Hapag-Lloyd AG Aktie

Ladies and gentlemen, welcome to the Hapag-Lloyd Analyst and Investor Q1 2026 Results Conference Call and Live Webcast. I'm [Moritz], the Chorus Call operator. Hapag-Lloyd today is presented to you by CEO, Rolf Habben-Jansen; and CFO, Mark Frese. [Operator Instructions] The conference is being recorded [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf Habben-Jansen. Please go ahead, sir.

Thank you very much, and thanks, everyone, for making the time to join us here today. We'd like to give you a quick rundown of Q1 and hopefully also a little bit a glimpse into the future. Maybe if we start with what I would call the key developments for the first quarter, then I think it's fair to say that we definitely had an unsatisfactory start to the year. There are reasons for that. But nevertheless, if we look back at Q1, I think we would have hoped for a better quarter. If we look at the reasons behind it, one very big reason is definitely the adverse weather conditions that we've had in North and Southern Europe in January and February and a bit similar on the East Coast of the United States as we are very heavily exposed to those markets much stronger than many others that hit us harder than most.

We've seen a recovery in those flows in the course of the first quarter. So I think it's a bit of a one-off, but nevertheless, something we could have done without. And of course, we've also had the situation in the Middle East, which caused a significant extra cost as from March, which we hope to recover through surcharge, et cetera. But of course, we'll see that only a little bit later. Despite that, I'd say Q1 has been again a good quarter for Gemini. Yes, we saw that schedule reliability was down. But given the severity of the disruption that we've seen, I think our recovery has also been quite quick, and you will see again in the second quarter that we get back to where we were most of last year.

On the terminal side, we saw good throughput growth. And then, of course, we signed the merger agreement with ZIM and also worthwhile mentioning that the shareholders voted with overwhelming majority in favor of that just 2 weeks ago. In terms of our earnings outlook, that remains unchanged. A little bit more about Q1 and the exposures that we've had and which caused our results to dip. I think 2 main -- or 2, 3 main things to call out. One is the weather that I already mentioned. And the other one is significant exposure to the Atlantic freight, which was very weak in the first quarter, in particular. And also, we have, as a consequence of that, have had to take some capacity out because it was simply more -- no longer possible to provide those services at a reasonable cost.

Of course, we saw the cost going up then on the back of the conflict in the Middle East. I think the thing which is a little bit special about that is that whilst the conflict itself is geographically quite isolated and as such, does not impact global flows all that much. The effect it has on costs, of course, have a global effect because with the surge of energy prices, we have seen significantly higher costs hitting us. I think if we look at what we have today, then we definitely look at EUR 50 million, EUR 60 million extra cost every week. And of course, we try to pass that on similar to when you go to the petrol station and you also have to pay a higher fuel price. But clearly, that puts pressure on our business.

As far as the Middle East is concerned, we still have a number of ships stuck there, and we cannot go in and out of Strait at this moment in time. We do serve the upper Gulf through land bridge through Oman and to some extent, via Jeddah, but of course, those volumes are limited. Initially, we paused all those bookings into the Upper Gulf. But at the moment, we've opened up again for that, and we do provide services both, as I said, through Oman, but also through Jeddah. Having said that, this is a solution that is a lot more costly for customers because, of course, especially the land bridge is very expensive and the capacity of it also remains somewhat limited. If we switch over to ZIM before I hand it over to Mark, I think we were pleased to see that the ZIM shareholders approved the merger agreement with Hapag-Lloyd with a very clear majority.

And at the moment, we are going through the process of filing all the regulatory approvals that we need on the one hand, in Israel, of course, related to the Golden share, but we also have quite a lot of other jurisdictions where we need to file and those filings are being done as we speak. And based on what we can see right now, we would still anticipate to close that transaction in the fourth quarter of this year. And with that, let me hand it over to Mark, who will take us through the numbers.

Yes. Thank you, Rolf. Good morning also from my side, and thank you for joining us today. The first quarter, as already said, was particularly challenging with the weak market fundamentals and significant operational disruptions weighing on our financial performance. These effects were driven by sustained pressure on freight rates. The very severe weather conditions Rolf alluded to already and heightened geopolitical tensions, particularly for sure in the Middle East. Despite this very unsatisfactory start to the year, we once again generated a positive free cash flow of USD 0.4 billion and maintained a resilient balance sheet.

And for sure, this provides us with substantial flexibility both to fund strategic investments such as the planned ZIM acquisition Rolf just talked about and to navigate periods of growing market uncertainty. And with that, let me walk you through the individual components a little bit in more detail. Group revenue declined to USD 4.9 billion compared to USD 5.3 billion in the prior year quarter, driven exclusively by weaker performance in the Liner Shipping segment, while our growing terminal infrastructure business continues to expand its global footprint and deliver improving results delivering improving results. Group EBITDA at USD 494 million came in below the very strong prior year figure when we benefited from much higher freight rates in the Liner Shipping segment.

Given the challenging market environment, it was not possible to differentiate ourselves from broader market dynamics in Q1 that resulted in an EBIT loss of USD 157 million. When we jump to the Liner Shipping segment, in Liner Shipping revenue declined year-on-year to USD 4.8 billion. That's reflecting softer freight rates, but only slightly lower volumes. As mentioned earlier, both the volume and cost trends were impacted by adverse weather conditions, particularly across Europe as well as softer North Atlantic demand due to prior year front-loading effects and service disruptions resulting from the Middle East situation. In this challenging environment, liner EBIT dropped to negative USD 174 million.

