Operator: Ladies and gentlemen, welcome to the Kuehne+Nagel nine months 2026 Results Conference Call and live webcast. I am Matilde, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Stefan Paul, CEO of Kuehne+Nagel. Please go ahead, sir.
Stefan Paul: Thank you very much, Matilde. Good afternoon and welcome to the presentation of Kuehne+Nagel's Q3 2026 financial results. I am CEO Stefan Paul, and I am joined once again today by our CFO, Markus Blanka-Graff. Let us move into page 2, nine months 2026 results. Kuehne+Nagel significantly improves profitability in Q3. Over the first nine months of the year, Kuehne+Nagel maintained its positive earnings momentum, supported by disciplined cost control, Air Logistics growth, and the recent stronger growth in Sea Logistics. Solid underlying business development and market share gains also improved the results of Road Logistics and Contract Logistics. In Q3, recurring EBIT rose to CHF 435 million, 53% higher year over year, and 14% higher quarter on quarter. Let us review some of the key factors.
Stefan Paul: Our cost reduction program, introduced a year ago and underway since year-end 2025, has already delivered year-to-date savings of about CHF 100 million. We expect savings to accelerate into Q4 and reach an annualized savings run rate of at least CHF 200 million by year-end. These cost savings helped improve the group conversion rate to 18.2% in Q3 versus 16.9% in Q2 and 13.4% in Q3 last year on a like-for-like basis. In Sea & Air, we target a conversion rate of 35%. The combined conversion rate was 32.3% in Q3 versus 30.2% in Q2 and 22.8% in Q3 last year, again, on a comparable basis. Important factors behind the higher conversion rate included resilient yields and favorable mix, consistently strong Air Logistics, and improving Sea Logistics volume. Recurring group EPS grew by 58% year over year in Q3, with no material impact from currency translation.
Stefan Paul: Underlying free cash flow generation in the third quarter improved by 53% year over year when we exclude disposal proceeds in both periods. Given the positive earnings momentum and our expectations through year-end, we are once again lifting our 2026 full-year recurring EBIT guidance. Markus Blanka-Graff will cover this in more detail shortly. Before we move on to our business unit details, let me briefly recap our AI ambitions. We are calling for CHF 100 to 150 million of annualized benefits to emerge over the course of 2027. Our next deep dive will come with a full-year result in March, in line with our commitment to provide formal updates. As I said at the top, each business unit contributed to our strong third quarter and nine-month results. Let us now turn to our performance by business unit, starting, as always, with Sea Logistics, which you find on page 3.
Stefan Paul: Strong growth trajectory with supportive yields. In Sea Logistics, we steadily increased volumes and returned to year-over-year growth in the third quarter. Unit profitability has risen consistently, aided by cost control and resilient yields. This is clear to see on the three charts on the slide. As usual, on the left, we have the volume in thousands of TEU. In the middle, we show gross profit per TEU, on the right, EBIT per TEU. Q3 volumes grew by 5% year over year and 6% quarter on quarter. Sequential growth is above our typical performance for this period. We gained market share in Asia export trades as well in the trans-Atlantic, where the recovery of US import demand was a key driver. The SME volumes grew in line with the overall business. Average yields ticked up sequentially in the third quarter, the fourth consecutive quarter of stable or better results.
Stefan Paul: All these sectors combined to lift EBIT in the third quarter to CHF 172 million, a 23% gain sequentially and 55% gain on a year-over-year basis. The Sea Logistics conversion rate was 32% in Q3 versus 29% in the second and 23% last year in the third quarter. Let's now focus on page 4, our Air Logistics business unit. Ongoing market share expansion in higher-yielding segments. In Air Logistics, we delivered yet another quarter of strong volume growth in higher-yielding segments. That growth, combined with effective cost control, helped the conversion rate improve even further. Q3 volumes expanded by 10% year over year and 7% sequentially. As with Sea Logistics, these results are better than what we typically see in this period. The drivers behind this growth were once again the high demand in the tech sector and stronger general cargo volumes.
