

Alexia Dogani: Thanks.

Speaker #4: Thank you, Alexa. I think I'm also surprised by and what surprises me is the strength and the resilience of market demand. I think our imagination at least has been constrained by all the talks about trade wars and deglobalization and by the view that Iran the Iran conflict would unleash an energy crisis that would be that would have also negative impact on global demand.

Vincent Clerc (A.P. Moller: Thank you, Alexia. I think I am also surprised by it. What surprises me is the strength and the resilience of market demand. I think our imagination, at least, has been constrained by all the talks about trade wars and de-globalization, and by the view that the Iran conflict would unleash an energy crisis that would have also a negative impact on global demand. Despite years of talk about de-globalization and despite the uncertainty around oil prices, what we have seen is that demand for container transport is basically shrugging off all of that, and you see no sign in the number that any of that de-globalization talk or any of that energy crisis is actually denting demand level. I think that is, for me, compared to where I was three months ago, that is a key thing that has changed.

Speaker #4: Despite years of talk about deglobalization, and despite the uncertainty around oil prices, what we have seen is that demand for container transport is basically shrugging off all of that.

Speaker #4: And you see no sign in the numbers that any of that deglobalization talk, or any of that energy crisis, is actually denting demand levels.

Speaker #4: I think that, for me, compared to where I was three months ago, that's a key thing that has changed. It seems that the market is so resilient that it can shrug off these shocks and keep on pumping volumes at an unchanged level.

Vincent Clerc (A.P. Moller: It seems that the market is so resilient that it can shrug off these shocks and keep on pumping volumes at an unchanged level. That is the first thing. The second thing is the compounding effect of having three years in a row of strong growth, which is only one way, basically, in trade flows. We have been looking at strong growth, but I think we have only started to realize what one way trade growth means for landside infrastructure. Because if only your import growth, you basically need two trucking moves per every import, rather than have one trucking move for an import and one trucking move for an export. So you need more trucking powers just to move the same amount. You need more terminal capacity because you have more empties that you need to remove.

Speaker #4: That's the first thing. The second thing is the compounding effect of having three years in a row of strong growth, which is basically only one way in trade flows.

Speaker #4: And we've been looking at strong growth, but I think we've only started to realize what one-way trade growth means for landside infrastructure. Because if you only have import growth, you basically need two trucking moves per every import, rather than having one trucking move for an import and one trucking move for an export.

Speaker #4: So you need more trucking power just to move the same amount. You need more terminal capacity because you have more empties that you need to remove.

Vincent Clerc (A.P. Moller: I think there is a compounding effect there, which is hitting some limitations because there has been a relatively subdued view towards how much the market was going to grow, and so how much infrastructure investments you would need on the land side. We have not put enough terminal capacity. Trucking power has been an issue for a long time. Some of the waterways, especially in Europe right now, are severely affected by water levels and other issues. All of these kind of tighten the noose around the supply chain, and it is hard to see when you are going to hit those limits. But when you do, then the reactions on prices are strong. The other thing that is changing is actually what we are moving. So what is in the container is gradually changing.

Speaker #4: So I think there is a compounding effect there, which is hitting some limitations because there has been a relatively subdued view towards how much the market was going to grow, and so how much infrastructure investments you would need on the landside.

Speaker #4: And we've not put in enough terminal capacity. Trucking power has been an issue for a long time. Some of the waterways, especially in Europe right now, are severely affected by water levels and other issues.

Speaker #4: And all of these kind of tightened the noose around the supply chain, and it's hard to see when you're going to hit those limits. But when you do, then the reactions on prices are strong.

Speaker #4: The other thing that is changing is actually what we're moving. So what is in the container is gradually changing. For a long time, the main feature of what we were moving from afar was what we would call general department store goods.

Vincent Clerc (A.P. Moller: For a long time, the main feature of what we were moving from the Far East was what we would call general department store goods. Anything from furniture, footwear, clothing, foodstuff, stuff like that was very, very subject to conjuncture and consumption. What we have seen since COVID is, as the export from the Far East have boomed, we are seeing a lot of, it is more the industrials that are actually driving the growth. And it is anything that is related to electrification from storage, so batteries, solar panels, parts for either solar panels, windmills, turbines, grid, electricity grid, anything that has to do with electrification. Cooling units for data centers and other things. EVs. So anything that has to do around electrification and the race to build more power capacity is driving demand for industrial products whose production base is very Asia-centric and Asia-dependent.