In Q1 '26, our average freight rate fell to -- fell by 9.5% to USD 1,330 per TEU compared to the prior year quarter. The strongest rate erosion was recorded on the Asia to America trade due to the U.S. tariff induced demand fluctuations that we all have experienced. Transport volumes in Q1 '26 were only slightly below the very strong prior year quarter when we achieved volume growth of close to 9% due to the start of Gemini at that time. Volume performance was particularly damped on the Europe to America trade by severe weather conditions as well as generally softer exports out of Europe. This also affected the Asia to Europe trade as market volume on the backhaul trade from Europe to Asia continued to decline.

And in addition, this trade includes Middle East relations, which were particularly affected by the de facto closure of trade of homes and the booking stop was talked about to the upper Gulf regions that we forced to introduce in early March. In contrast, we were able to grow further and against the market trends on the North Pacific, supported by improved network coverage and our stronger schedule reliability. Our unit cost increased by 8% in Q1 '26 due to around about USD 1,420 per TEU, which was mainly the result of operational disruptions affecting our volume and cost performance. Handling and haulage as well as equipment costs increased, reflecting higher terminal storage costs and weather-related port congestions in January and February as well as the Middle East disruptions.

In addition, higher energy surcharges imposed by vendors globally led to increased hinterland transportation costs. Lower volumes resulted in weaker fixed cost absorption, particularly affecting vessels and voyage. A significant increase in bunker cost is expected in Q2, which will be covered by our emergency fuel surcharge and the regular marine fuel recovery mechanism. Our cost-saving initiatives are in full implementation and that will help to mitigate cost increases and improve efficiency. The transshipment situation has been optimized, particularly by reducing our exposure to third-party feeder costs. Looking now at the T&I performance. In our Terminal Infrastructure segment, revenue increased strongly in Q1 to USD 168 million, while EBITDA improved to USD 47 million.

Supported by higher volumes in Latin America and in India, terminal throughput increased by more than 11% to 3.4 million TEU. Revenue growth was further supported by the full consolidation of J.M. Buckley following the increase of our stake to 51% now. In addition, European ports generated higher storage revenue due to longer dwell times. Completing the construction, the Damietta terminal in Egypt commenced operation in February, starting to serve as our new East Met hub. Let me now turn to cash flow. The operating cash flow for Q1 '26 amounted to USD 500 million, reflecting a strong cash conversion of around 100%. Capital expenditures were modest, including first installments for the vessel orders in the sub-5,000 TEU segment that was, as you remember, announced in December '25.

Further investments included vessel modernization and terminal investments. The net cash outflow from investments totaled to USD 95 million supported by proceeds from interest, dividends and divestments. Free cash flow amounted to USD 405 million. Financing cash outflows were around about USD 650 million, primarily driven by debt and lease repayments as well as interest payments. In total, our cash balance declined slightly by roughly USD 200 million to USD 3.8 billion. Let me finally turn to our key balance sheet figures. We continue to have a robust balance sheet with ample liquidity, including our highly liquid fixed income investments and undrawn revolving credit facilities, our total liquidity reserve amounts to USD 6.9 billion at the end of the quarter.

As already announced with the presentation of our full year results in March or late March, the Executive Board and Supervisory Board have proposed to the Annual General Meeting on 20 May, so coming up next week to pay out a dividend of EUR 3 per share or EUR 527 million in total for the last financial year. This proposal is in line with our dividend policy and balances the interest of all our stakeholders. And having said that, I will hand it back to Rolf now for a market update and the outlook. Thank you.

Thanks, Mark. Yes, I think that brings us to market. As always, starting a little bit with supply and demand projections. As you can see on the chart on the left-hand side, we still expect to see decent growth in 2026. I think when looking at this picture, it's really important to understand that the growth in the last couple of years on the dominant legs has been significantly higher than what we have seen on the nondominant legs. And that means that the additional capacity that is required is actually more than what we just see when you look at overall market growth. When we look at '24, we saw overall market growth of 6%, yet the dominant legs grew with 10%. In '25, we saw a growth of 5%, yet the dominant legs grew with 8%.

And also this year, we see again that the dominant legs grow faster than nondominant legs. In the first quarter, I think market was up about 4%. So I think that planning with a 3% growth for the full year is certainly not odd. And again, when you want to look at the supply-demand balance, please also look at the distinction between dominant and nondominant legs because I suspect that once we are further into the year, we will actually see that the dominant legs grow faster than the additional supply that comes into the market. And then we have to see what's going to happen next year. The market is holding up reasonably well. I mean, of course, we have a single-digit percentage of the market that is currently down a lot, everything in the upper Gulf. But we see that the remaining market remains actually fairly strong.

And if we also look at forward bookings and when we look at futures markets when we look at talking to customers then, I think there is an expectation that we will have a fairly normal peak season. So as such, I think the outlook for this year is actually despite all the uncertainty that there is, not only bleak. We've seen spot rates go up a bit. We see now a bit more momentum going into May. But of course, there the truth will always be -- or the important moment will always be end of June and July when we head into peak season. Right now, I think the signs are that we will have a fairly normal peak season, but of course, that remains to be seen. In the context of all of this, we have confirmed our outlook. But I think we do that, of course, always to point out that there is still uncertainty.