Stefan Paul: In parallel with the strong volume growth, we kept yields broadly stable Q on Q, thanks to incremental improvement in unit cost. EBIT rose to CHF 169 million in Q3, a gain of 10% sequentially and a very healthy 84% gain year over year. The Air Logistics conversion rate was 32% in Q3 versus 31% in Q2 and 23% in the third quarter last year. Next is Road Logistics, page number 5. EBIT growth accelerates on market share gains. In Road Logistics, EBIT growth in the third quarter extended the positive trend we have seen throughout the year so far. Q3 EBIT increased by 40% year over year to CHF 28 million. The conversion rate was 8% versus 6% in the third quarter last year. Net turnover grew by 14% in the third quarter or 13% organically, which compares to a 9% like-for-like growth in the second.
Stefan Paul: We continue to believe the improved trend in recent quarters is most likely the result of market share gains rather than underlying market growth. At the same time, we are seeing rising demand from the high tech sector in Road as well. Page number 6, Contract Logistics. Positive results from recent investments in growth. In Contract Logistics, net turnover and profitability growth accelerated in the third quarter as recent investments in high tech sector growth began to pay off. Net turnover grew by 8% in the third quarter, excluding currency effects, well above the average 5% rate of growth over the past year. Q3 EBIT came to CHF 66 million, which is 29% growth sequentially. The corresponding conversion rate rose to 7% in the third quarter from 6% in the second. We remain confident in the future growth trajectory.
Stefan Paul: Contract Logistics is well filled pipeline, solid retention rate, and several contracts currently in the implementation phase. This concludes my comments on the performance of the business units, and I will now hand over, as always, to Markus.
Markus Blanka-Graff: Thank you, Stefan, and good afternoon all. Thank you for your continued interest in Kuehne+Nagel. Starting with the income statement for the third quarter, I would like to highlight the key drivers of our year-over-year earnings development. First, the third quarter was marked by accelerated gross profit growth from all business units and notably solid volume and yield expansion from both Sea and Air Logistics. Second, a high proportion of this gross profit growth converted to recurring EBIT supported by our cost reduction program. On a like-for-like basis, the incremental conversion rate was 57%, lifting the group conversion rate to 18% in the third quarter from 13% in the same quarter last year. Lastly, it is noteworthy that the 5% year to date foreign exchange headwind you see in this table on the right was confined entirely to the H1 2026.
Markus Blanka-Graff: The Q3 EBIT of CHF 435 million reflected +53% year-over-year growth with no material FX translation impact. Turning to working capital, here we saw the base increase to more than CHF 1.9 billion at the close of the Q3. This is an increase of about 17%, reflective of continued strong volume development as well as higher rate. Net working capital intensity increased to 5.8% by the close of the Q3 versus 5.5% at mid-year and 5.1% at the same time last year. This corresponds to a contraction of the spread between DSOs and DPO, with the spread now being negative. The CHF 281 million increase of core working capital over the course of the Q3 2026 contrasts with an CHF 80 million reduction during the same period last year.
Markus Blanka-Graff: This primarily reflects significantly higher volumes and freight rates as mentioned before, for both Sea and Air Logistics. A large share of air freight capacity linked to dedicated freighters and material growth from Contract Logistics. Let's now turn to free cash flow generation in the Q3. We produced CHF 336 million of free cash flow, including a CHF 3 million of cash proceeds from asset disposals, which had no material P&L impact. For a closer look to that cash conversion, let me move on to the next slide, where we see the usual comparison of free cash flow conversion in the most recent quarters versus the historical average. We focus on the history since the first full year of Apex consolidation, since that event changed the pattern of our free cash flow generation due to a larger proportion of freighter-based air freight activities.
Markus Blanka-Graff: The Q3 is typically the second strongest cash conversion quarter after Q4, with an average conversion of roughly 100% since 2022. In Q3, this underlying conversion rate was 105%. This 105% also includes the benefit of favorable cash tax payment phasing with corresponding outflows to come in the Q4. We expect a continuation of normal underlying free cash flow conversion seasonality also over the coming quarters, with a long-term average of 90% heavily weighted to the H2 of the year. Turning now to our financial guidance for 2026, we are raising both the lower and upper end of our recurring EBIT guidance by 150 and 50 million respectively. This results in a new recurring EBIT guidance range now from CHF 1.5 billion to CHF 1.6 billion.