Speaker #4: Anything from furniture footwear, clothing, foodstuffs, stuff like that, that was very, very subject to conjuncture and consumption. What we have seen since COVID is as the export from the far east have boomed, we're seeing a lot of it's more the industrials that are actually driving the growth.

Speaker #4: And it is anything that is related to electrification—from storage, so batteries, solar panels, parts for either solar panels, windmills, turbines, the grid, electricity grid—anything that has to do with electrification.

Speaker #4: Cooling units for data centers and other things, EVs—so anything that has to do with electrification and the race to build more power capacity—is driving demand for industrial products, whose production base is very Asia-centric and Asia-dependent.

Speaker #4: And that is a lot less subject to conjecture than what you have, because if you have a big contract to build a big solar park, whether there is a higher oil price or not, you're going to need to move the solar panels and the infrastructure to get that solar park built.

Vincent Clerc (A.P. Moller: That is a lot less subject to conjuncture than what you have. Because if you have a big contract to build a big sun park, whether there is a higher oil price or not, you are going to need to move the solar panels and the infrastructure to get that sun park built. So that is, I think something that for me is a shift, we will become less seasonal and more subject to industrial verticals as long as this macro trend will continue to materialize. This is not only a US issue, this is Europe, this is India, this is the Middle East, this is Latin America, this is Africa. We see this across the whole world, where large Asian companies are exporting more and more of these components into those geographies and those markets.

Speaker #4: So that's, I think, something that for me is a shift. We will become less seasonal and more subject to industrial verticals, as long as this macro will continue to materialize.

Speaker #4: And this is not only a US issue—this is Europe, this is India, this is the Middle East, this is Latin America, this is Africa.

Speaker #4: We see this across the whole world, where large Asian companies are exporting more and more of these components into those geographies and those markets.

Vincent Clerc (A.P. Moller: What all of this means is, I still think that the order book reflect a very optimistic view on the world. But I think so less and less as long as this trend continues. Because if I have a total market growing 4%, but the head-haul demand growing 7%, 8%, I need 7%, 8% capacity more every year just to be able to carry stuff. I do not know where the order book is going to end, but I think that this is less of a constraining factor, and I am actually more looking now at how quickly are some of the nodes that are most stressed in the network, how quickly can these bottleneck be resolved.

Speaker #4: What all of this means is, I still think that the order book reflects a very optimistic view on the world. But I think so less and less as long as this trend continues, because if I have a total market growing 4% but the head haul demand growing 7–8%, I need 7–8% capacity more every year just to be able to carry stuff.

Speaker #4: And so I don't know where the order book is going to end, but I think that this is less of a constraining factor. And I'm actually more looking now at how quickly some of the nodes that are most stressed in the network—how quickly can these bottlenecks be resolved.

Speaker #4: And I would say, if you look at Santos, if you look at Apapa in Nigeria, if you look at the north continent of Europe, if you look at the UK, if you look at other places in the market, those are not easy bottlenecks to resolve.

Vincent Clerc (A.P. Moller: I would say, if you look at Santos, if you look at Apapa in Nigeria, if you look at the north continent of Europe, if you look at the UK, if you look at other places in the market, those are not easy bottlenecks to resolve, and it is going to take a while. They have been building up for 15 years, and it will take a while to undo them.

Speaker #4: And it's going to take a while. They have been building up for 15 years, and it will take a while to undo them.

Speaker #1: And Vincent, if you allow me to follow up just on the electrification theme and kind of the industrial goods—obviously, we're hearing that some companies are mentioning pre-buying because prices for those goods will go up due to energy costs affecting their production.

Alexia Dogani: And Vincent, if you allow me to follow up just on the electrification theme and kind of the industrial goods. Obviously, we are hearing that some companies are mentioning pre-buying because prices for those goods will come up because of energy costs affecting their production. Do you think that has happened or not, or is it just fundamental demand, or is there some pre-buying?

Speaker #1: Do you think that has happened or not? Or is it just fundamental demand? Or is there some pre-buying?

Vincent Clerc (A.P. Moller: All that preponement before tariff and all of these gaming trade, I do not see any sign of it in any of that. I think that you have a macro trend now where people have gone from worrying about electricity as a green transition into worrying about electricity availability because every market needs more and more electricity. If you need more air conditioning, you need more electricity. If you have more EVs, you need more electricity. So it is gone from, is it moving from black to green energy into we need more energy, and therefore we need to build up the energy infrastructure of the future. And that we are seeing again in all of the markets. And I do not think it will necessarily be linear, and there will not be a lull here or a lull there.