I would say though that the range and why it's actually not that easy to determine where we are going to land. I think when we look -- in the short end, we definitely see somewhat better volumes. At the moment, we also see a bit of recovery on the Atlantic freight, but it will be decided what is going to happen during the peak season because that's where we'll still need to have a further uptake on the rates as the additional bunker costs still weigh very heavily on our P&L. Before we go to questions, maybe a quick wrap-up and priorities for the remainder of the year. I think we've already commented on the first quarter. I think Gemini has demonstrated strong resilience, and we'll continue to build on that. But we do expect to see elevated transport costs mainly driven by higher energy costs for the remainder of this year.

We'll continue, as Mark said, on focusing on getting our unit cost down. We had a really good trend in Q3 and Q4. And because of the bad weather, in particular, that's been thrown a bit of track in Q1, but we need to get back on the course on that. And then, of course, for us, also important to complete the ZIM transaction as that will also help us strategically as we look ahead in the upcoming couple of years. I think that brings us to the end of our introduction. And with that, I'll happily hand it over to the operator to take your questions.

[Operator Instructions] And the first question comes from Lars Heindorff from Nordea.

A couple of them, if I may. The first one on the bunker side. We have heard from some of your competitors that not only there's been an increase in the actual bunker price, which, of course, affects your cost, but also that there's been other costs associated with this, for example, conducting bunkering in places where you normally don't do and so forth. So I just want to sort of try to get a better feeling for the expected growth into the second quarter, how much of that growth in the bunker cost will be just purely price related? And how much will be kind of other cost, if I can put it that way? That's the first one. And then the second one is on the reliability.

You had a slide in the beginning where you showed the decline. I know you talked about bad weather and so forth. But none of your competitors have seen a similar development in the decline in the reliability here during the first quarter. Just trying to get a sense, is this sort of a deliberate choice in the Gemini -- or what is the reason for this? And last but not least, which is the difference in the growth volumes between you and your partner, Gemini Maersk, which reported a very strong volume growth in the quarter. Just trying to get a sort of a sense for why those big differences.

Yes. Maybe let's try to take -- maybe start with the last one on the growth. I think we saw that if you go to Q1 last year, we had the opposite effect, where we grew a lot and Maersk did not grow a lot. If you compare where we came from and you look 2 years back, then the growth rates over that 24-month period has actually been fairly comparable. So I expect those things to get closer together again as we move forward. And I think the -- it may have something to do with the way we look at things in the way because we also changed a little bit the way we moved out of the previous alliance last year in first quarter and into this one. So that will have probably something to do with it.

The second factor is that we are more exposed to some of those Northern European markets where we had disruptions and the same for the Atlantic. So that certainly explains some of it as well, but I expect that to be temporary. In terms of reliability, yes, you are right, we had a dip. I think I saw actually also a dip with others, even if it was -- if that was maybe a little bit less, but it also was from a much lower level. I think what was unfortunate for us is that we were particularly hit hard by the port closure in [China], which is something that we have not seen for the last 30 years. And in the first quarter, we were closed for effectively 9 days. So that's probably the single biggest effect. I also see now that we are getting back to where we were in terms of schedule reliability. So the recovery has been good.

You will also start seeing that in the statistics when you look at those even if they are typically a 2 months rolling figure. So before we will be back up again to the 90 will probably be May or June. And then in terms of bunker, the main effect you see is definitely price. We do not see significant availability issues at this point in time. But you are right that sometimes there's a little bit less choice in fuel rates that you can take. So you can't always take the most efficient one. That also has an effect. But when you look at the overall increase of cost, then the vast majority of that is price. And vast majority means I think when we -- I don't know the exact numbers off the top of my head, but it's probably over 90% of the effect is price.

Then the next question comes from Christian Nedelcu from UBS.

I have 3, if I can. The first one on the Asia-Europe trade lane. The spot rates did not increase much since the start of the Middle East conflict, and this implies that on the spot rates, we're not really passing through the incremental fuel cost. Could you tell us a bit roughly what is your volume split for spot versus contract on this trade lane? And to what extent are you seeing some of the clients, especially the forwarders trying to dilute the contracted volumes or put more pressure on the agreed contracted rates in this environment? The second one is on ZIM. I think there were some articles in the local press that the Israel Shipping and Port Administration may be opposing the deal in this context, would you consider making any additional concessions to complete the deal or any more color that you could provide there?

And the last one is a bit of general question, but at an industry level, roughly where do you think is the cash breakeven for the average ocean carrier? I'm trying to think, is this the level of rates that we need to see to trigger more scrapping and more capacity rationalization. So do we need to get to that rate where most players are cash breakeven to become more rational?

Let me try and answer them one by one. I mean if we start with Asia Europe, I think you are right. So far spot rates have not been up a lot. I would say though that the demand at the moment on Asia-Europe is very strong. So I would be very surprised if those spot rates are not going to trend up over the upcoming couple of weeks as we see significant overbooking and as such, there is certainly not a lot of downward pressure on pricing. If anything, there is upward pressure, which probably a little bit later than we would have liked, but I think you will start seeing that. In terms of the ZIM approval process, I mean, we're working with the regulators and trying to provide the information and the data that they are asking for. If I look a little bit more in detail in what we have been doing, we've been filing.