Markus Blanka-Graff: As you can see in the graph on this slide, this marks the third sequential earnings guidance increase for the year, with the current midpoint nearly 20% greater than our opening estimates for the financial year EBIT presented back in March. Our core assumptions continue to include: we see global GDP growth but with persistent uncertainty across geopolitics, macroeconomic policy, and trade patterns. We now expect gross savings from our cost-saving program announced in the Q4 2025 of more than CHF 150 million in 2026, up from the CHF 120 million as we have reached our target earlier than expected. In terms of currency translation headwinds, our financial guidance assumes no more than 5% negative impact. At this stage, it appears that this might be entirely weighted to the H1 of the year 2026. Lastly, our expectation for a 25% effective tax rate remains unchanged.
Markus Blanka-Graff: That leads me already to our key takeaways. We rest with our unchanged strategic focus on growing faster than the market in targeted, attractive sectors. We see this emerging in Sea Logistics already, which is on a strong growth trajectory with supportive yield backdrop. Air Logistics remains a powerful source of volume growth, especially in the higher-yielding segments. Our cost reduction program is ahead of schedule, and we remain confident in full delivery of the targeted savings by year-end 2026. We reiterate our expectation of material AI productivity gains emerging in 2027 with an uplift of CHF 100 to 150 million. In light of this positive earnings momentum, we are once again raising our 2026 recurring EBIT guidance, this time to a range of CHF 1.5 to 1.6 billion.
Markus Blanka-Graff: With this, I want to thank you for your attention and hand back to the operator, Matilda, to open the Q&A session.
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 question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one at this time. The first question comes from the line of Jaime Rowbotham from Deutsche Bank. Please go ahead.
Jaime Rowbotham: Hi, Stefan and Markus. Thank you for taking my questions. First one, how much of the 10% volume growth in Air would you say came from underlying market growth versus market share gains? Insofar as there are share gains, do you think you can sustain those or even improve on them into 2027? In Sea, obviously volume growth, sequential yield improvement, EBIT per TEU, the highest level in over a year. Should we be viewing Q3 as the beginning of a more sustained sea freight recovery? Or is it premature to say? Thanks very much.
Stefan Paul: Jamie, Stefan speaking. I take the first one, the question on Air Logistics. This is an estimate, right? I would say 3%, 4% is the market and 6%, 7% is our market share gains. It is pretty much coming from hard cargo. Hard cargo had a double-digit increase in terms of volume this quarter. E-commerce went down significantly. So overall, I would say it is 60%, 70% market share gain driven. The other one is the Sea Logistics. Is that the new normal, so to say? Good question, and this is difficult to judge, basically. But I would say at least for Q4 and most probably as well as we look into Q1, that should be a good reference in terms of the yield is concerned. I would not expect a significant change in the next weeks and months to come.
Jaime Rowbotham: Thanks, Stefan. I do not know if you can comment on market share next year in Air Logistics. More gains, do you think?
Stefan Paul: Similar to this year, it should continue.
Jaime Rowbotham: Very good. Thank you.
Operator: The next question comes from the line of Muneeba Kayani from Bank of America. Please go ahead.
Muneeba Kayani: Good afternoon. First question is just on the guidance. You have CHF 100 million range, with just one quarter remaining. I wanted to understand how you are thinking about the top and bottom end of the guidance range, especially given that Q4 is peak season for Air Logistics, so the thoughts on volumes and yields on Air Logistics within that. Secondly, on sea yields. Those were up 5% sequentially. It is much less than the freight rate increase we have seen. Is it because of a mix shift that yield performance is lower than the freight rate performance? Related to that, how should we think about yields next year, in the scenario that ocean freight rates come down? Thank you.
Markus Blanka-Graff: Hi, Muneeba. It is Markus. Let me talk about the guidance. I think that, yes, CHF 100 million looks like a larger corridor. I think the usual way of looking also from our perspective would be around the midpoint. The rest that goes from the midpoint up and down is really a variance that could still happen around the peak season, how that plays out, or if there is any other interruptions that we are not aware of. I think it is a relatively fair and narrow way of looking for the next three months. I would look into midpoint and then that corridor obviously halves relatively quickly.