Speaker #4: All that preamble before tariff and all of these gaming trade, I don't see any sign of it in any of that. I think that you have a macro trend now where people have gone from worrying about electricity as a green transition into worrying about electricity availability, because every market needs more and more electricity.

Speaker #4: If you need more air conditioning, you need more electricity. If you have more EVs, you need more electricity. So there is more, and it's gone from, is it moving from black to green energy, into we need more energy, and therefore we need to build up the energy infrastructure of the future.

Speaker #4: And that's what we're seeing again in all of the markets. I don't think it will necessarily be linear, and there may be a lull here or a lull there.

Speaker #4: But I think we're probably going to see pretty sustained growth in those verticals for the years to come.

Vincent Clerc (A.P. Moller: But I think we are probably going to see a pretty sustained growth in those verticals for the years to come.

Speaker #1: Thank you. The next question is from Jacob Blacks, Walter Research. Please go ahead.

Alexia Dogani: Thank you.

Operator: The next question is from Jacob Lakes, Wolfe Research. Please go ahead.

Jacob Lakes: Hi, good morning. Thanks for your time. Could you maybe speak about how you're thinking about unit costs from here? How meaningful can the return to the Red Sea be in driving these lower, and then any other big puts or takes we should be keeping in mind over the balance of the year? Thank you.

Speaker #5: Hi, good morning. Thanks for your time. So, could you maybe speak about how you're thinking about unit costs from here? How meaningful can the return to the Red Sea be in driving these lower, and then any other big puts or takes we should be keeping in mind over the balance of the year?

Speaker #5: Thank you.

Speaker #4: Yeah, thank you, Jacob. So our opinion is that, at this stage, a return to the Red Sea will have very little pricing impact. And it will have a positive cost impact, obviously, due to the shorter sailing distances and lower cost of going the straight route versus all around Africa.

Vincent Clerc (A.P. Moller: Yeah. Thank you, Jacob. Our opinion is at this stage, a return through the Red Sea will have very little pricing impact and will have a positive cost impact, obviously, for the short sailing distances and lower cost of going into a straight route versus all around Africa. The reason why we think it's not very significant on prices, but it's significant on cost, on cost I just explained. On prices, it's because we see the bottlenecks being elsewhere. Therefore it's not really going to have a material impact on prices. As long as the safety requirements are met, this is the type of market that is good for a return rather than at once where there was no bottleneck.

Speaker #4: The reason why we think it's not very significant on prices, but it is significant on cost—on cost, I just explained. On prices, it's because we see the bottlenecks being elsewhere.

Speaker #4: And therefore, it's not really going to have a material impact on prices. And as long as the safety requirements are met, this is the type of market that is good for a return, rather than as it was once, where there was no bottleneck.

Speaker #5: Thanks. And are there any other sort of big puts or takes we should be keeping in mind as it relates to unit costs for the rest of the year?

Jacob Lakes: Thanks. Are there any other sort of big puts or takes we should be keeping in mind as it relates to unit costs for the rest of the year?

Speaker #4: Yeah, so I think there are two things that you should keep in mind. First of all, oil price is still obviously a big factor. Depending on what reserves are at, what consumption is at, whether Hong Kong reopens or it doesn't reopen, we have seen some increased volatility in oil prices.

Vincent Clerc (A.P. Moller: Yeah. So I think there are two things that you should keep. First of all, oil price is still obviously a big factor, depending on what reserves are at, what consumption is at, whether Hormuz opens or it doesn't reopen. We have seen some increased volatility in oil prices, which in the long term, I think we're pretty well covered with our bunker formulas with the contracts, but in the short term, could have some impact on how we think about the unit cost. Then higher rate environment tends to lead to also longer, higher charter markets for the ships that we charter or lease.

Speaker #4: Which, in the short term—I mean, in the long term, I think we're pretty well covered with our bunker formulas with the contracts. But in the short term, it could have some impact on how we think about the unit cost.

Speaker #4: And then, a higher rate environment tends to lead to longer and higher charter markets for the ships that we charter or lease. We've seen this if you look at the publicly available data in terms of fixtures and prices of those fixtures—the prices continue to be high.

Vincent Clerc (A.P. Moller: We've seen this, if you look at the publicly available data in terms of fixtures and prices of those fixtures, the prices continue to be high, and the fixtures actually go for longer as owners take advantage of the shortage that there is a ship in the current market to demand higher prices for longer. I think those will have some impact on the unit cost going forward. The Gulf war broke.

Speaker #4: And the fixtures actually go for longer, as owners take advantage of the shortage that there is of ships in the current market to demand higher prices for longer.