We've been receiving questions. We've been responding to those, and now we are in dialogue, which is a very normal process. I see also sometimes things in the press, but in the end, the only thing we can do is work with the regulators and try to convince them of the fact that we believe that this is actually for all parties a very, very good deal. And then the last point on the industry, what is the cash breakeven? I think that's unfortunately really impossible to say because this depends completely on what kind of fleet you have, what your split is between owned and charters and what your trade exposure is. So that's too early to say. But it's very clear that when you look today at the results in the liner business over the last couple of quarters actually that nobody gets anywhere near to recovering its cost of capital.

So longer term, one should expect that there is going to be upward pressure also because with the order books being the size that they have, lots of people have lots of investments and CapEx coming up.

[Operator Instructions] And the next question comes from Marco Limite from Barclays.

I've got a question on the Red Sea. As some of your peers are talking about possible return to the Red Sea in the short term despite what's going on in the Middle East. Just wondering what is your view about return to the Red Sea? Do you think we need to see the Iran situation to be completely, let's say, sorted from a political perspective before thinking about a return to the Red Sea? Or you are also considering Swiss Canal crossing with some escort capacity? And on that, how easy is to get escorting capacity? How organized is that sort of capacity? Is it easy, let's say, to have visibility on it and to book it in advance? Is there a sort of priority mechanism where you can book it? So sorry for being long, but yes, a few questions on the Red Sea.

The second question is on the fuel pass-through. Just to be very clear, do you think that you have been able to fully pass through the higher fuel costs so far? And do you have an expectation that you will continue to be able to fully pass it through in the next months or you have seen some pushbacks on that? And then if I may, just a third one. I've noticed that you have made a change in the disclosure when I look at the revenue per trade lane, you are now saying that revenues will be booked based on orders after reaching the port of loading. So why have you done that change in disclosure? And what does it mean in terms of accounting?

Okay. The last question is probably best if Mark takes that or one of the guys from Investor Relations. If I take the first 2, on the Red Sea, I think it's still difficult to judge when that is going to open. I personally see it difficult going through the Red Sea as long as the Iran conflict is still ongoing and just reading the news flow on that, that is certainly not -- that conflict is certainly not concluded just yet. In terms of Escort, we were prepared to go through the Red Sea under close protection earlier on in the year. But then it turned out that at that point in time, also because of everything that happened, there was not sufficient capacity available to allow us to go through in a planned and orderly fashion.

We need to see how that develops as we move forward. Right now, there is certainly not enough capacity to guide all the ships through. So that's why for now, we still find it difficult to put a real time stamp to when we are potentially going to go back to the Red Sea. And keep in mind that once we do that, we will also try to do it in an orderly fashion. We will not go back with all the services at once because then the terminals in the Mediterranean and in North Europe, in particular, and to a lesser extent, in the U.S. will collapse that we will try to avoid. And as such, it will be a gradual process over multiple months. In terms of the fuel, I think roughly 50% of our business runs under contract. All of those contracts have fuel clauses. So that means that there will be an automatic adjustment.

And I expect that for that 50%, we will be able to recover the additional fuel cost in full. How much we will be able to recover in the short-term market remains to be seen because in the end, the short-term market is typically an all-in rate. As we are starting to move into peak season and as demand is holding up fairly well, I think our chances to recover the full amount of that cost certainly over the next 2 quarters is pretty good. What happens after that is difficult to judge. I think in terms of the revenue recognition, then I will probably hand it over, Mark, to you or one of the team from IR.

Yes. Thank you, Rolf. Very briefly on the revenue recognition. I think it's pretty clear after the IFRS 15 standard, it was important that we fully implement that and change our view, how we look at that. So we are coming from -- or we went to shipment-based revenue recognition that was necessary. Our systems were changed to that one. And we were going from an end of voyage to start of shipment view, and that is the change we have seen and fully executed end of the year. So what you are seeing now end of quarter has that new structure. And yes, there might be a bit of adoption we have seen in Q1. But from now on, it will be a stable structure according to the IFRS 15 revenue recognition standard.

And apologize for taking too much time. But if I can just follow up on the escort capacity. It's just quite unclear to me how does that work? Because if everyone, let's say, wants to go back with escort capacity and there's no capacity, who is going to, in a way, take that capacity. So are you confident that you as a Gemini alliance overall, you have been a first mover before they run and therefore, you have, let's say, secured that capacity ahead of the others? Or is this something yet to be, let's say, negotiated, so it's all up there?

I think it's fair to say that right now, there's not a lot of clarity on how that will exactly work. There's lots of discussions going on. But right now, we do not have a lot of visibility on that.

And the next question comes from Danielle Ward from JPMorgan.

I just have one question on the ZIM transaction. You have the EUR 2.5 billion of bridge funding. I was wondering if you have any plans to come to the market to refinance that at any point in the near future or down the line.

Mark, probably best if you guys take that.

No. Thank you. Nothing plans to come to the market on that one, not needed.

[Operator Instructions] The next question comes -- is a follow-up question from Lars Heindorff from Nordea.