Stefan Paul: The question on the sea yields, Stefan speaking. It has to do with the timing, of course. We invoice at the time when the customer receives the cargo at the destination. This has to do with the timing, and that is the reason why we have a little bit of a lacking increase and slower time to show the higher yields. This is the explanation for this question. As I said before, I would reiterate what I said before. I think yields should be stable into the Q4 and Q1, but beyond, it is hardly difficult to make any judgment currently.
Muneeba Kayani: Thank you. If I could just follow up on the Air Logistics peak season, what are you thinking that turns out to be this year for Q4?
Stefan Paul: Our expectation is that the volume development in Q3, you will see as well, materializing in Q4 with stable yields. We have just started in the peak season, but I would say it is strong. Is it even stronger than Q3? Wait to be seen, but it is definitely strong.
Muneeba Kayani: Thank you.
Operator: We now have a question from the line of Alex Irving from Bernstein. Please go ahead.
Alex Irving: Good afternoon. Excuse me. Good afternoon. Two from me, please. The first one is around AI and productivity-related savings. You are achieving really strong volume growth across both Air and Sea, and what I am wondering is whether that increases the size of potential productivity savings as you can accelerate the productivity gains faster without needing redundancies. Should we therefore see upside to the CHF 100 million, CHF 150 million AI-related EBIT improvement that you have spoken about? My second question is on your air freight yields. You point to semis, cloud, and hard cargo as the main growth drivers, less e-com and by implication, less perishable freight in the mix. Excluding FX translation, GP was low as it has been since Q4. Why are we not seeing more of a positive mix effect on your air freight yields following that mix effect? Thank you.
Stefan Paul: I go for the first one. Fair question, fair assumption. I think as we said before, the next update will follow in March when we present the full year figure, but maybe a couple of topics upfront. For us, it is three ways of looking into AI and the impact of the CHF 150 million in 2027. Is everything around additional revenue and GP streams, for instance, that comes from use cases like pricing, AI pricing, where we have tested already quite intensively in Air Logistics, and we talk about that more in March. The second one is everything around, Alex, everything around service quality and a better quality in order to retain customers even better, especially on the SME side. The third one is then, what you have touched base on, is everything around efficiency gains, productivity and efficiency gains.
Stefan Paul: I would not basically link that to a much higher volume. I would focus still on our use cases and how successful are we with the pilots, which we are currently conducting. Then of course, if we have more volume, we can increase the potential savings. But I would not make any statement currently that we go beyond the CHF 150 million, which we have communicated a couple of quarters ago at the beginning of this year. This is our target and this is our commitment on which you can measure us.
Markus Blanka-Graff: Alex, it is Markus. On the air yield, I think when we look into FX, which obviously have zero negative impact anymore or very small in the Q3. So my expectation would be that that is going to continue not having an impact into the Q4 either, right? I think what we need to look into when the mix changes, you are absolutely right, the stronger profitability, the stronger margins are on the hard cargo side and special products, healthcare side, high tech side. But I think it becomes academic when we look into the Q4 and we say yields are going to stay stable. If that is now one or two Swiss franc up and down, I think that is something where it is really difficult for us to assess that at the current stage.
Markus Blanka-Graff: What we can certainly say is that we will be in the similar range as we have been in Q3. What is exactly supporting or driving it, if it is more the mix or more the way how we do the pricing or if it is more about the capacity or it is a bit more off the peak, I think I cannot tell you right now. What I can tell you is we expect a very similar and stable yield going forward.
Stefan Paul: And maybe to add on that last statement or comment. I think the focus pretty clear into 2027 is as well an improved mix, focusing on the hard cargo and piggybacking on my comment a couple of minutes ago.
Alex Irving: Right. Thank you both.
Operator: The next question comes from the line of Ruairi Cullinane from RBC Capital Markets. Please go ahead.