Speaker #4: So I think those will have some impact on the unit cost going forward. The Gulf War broke.

Speaker #1: The next question is from Ulrich Beck, Danske Bank. Please go ahead.

Operator: The next question is from Ulrik Bak, Deutsche Bank. Please go ahead.

Speaker #5: Yes, thank you for taking my question. It's on the discrepancies in your guidance upgrade between EBITDA and EBIT, which are increased by $2.5 billion, while the free cash flow guidance is $1 billion.

Ulrik Bak: Yes. Thank you for taking my question. It's on the discrepancies in your guidance operate between EBIT which are increased by USD 2.5 billion, while the free cash flow guidance is USD 1 billion. If you could please explain that delta, also considering that you keep your CapEx guidance unchanged. Then on that last point, given that you now indicate that you may need to increase your capacity in forward years, why do you keep CapEx?

Speaker #5: So if you could please explain that delta. Also, considering that you keep your CapEx guidance unchanged—and on that last point, given that you now indicate you may need to increase your capacity in forward years—what might that do to CapEx?

Speaker #4: Thank you. I might take that one. As you explained, obviously, in the free cash flow, mainly driven by what we have seen in Ocean, we have to consider that we also carry a much higher working capital.

Robert Erni (A.P. Moller: Thank you. I might take that one. As you explained, obviously in the free cash flow, mainly driven by what we have seen in Ocean, we have to consider that we also carry a much higher working capital. That is, due to the fact that our rates went up, so the billing to the customer went up, so that drives a higher working capital cost, mainly driven by higher receivables. Then we have also more working capital carried by higher bunker costs. So basically inventory that we have on the balance sheet. That inventory costs more due to higher bunker price costs. Does that explain the question?

Speaker #4: That is A, due to the fact that our rates went up. So, the billing to the customer went up, and that drives a higher working capital cost, mainly driven by higher receivables.

Speaker #4: And then we also have more working capital tied up due to higher bunker costs. So, basically, the inventory that we have on the balance sheet is more expensive. That inventory costs more.

Speaker #4: Due to higher bunker price costs. Does that answer the question?

Speaker #5: Yes. Yeah, very clear. But then also the CapEx guidance.

Ulrik Bak: Yes. Very clear, but then also the CapEx side.

Speaker #4: No, CapEx, at least for the quarter, there was not really a change. I think we are right now running a little below what we have targeted.

Robert Erni (A.P. Moller: On CapEx, at least for the quarter, there was not really a change. I think we are right now running a little below what we have targeted, but again, that we cannot judge on a quarterly basis. For the full year, the guidance stays as it is.

Speaker #4: But again, we cannot charge on a quarterly basis. For the full year, the guidance stays as it is.

Operator: The next and last question is from Jack Rayborn, Bank of America. Please go ahead.

Speaker #1: The next, and last, question is from Jack Rayburn at Bank of America. Please go ahead.

Speaker #5: Hi, good morning. Thank you again for making time today. Congratulations on the results. I'm just trying to understand the circumstances you forecasted for the bottom and the top end of your guidance.

Jack Rayborn: Hi, good morning. Standing in for Muneeba today, and congratulations on results. Just trying to understand the circumstances you forecasted for the bottom and the top end of your guide. For the low end, is it simply easing congestion, and how likely could that actually be in the next few months given the lack of terminal capacity you've cited? Connected to that, would fully reopening the Red Sea not exacerbate congestion issues which could actually be supportive for rates in the short term, at least for the rest of this year? Thank you.

Speaker #5: For the low end, is it simply easing congestion? And how likely could that actually be in the next few months, given the lack of terminal capacity you've cited?

Speaker #5: And connected to that, would fully reopening the Red Sea not exacerbate congestion issues, which could actually be supportive for rates in the short term, at least for the rest of this year?

Speaker #5: Thank you.

Speaker #4: Yeah, thank you, Jack. So you're correct. For the lower end of the guidance, you would need to see an easing of congestion, basically around the first week at the beginning of the fourth quarter there, in connection with the Golden Week holidays in China, and that it would last into the fourth quarter.

Vincent Clerc (A.P. Moller: Yeah, thank you, Jack. You're correct. For the lower end of the guidance, you would need to see an easing of congestion, basically around the first week of the beginning of Q4 there in connection with the Golden Week holidays in China, and that it would last into Q4. You are correct also that a return through Suez in the short term is likely to exacerbate some of these bottlenecks rather than help alleviate them, at least at destination, especially in Europe. I think that answers both questions. I think for the upper end of the guidance, it's the opposite, right? If demand continues strong and some of these congestions endure, then you would see a more favorable development in Q4.