A more general question about the market. I think it's obvious to everybody, there's a lot of capacity coming in next year and also in '28. So I just wanted to hear your take on, I mean, what will be the offsetting factors to all that supply, which looks like it will be a structural oversupply for at least for a couple of years. Will it be discipline? Will it be slow steaming? Will it be scrapping? Or will it be a combination of those 3? And maybe I don't know which one is most important? That's the first part. And then the second is on the capacity plans for the rest of the year. As far as I can see, capacity growth here in the first quarter, with nominal capacity that you have at hand was almost flat, up 1%. What do you expect here in the rest of the year? And in particular, maybe in light of your huge [indiscernible] utilization and any sort of considerations about conducting further slow steaming if the prices will stay up at these levels here? Yes.

Maybe the second one first. I think you should expect that our capacity remains fairly flat throughout 2026. And in your second question, what will drive supply and demand? Yes, you are right. I mean the order book is quite significant. But I think the biggest unknown, which has actually been -- which has developed very favorably at least for the industry over the last couple of years is the growth on the dominant legs because that's what drives the capacity need, not the overall market growth. And that's why I pointed out earlier that in '24 and '25, we saw 10% and 8% on that, which was even if there was a lot of additional supply coming in, that actually meant that there was not a lot of oversupply created.

I expect that this year, the growth on the dominant legs will be higher than the additional supply that comes into the market. So then we need to see what does that mean also for next year, but I think that's a big mitigating factor. And then your other point, I mean, scrapping will go up. We can all debate about how quickly that will happen and how much of that will go up, but scrapping will definitely go up. And if oil prices stay the way they are today, then also slow steaming will play a role.

So I think you have to look at those 3 factors, the growth on the dominant legs, which people typically don't look at because we only look at overall market growth, and then we see this discrepancy. The second one is scrapping where it will always depend on how our things in the market, but scrapping will go up. That is -- that's for sure. And then your third point on slow steaming. I mean, if the fuel price remains at the levels where it is today for a longer period of time, then the economics between sailing faster or slower change. And that means that one should then expect that the average speed at which the vessel sale will go still somewhat down.

And just a follow-up on the slow steaming. How much lower can you go? And what kind of capacity will that tie up if you slower the speed by, let's say, 1 or 2 knots?

I think you are right. I think that's probably the margin that you have. It's 1 or 2 knots. And I think that would -- typically, if you would have an Asia-Europe loop of, say, 12 ships, then you would typically have to add 1 ship. And in some other cases, you will not have to add something because you just further streamline the rotation. But that's a little bit the way to look at it.

And we have one more follow-up question from Christian Nedelcu from UBS.

I have a few, if you allow me. How should we think about the second quarter profitability and the moving parts there? I think usually, seasonality-wise, the volumes are higher quarter-on-quarter.

Could you comment on other moving parts? And do you have a clear framework that says that Q2 will have positive EBIT? The second one, just coming back on the prior question on the slow steaming, -- just could you give us a rough indication? -- if we do slow down from 16 knots, we go down by 1 knot, does the reduction of the fuel consumption, is that proportional to that? Or is it asymmetric so that the fuel consumption goes down by more or by less?

And the last one on CapEx, just if we think at your -- if you can talk a bit more about the '26 and '27 CapEx plans and maybe also around the flexibility and your ability to adjust that CapEx envelope. What is the range there in the context that if we get a very difficult market next year, what is the sort of minimum CapEx that you could see?

Okay. Well, maybe -- I mean, as you know, we don't provide outlook in terms of profitability by quarter.

I think when you look at the factors that will influence the second quarter, then you are right, one of them will be volume that quarter-on-quarter, I would expect to be better. Of course, we see also rates being better, but there we still have to see what the bunker cost and additional costs that we face in other categories do against that and how much of that do we actually then fully recover. In terms of slow steaming, if you go from 16 to 15 lots, then you do I mean, fuel consumption curve is a bit like in your car, the faster you drive, the more fuel you consume, and that's not a linear curve.

I would not know exactly what the delta is between 16 and 15 or 15 and 14, but it is certainly more than the delta between -- with the speed. And I think in terms of CapEx, probably, Mark, you guys are better. I think it's probably better for you guys to comment on that, but we definitely have a fair bit of flexibility on that front. Having said that, our liquidity is also still pretty strong. But Mark, you may want to add a few words to that.

I think key question from your side was how far we could go down in a very serious situation. That is what I understood. And for sure, if you know what our depreciation is and in times when it's needed, there is, for sure, potential to reduce even further. If it's really needed, that is not planned. So we are not talking about what we are planning for because we are not seeing that situation coming. But overall, you have to think along these lines to keep our ships on the needed level and being able to perform our volume plans. That's more or less what it is.

And the next question comes from Chloe Fu from Citi.

I have 2 questions.

The first one is if you can share some color on the Transpacific contract negotiation and also the latest booking trends in Q2? Where are you seeing weaknesses or strength? And my second question is around the ZIM deal. Obviously, there has been some voices opposing the deal. How likely do you think the deal will pass regulatory approvals given the political uncertainties? And if it doesn't, will you consider other ways to acquire capacity to maintain your position as a top 5 operator as we see that you're a bit short of order books if the deal does not go through?