Ruairi Cullinane: So hi there. First question, Contract Logistics. Could you help us quantify the impact of the 37 new contracts there? What kind of GP uplift could that represent? Similarly, since it hasn't really featured yet, could I ask the same question about the Amazon collaboration? Thank you very much.
Markus Blanka-Graff: So let me repeat just the question because the line was a bit bad, that we understood it correctly. First question is on Contract Logistics, 37 new contracts in implementation, and you were asking what would be the GP uplift. Is that roughly what-
Ruairi Cullinane: Yes.
Markus Blanka-Graff: Okay. Yes.
Ruairi Cullinane: Yeah, exactly. Thank you.
Markus Blanka-Graff: Okay. And the second question was on?
Ruairi Cullinane: Yes. Could you help us quantify the Amazon collaboration?
Markus Blanka-Graff: Oh, Amazon. Okay. Right. On the Contract Logistics side, I think looking at the performance on Contract Logistics in Q3. When we talk about 37 or n number of new contracts being under implementation, obviously, implementation takes time, is putting also some initial investments in place, right? Many times before we start fully operating, we have to implement a business with startup costs that usually being invoiced at a later stage to the customer. From that perspective, when we talk about new contracts, the timing and the phasing can be absolutely fluid, I would call it. Where they are, I think we currently gain business quite around the globe on a global basis with a good mix of different industries. Yes, there is also some of the high tech cloud provider business that we currently are implementing.
Markus Blanka-Graff: It is a good business mix with a global basis and in different phases of implementation. You will not have seen the full impact of these implementations as of yet in Q3.
Stefan Paul: Just to double-check, Stefan speaking. The second one, the Amazon thing was how many do we implement in Contract Logistics at present from them? Was that the question?
Ruairi Cullinane: Just could you sort of help us quantify the potential upside from the Amazon collaboration? Just any comments around that would be very useful.
Stefan Paul: Oh, yeah. Okay. It is more broader, right? What we have stated, and I can only reiterate what we have stated from a couple of hundred millions in all four business units. We have a collaboration partnership in Contract Logistics, Road, Sea, and Air. The aim is to come to a billion kind of revenue as of 2027. And we will contribute or this deal will help us to gain share in all business units, not in one, for instance, air freight. It will help all four business units to grow their business with this important customer.
Ruairi Cullinane: Thank you.
Operator: We now have a question from the line of Marc Zeck from Kepler Cheuvreux. Please go ahead.
Marc Zeck: Thank you for taking my question. Congratulations on the good results. I just wanted to confirm that, say for Air Logistics, there is not any, let us say, temporary impact from the Middle East crisis in there, right? It is a pretty clean number driven by what you said, data center, hard cargo and probably good performance Apex. So no Middle East in there. The second question would be on the ocean freight volume number. I guess you quantified market share gains for Air Logistics. Could you do so for ocean freight as well? To me it seems that overall the ocean freight market is pretty solid, especially into the US, I believe, in Q3. What do you feel is sort of driving the strength then in US or let us say Transpacific ocean freight? What do you see on the mix? Is it more consumer? Is it more manufacturing?
Marc Zeck: Do you feel like in the US, inventories are still low, people need to restock? So anything that might help us really assess the underlying strengths of ocean freight volume might be helpful. Thank you.
Stefan Paul: Yeah, Marc. Stefan speaking. Thank you very much for your feedback and positive reaction. I can confirm, no, there is no impact from the Middle East crisis. Straightforward. The question on Sea Logistics, where is this push or this volume increase coming from? It is mainly from Asia, in particular China, into the US, and twofold, right? We talked about it already, I think last time. So we have decided roughly a year ago to invest into these new, let us call it new MNC, multinational customers, the new logos, the new OEMs coming from China. All of them want to become global and they need definitely support with their uplifts into the markets, right? Whether it is Europe, whether it is Latin America, but as well to a certain degree, of course, outside of the automotive industry to the US.
Stefan Paul: We have signed roughly 25 master service agreements this year, and now we get quite good traction with these customers. You have seen some press releases on BYD. You have seen the CATL. This is only to name two. It is much more brands who want to become global, really large and very successful from a product innovation perspective, pushing their products now into the global market. We see ourselves very well-positioned, and that is part of the success you have seen in Q3. That is one of the main drivers. Of course, restocking in the US is ongoing. Consumer is getting better, industrial is getting better for Sea Logistics as well. The main driver in terms of new additional volumes is as I just have described it.