Speaker #4: You are correct. Also, the return through Suez in the short term is likely to exacerbate some of these bottlenecks rather than help alleviate them.

Speaker #4: At least at destination, especially in Europe. And I think that answers both questions. I think for the upper end of the guidance, it's the opposite, right?

Speaker #4: If demand continues—if demand continues strong—and some of these congestions endure, then you would see a more favorable development in the fourth.

Speaker #5: Everything remains set as paradise in the Red Sea, and you do go back in. Would that not be included in your circumstances at the high end of the guide then?

Jack Rayborn: Everything remains ceteris paribus in the Red Sea and you do go back in, would that not be included in your circumstances at the high end of the guide then, because you get that congestion-related rate increase?

Speaker #5: Because you get that congestion-related rate increase.

Speaker #4: I think the congestion-related rate increase is a function of what the whole market would have to do. I think we're managing this very carefully, one service at a time, in order not to completely collapse the facilities that we utilize.

Vincent Clerc (A.P. Moller: I think the congestion-related rate increase is a function of what the whole market would have to do. I think we're managing this very carefully one service at a time, exactly, not to completely collapse the facilities that we utilize, because then that would put us at a serious disadvantage compared to competition. But if the market was to move quite suddenly back through the Red Sea, then this would put a more general pressure on that. How this translates into prices, I don't know, because it depends on how the situation would evolve, but it would create an upside probably to some of the rates, possibly.

Speaker #4: Because then that would put us at a serious disadvantage compared to the competition. But if the market were to move quite suddenly back to the Red Sea, then this would put a more general pressure on that.

Speaker #4: And how this translates into prices, I don't know, because it depends on how the situation would evolve. But it would create an upside to probably some of the rates.

Speaker #4: Possibly.

Speaker #5: Perfect. Thank you very much.

Jack Rayborn: Perfect. Thank you very much.

Operator: Ladies and gentlemen, this concludes our Q&A session. I would now like to turn the conference back over to Vincent Clerc for any closing remarks.

Speaker #1: Ladies and gentlemen, this concludes our Q&A session. I would now like to turn the conference back over to Vincent Clerc for any closing remarks.

Speaker #4: Well, thank you again for joining us today, and thank you for the great questions and discussions. To summarize, we had a really strong quarter, with all our key businesses performing well.

Vincent Clerc (A.P. Moller: Well, thank you again for joining us today, and thank you for the great questions and discussions. To summarize, we had a really strong quarter with all our key businesses performing well. We demonstrated agility in our operations against the backdrop of a strong container market and many disruptions, allowing us to capture both volumes and the benefit of the higher spot rates, driving higher earnings in Ocean. Logistics & Services continued to build momentum. It delivered strong top-line growth and another quarter of margin improvements with plans in action to further improve on the margin front. The strong trajectory in Terminals continues with good earnings and returns while undertaking significant investments, positioning the business for future growth.

Speaker #4: We demonstrated agility in our operations against the backdrop of a strong container market and many disruptions, allowing us to capture both volumes and the benefit of higher spot rates, driving higher earnings in Ocean.

Speaker #4: In Logistics and Services, we continued to build momentum. It delivered strong top-line growth and another quarter of margin improvements, with plans in action to further improve on the margin front.

Speaker #4: The strong trajectory in Terminals continues, with good earnings and returns, while undertaking significant investments positioning the business for future growth. Taking a broader look at the Ocean industry, the combination of strong demand and tight port capacities is becoming a structural feature of the market, making the rate environment more benign, albeit still very volatile.

Vincent Clerc (A.P. Moller: Taking a broader look at the Ocean industry, the combination of strong demand and tight port capacity is becoming a structural feature of the markets, making the rate environment more benign, albeit still very volatile. As you have seen, this has led to an upgrade of our full-year guidance. Results like the one of this past quarter do not happen accidentally. They are the results of the capabilities, hard work, and commitment of all our colleagues at Maersk. I would also like to thank our customers for their continued support and trust to keep their supply chains moving. And with that, thank you for your attention and see you soon.

Speaker #4: As you have seen, this has led to an upgrade of our full-year guidance. Results like those of this past quarter do not happen accidentally.

Speaker #4: These results are the product of the capabilities, hard work, and commitment of all our colleagues at Maersk. I would also like to thank our customers for their continued support and trust in us to keep their supply chains moving.

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