Yes. Let me try and take those 2 questions. One, I think on the TP contract season, if you take a look at the TP contract rates, -- if you exclude the fuel component, they were a bit down compared to previous year. If we look at market, the demand at the moment is quite strong. So that's what I said earlier, I'm fairly optimistic about the peak season. I think we're going to see some of that.

As far as ZIM is concerned, I mean, we are still optimistic and expect the deal to close in the fourth quarter. I think when you just look at the data and you look at the fact and look at the solution that we've put on the table, then that is, in principle, a very good solution for all parties. But of course, especially in times as we have them today, we know that there are also emotional and political elements that can play a role. Those are much more difficult to predict. But right now, we have no indication other than what we announced earlier that we expect to close in the fourth quarter.

And we do have one more follow-up question from Marco Limite from Barclays.

I wanted to ask to what extent you think that the alliances have, let's say, improved versus a few years ago when it comes to managing capacity. So do you think that alliances are now more relevant than before in planning capacity in planning, capacity management and so on?

No, I don't see that. I think what we see when you look at the large East-West trades is that -- there are a number of alliances that work together, but you see also more independent services. So I would say that if you would compare it to a couple of years ago, then a somewhat larger percentage was controlled by the alliances.

They've always had the possibility to blank sailings or to adjust services, which is also what they have today. I think the only thing that's really changed is that we see a little bit more independence or stand-alone services. So I think if anything, that ability is probably a little bit less today than it was a couple of years back.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Rolf Habben Jansen for any closing remarks.

Not much to add. Thank you very much for your questions. We really appreciate it. And hopefully, that was informative for you as well and hope to hear and see you again soon. Thank you very much.

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 line.

Ladies and gentlemen, welcome to the Hapag-Lloyd Analyst and Investors Full Year Results 2025 Conference Call. Today, Hapag-Lloyd is represented by Rolf Habben Jansen, CEO; and Mark Frese, CFO. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf Habben Jansen. Please go ahead.

Thank you very much, and welcome also from our side as usual, and really appreciate you taking the time to listen to us. I think from our end, I'll give, as usual, a quick introduction, talk about some highlights. Mark will take us through the numbers, and then I'll try to say something about market and outlook. And after that, happy to take your questions. Maybe if we start with a couple of highlights when we look at 2025, I would say that a number of things to be mentioned. I think on the financial side, I would say the results were solid with as a real highlight that we have grown quite fast, significantly ahead of market, and we were able to keep rates at a reasonable level also if you compare that to some others. We certainly had a lot of transition costs when moving into Gemini, but in the second half of the year, we also started to see costs coming out.

On the fleet side, we've continued to invest in modernizing our fleet. I think that's just normal. Looking at '24, we ordered a fairly large number of ships. We ordered some more ships this year. That is a process that will continue to move ahead. On Gemini, I think we're very pleased with where we are on Gemini after 12 months. I think if we go back 1.5 years, a lot of people were sitting on the fence and were in doubt on whether we were going to be able to deliver that 90% schedule reliability. I think we've -- together with Maersk, done a really good job in doing that pretty much from day 1. And we're also confident that going forward, we will be able to hold that up and that will start yielding dividends.

On the terminals, good throughput growth. We've also been able to grow the portfolio with the terminal in Le Havre, and then we also signed an agreement in Brazil towards the end of the year. So good progress there even if that unit is still fairly new. And then, of course, we signed the merger agreement with ZIM, where we hope to conclude that transaction towards the end of this year. If we look maybe first at the terminal side of things. I think when you look at the terminal portfolio on Page 3, we've grown in La Havre, as I mentioned, operations started in March being used by Gemini, certainly improves our position in and out of France, good volume growth. We expect to see some more of that in the course of '26. Damietta, we've been constructing that port for quite some time, and it has now gone live in February, really good start, good productivity pretty much from day 1, but of course, volume will continue to grow.

And then we have Aracruz, where we signed the agreement in December, and we will finish, hopefully construction somewhere in the course of '28, and that will then become another important hub in our network. In this case, of course, mainly focused on the East Coast of South America. So all in all, I would say, on good track. And when you look at it on the right-hand side, where we are these days, I think it's impressive what the team has done, especially keeping in mind that we established it only a few years ago.

When we look at volume, -- on Page 4, we've seen really good volume growth globally, 8% versus market, approximately 5%. Very strong growth on the Transpacific, although admittedly, we had also lost a fair bit of market share there in the years running up to '23. In '24, we saw good growth and another piece of -- another chunk of good growth in '25. On the Far East, a bit ahead of market, Middle East and Africa also clearly ahead of market. And of course, if you would fast forward and would add in the potential acquisition of ZIM, that would certainly strengthen our position in the market and would reinforce our position as #5 as that would mean that we grow to roughly 18 million TEUs.

A few words on Gemini. When we look at the schedule reliability, I think we're really proud, as I mentioned in the introduction about what we actually have achieved. And that is certainly a testimony to all the teams that have worked so hard on that. I know that when we look at the month of February that we are a little bit down on the back of very bad weather in Europe, but we will get back to this 90% within 1 or 2 months. So I think the model that we have designed actually turns out to be quite robust, and I also believe it can still be improved quite a lot. We did a little survey in terms of how do customers look at this.