Marc Zeck: Thank you.
Operator: The next question comes from the line of Sebastian Vogel from UBS. Please go ahead.
Sebastian Vogel: Hello, good afternoon from my side. First question is on Air Logistics. Can you share some sort of indication, potentially more on a quantitative basis, how much exposure you currently have to semi and tech? If possible, how that compares to a couple of years ago? That is my first question. The second question is on the Sea Logistics side with regard to the D&A swing in Q3. Can you also add some or shed some additional light on that one, please?
Stefan Paul: Let me tackle the first one, Sebastian. Stefan. I would say if you look into five, six, seven years ago, we had a very strong automotive business out of Europe, right? With the large OEMs and with the first and second tiers on the former combustion kind of century, right? If you take this, that has been replaced by the high-tech sector, by the tech sector in particular, right? I wouldn't say that we have an overdependency now on this one, but it has replaced the shrinking auto sector in a one-to-one basis.
Sebastian Vogel: Got it.
Markus Blanka-Graff: Sebastian, on the sea freight depreciation and amortization, we have a reclassification of real estate, with no EBIT impact in the sea freight. It's a reclass between OpEx and D&A. The amount for Q3 was accumulated CHF 23 million, so that's why that's changing. But year over-
Sebastian Vogel: If I'm, got it. Going forward, the D&A number would be what sort of number then, if I may follow up there for the sea freight?
Markus Blanka-Graff: When we take around 6, 7 million less than what it was as an average.
Sebastian Vogel: Got it. Thanks.
Markus Blanka-Graff: All right. Thank you.
Operator: The next question comes from the line of Gian Marco Werro from Zürcher Kantonalbank. Please go ahead.
Gian Marco Werro: Good afternoon. Two questions from my side. The first one is just a follow-up on the Asian contract or the Chinese contract. What were the key drivers behind this strong development of signing new contracts with these master agreements as we already heard, and so far also to expand your volumes in China. What do you expect here? Can you quantify a little bit how many of these master agreement partners you are currently approaching? The share of how many already signed? What do you expect also for the next two to three quarters of additional master agreements being signed in China? That is the first question. The second one is just, can you please also give us an update, if possible, on the Apex investigation that you had? Thank you.
Stefan Paul: Gian Marco, Stefan. I take the master service agreement question. The master service agreement is a prerequisite of entering into business discussions, right? So 25 master service agreements does not mean that you have business already automatically with all of them, right? If you look at the sheer volume behind this 25, then it is millions of containers and a lot of air freight, right? But that does not tell you a lot, right? So it is basically how many customers can we implement and gain in a certain period. I would say per quarter, we are currently implementing between two and three. But the volume is quite massive, right? But you should not link that too much to how many master service agreements.
Stefan Paul: It is more about this is the basis, and there is maybe another 20, 30 MNCs where we can go the exactly the same route, but this will take us another two to three years. But looking at the sheer volume of each of them, right? It is a couple of thousand container units on a quarterly basis, which we can implement.
Markus Blanka-Graff: Gian Marco, on the Apex, understandably, obviously we are part of a wider US government investigation. That one is still ongoing, so it is not a lot I can say. But obviously Apex is entirely cooperating with the relevant authorities, and we know it is an isolated matter. So full cooperation and is not connected to any of our staff or anything like that where we are directly investigated. So it is all I can say at that point.
Gian Marco Werro: Okay, thank you.
Operator: We now have a question from the line of Alexia Dogani from J.P. Morgan. Please go ahead.
Alexia Dogani: Yeah, good afternoon. Thank you for taking my questions. Just wanted to ask about how we should think about your Sea Logistics yields going into next year. I appreciate what you've talked to us before about the fact that the Chinese brands that are giving a lot of volume usually come at a lower margin. How should we think about the evolution of that mix into next year? Should we care at all about the fact that container supply is going to grow double digit next year? Or do you see that your yields will not be affected at all by that because they haven't been massively influenced by this year's spot rate dynamics? Thanks.
Stefan Paul: Yeah, Alexia. Hi, Stefan. First of all, looking at our revenue gain in Q3, 22%, which we translated into 53% EBIT margin. We will not, by all means, tackle new volumes on a lower yielding basis. We will carefully investigate where to play, how to play. As I said a couple of times, it's not only the port-to-port portion, everything beyond, customs clearance, on-site delivery, value-added services. So we are not going into this market with the Chinese MNCs in order to gain sheer volumes. We are carefully looking into an end-to-end margin, which is similar if you look at it from an end-to-end perspective with the European US market and customers who decide on that side.
Markus Blanka-Graff: And-
Alexia Dogani: Yeah.
Markus Blanka-Graff: On your second question for the container, I assume you mean there is capacity coming into the market, and if that has an impact on the rates. I think that is something we will have to see how relevant that is going to be in the next year. We have seen also this year, with all the changes and disruptions and challenges, let us say, around how that works, that even additional capacity does not necessarily lead to a direct impact of freight rates. We are seeing that this capacity is sometimes even blocked in congestion situations or alike. So I would answer in theory, when we looked historically in an undisturbed market, I would think, yes, it should lead to a certain pressure on capacity. But I think the last at least 2 and a half years have shown that that logic becomes more skewed.
Alexia Dogani: Thank you both. If I may follow up just on Stefan Paul's point around the end-to-end. Could you kindly remind us the split of value-added services in the two product segments at the moment, and whether we should expect some changes in the mix there?
Stefan Paul: I would not expect any changes, but in Sea Logistics it is the typical 40/60. 40 port-to-port to 60 before and after. In Air Logistics, we are not so much dependent on that question because we have 50% our own charter capacity. The rest is block space agreement. This is for this business not so much relevant rather than for Sea Logistics. Here it is a 40/60.
Alexia Dogani: Thank you.
Operator: As a reminder, if you wish to register for a question, please press star and 1 on your telephone. We now have a question from the line of Cedar Ekblom from Morgan Stanley. Please go ahead.
Cedar Ekblom: Thanks very much. Hi. I just wanted to follow up on this question of the tech or hyperscaler customer and the relevance in the Air Logistics business. I do not want to know what percentage it is of revenues, but I would like to try and understand what percentage that segment has been of your growth this year. There is some market data out there that suggests that ex the hyperscaler or high tech customer, that market growth in Air Logistics has been extremely tapered. I would like to get a bit of color on how you see your composition of growth this year. I do not know if you can give any visibility, but it would be helpful to know if you have any view on what that looks like into 2027 or maybe even Q1 or Q2 of next year.
Cedar Ekblom: Here I am talking about specific contracts that you maybe have in place already that can give us a little bit of color and confidence in terms of the durability of growth. Thank you.
Markus Blanka-Graff: Hi, Taylor, it's Markus. Yes, I can certainly confirm that hyperscaler is a good part of our growth in 2026. I think our view currently is that growth in that space with the customers that we continuously gain is also going to continue into 2027. Specifics around which customers, how many and what's the percentage, we will not be able to disclose. I am sorry.
Operator: We have a follow-up question from the line of Marc Zeck from Kepler Cheuvreux. Please go ahead.
Marc Zeck: Thank you for allowing for a follow-up. Just quickly on IMC, could you tell us if there was any yield uplift in Q3 from IMC, versus Q2? Would it be correct to assume that IMC activity is strongest in Q4 when all the containers that are shipped in Q3 will arrive in the US? Or would that be wrong way to think about it? Thank you.
Stefan Paul: Your way of thinking it through is absolutely right. As more the volume bounced back into the US, as better the GP and the overall situation with IMC became so much stronger in H2, and that is as valid for Q4.
Marc Zeck: Thank you.
Stefan Paul: Welcome.
Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Stefan Paul for any closing remarks.
Stefan Paul: Yeah. Ladies and gentlemen, thank you very much for listening. We had a very good Q3. We will continue with our efforts and deliver the same moving forward. I wish you a very good time and talk to you then latest after Q1 2027. Thank you very much.
Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