And there, I think you see that also when you look at NPS scores that -- the feedback from the customers is also very clear that when we look at Gemini, that clearly outperforms the other alliances. And of course, that should help us to continue to grow hopefully a little bit ahead of market, but it should also allow us to attract the best possible cargo mix. And I believe that in some cases, we also see that customers recognize that not only because we are more reliable, but also because the standard deviation of when we deliver so much smaller that they actually can start to reduce their inventories, which, of course, is a clear financial benefit, and that makes it possible to start thinking about how do we share some of that.

On the modernization of our ships, we continue to work on that. We today have an order book of in total about 350,000 TEUs with 32 vessels. In addition to that, we also have a number of strategic charters. Our order book is currently well-sized. We have the 12,000 TEU and 17,000 TEU classes currently under construction, alongside the 9,000 TEU units ordered in 2024. In 2025, we ordered some dual fuel LNG of 4,500 TEU, while securing long-term charters for smaller feeder ships to balance the fleet.

In the end, I think that underlines that we remain committed to not only modernizing our fleet, but we also do continue to focus -- we continue to focus on bringing emissions down. We see that our AER is meantime down about 20% versus 2022, which I think is a really good achievement. We have about 50 ships with alternative propulsion by the year 2030. We have secured some green fuels based on long-term uptake agreements.

And also good to note that despite all the skepticism that we sometimes see in the market that last year, we sold over 380,000 TEUs via Ship Green, which was 90% more than what we saw in '24. And I think that's the third year in a row that we more or less doubled that. We hope to be able to grow that even more in '26. We think that the growth will definitely slow down, but 380,000 TEUs is not small and at least gets close to about 3% of the total volume that we move. Then a bit on cost savings.

On Page #7, I think we see that those cost savings are starting to come. We do expect to get to full run rate by the end of 2026. If you look at where are they, a couple of categories mentioned here. Of course, the network has a lot to do with Gemini, but also has to do with reduction of third-party feeders and some changes that we make to the network in Gemini, but also outside of Gemini. Bunker efficiency because of the reliability, but also because of the money that we have invested in fleet upgrade. And then we have a whole bunch of other categories as well that we are working on.

I think we've seen some real good traction on cost savings in the second half of '25. We do expect more than EUR 1 billion to materialize in '26. It is also fair to say, though, that the first quarter has been a little bit tough, and we'll come to that later on when we talk about outlook because of extreme bad weather in Europe, especially in the beginning of the year. And of course, we now also have to face the renewed crisis in the Middle East that causes significant additional cost for us, especially short term, where, of course, we then need to see how to recover that over the upcoming couple of months.

But in parallel, we stay focused on Ventus, and we still think that over time, that will bring us a very material contribution to the success of Hapag-Lloyd. Then a few words on ZIM. We have initiated the -- you will have seen that we signed the merger agreement. Now we have initiated the process to try and get all the needed approvals -- of course, given the situation that we have today in the Middle East, that process may take a little bit longer because things simply move a little bit slower these days. Reinforcing our deal rationale, securing our position, access to a very efficient and modern fleet, great people, good customer base and a strategy that's very similar to ours. And of course, in the end, also because we believe that we will be able to realize up to EUR 500 million synergies per year. Time line, we signed in February.

We have the extraordinary meeting of the shareholders scheduled for the end of April. We have initiated the process by now to get the approval from relevant authorities, starting with Israel, but also starting in other jurisdictions. And then hopefully, we will be able to get all those clearances before the end of the year, which would then allow us to close, hopefully, towards the end of this year or latest in the beginning of next year. So, so much maybe as highlights from my end as an introduction. And with that, I would hand it over to Mark, who will take us through the numbers. So Mark, over to you.

Yes. Thank you, Rolf, and also good morning from my side to our fiscal year '25 results presentation. And let's begin with the overview of our key performance indicators. So for sure, '25 was marked by a very challenging market environment. Yet, we can say we continue to demonstrate resilience and operational strengths across the group as we delivered strong volume growth in both of our business segments, and although the market's backdrop remained demanding, we achieved an overall very satisfactory financial results, underlying our ability to operate reliably and efficient even in these volatile circumstances and conditions.

Free cash flow remains clearly positive and our balance sheet continues to be a strong one with ample liquidity, solid operational cash generation and a well-balanced funding structure we are well positioned to navigate the current uncertainty environment and invest in our strategic priorities going forward.

And with that, let me walk you through the individual components in a little bit more detail. Revenues increased by 2% in 25%, mainly driven by higher transported volumes. As expected, earnings were lower year-on-year, and that is primarily due to softer freight rates and continued external cost pressure.

For this year, group EBITDA came in at USD 3.6 billion, EBIT at EUR 1.1 billion and group profit at USD 1 billion. Overall, the results landed at the upper end of our earnings guidance, and it was slightly supported by positive operationally caused onetime noncash effect in the fourth quarter of around $150 million, which were mainly related to an improvement in our system supported process for revenue recognition resulting in the release of provisions.

When we jump to our liner shipping segment, we saw there and achieved strong volume growth. At the same time, revenues were impacted by softer freight rates driven by rising trade imbalances and growing global tonnage supply.

Operationally, new U.S. tariff policies continue to create the tension in the Red Sea, as we all know, and increasing port congestions, all added pressure on cost. Despite this challenging backdrop, we delivered a solid liner EBIT of USD 1 billion. Jumping over to rates and volumes.

In '25, we transported 13.5 million TEUs, and that represents a volume growth of 8%, which is well above the market and this strong development reflects the successful implementation of Gemini Corporation and the supporting expansion of our fleet capacity. Significant reduction in network delays was one of the key success factors that enabled this remarkable volume performance, as you might imagine.

The growth is particularly noteworthy given the tariff-driven demand volatility we have to manage in this year. While market volumes on the Transpacific declined due to the sharp increase in U.S. import tariffs, we were still able to grow our volumes by double digits and gained overall market share.

We also delivered above-market growth on other Gemini trades, such as Far and Middle East. On the Atlantic, volumes increased only modestly due to the softer demand between Europe and North America, and we all know why. While operational disruption in several ports limited growth on the Latin America Europe trade.

After that prolong decline, the average freight rate increased by 5% quarter-over-quarter in Q3 and supported by front-loading effect, especially, but eased again in Q4 to USD 1,310 per TEU and that is the lowest level since the fourth quarter of the full year, average freight rates stood at USD 1,376 per TEU, thus representing an 8% decrease compared to the year before.

Jumping over to our unit costs. They increased by 4% in 25' to USD 1,328 per TEU, respectively and several factors caused this for sure, higher trade imbalances, fluctuating U.S. tariff rates and driving regulatory compliance requirements of which structurally increased our cost base and a weaker U.S. dollar further, for sure, amplified these effects just named.

Operational efficiency also remained under pressure due to Red Sea rerouting and the persistent port congestions across key hubs. And as Rolf already mentioned, with our comprehensive cost savings program, Ventus, we began effectively counterbalancing these elevated cost pressures in the second half of 2025 and more to come.

Following the successful phase-in of Gemini, the structural benefits of the new network has started to materialize, supporting efficiency and service reliability as key quality factors.

Jumping over to the T&I, so to our terminal infrastructure segment. That business delivered strong throughput growth and they benefited from the synergies between both business segments. And they also benefited for sure, from the acquisition and ramp-up of new terminals.

Revenues in the Terminals segment increased by 18% to USD 514 million in '25. European and Mediterranean hubs, in particular, saw a strong uplift from stable Gemini connectivity, as mentioned already before. Growth was further supported by our acquisition of the Le Havre terminal in France last March and the ramp-up of our terminal in Tuticorin in India.

At the same time, the cost base was impacted by operational challenges, particularly U.S. tariff-related demand quality in our Latin American terminals as well as the unfavorable mix effects, one-off items and ramp-up costs associated with the new business segment.

As a result, EBITDA remained broadly stable at USD 152 million while EBIT slightly declined to USD 66 million in '25. Jumping over to the cash flow. Operating cash flow for '25 for the group amounted to USD 2.9 billion. We invested around USD 1.8 billion especially in new vessels and containers and also in the modernization of our existing fleet under our fleet upgrade program.

These investments are, as you know, key for us to further improve our cost efficiency on the one side and reducing our CO2 emissions across the whole fleet. The net cash outflow from investments totaled to USD 1.4 billion, and that was supported by USD 390 million from proceeds of proceeds from interest dividends and divestments we did.

All in all, we generated another robust free cash flow of USD 1.45 billion. The financing cash outflows amounted to USD 3.1 billion results for sure of the dividend payment of USD 1.65 billion but also from debt and lease redemptions and interest payments.

Our year-end cash guidance remains at a very healthy level of USD 4.1 billion. Looking at our balance sheet. And here, you can see that we continue to operate from a very strong financial position, which is really characterized by the liquidity we are having and our low leverage, including our highly liquid fixed income investments and our undrawn revolving credit facilities, our total liquidity reserve amounts to USD 7 billion.

And this, for sure, provides us with substantial flexibility both to fund strategic investments, such as the planned ZIM acquisitions and to navigate periods of heightened market volatility. Jumping over to the next slide, and let me maybe before I conclude take a moment to reflect on our recently celebrated tenth anniversary as a public listed company with our clear focus on quality we are not only delivering an outstanding service offering to our customers but have also generated tremendous long-term returns for our shareholders.

Since IPO in 2015, Hapag-Lloyd has distributed more than EUR 21 billion in dividends. And that's while consistently creating value and maintaining a strong balance sheet with a prudent financial policy. And to continue that and to continue sharing the success with our shareholders, the Executive Board and Supervisory Board will propose a dividend of EUR 3 per share at the AGM in May.

This represents a payout ratio of 57% of our group's annual net profit and a total payout of EUR 0.5 billion, and that is fully in line with our dividend policy. Having said that, I hand it back to Rolf for a market update and our financial outlook.

Thank you, Mark. And yes, maybe say a few words around the market where it's always about supply and demand. When I think when we look at global container volumes, I think that the growth of our market has actually been surprisingly robust, at least too many for the last 2 years.

I think if we look at '24 and '25, we saw growth of 6% and 5%. But what's even more important is that when we look a little bit deeper into that growth, we see that the growth on the dominant legs, which actually determine how much capacity growth is needed was even higher.

When we look at the growth on the dominant legs, it was actually 10% and 8% in '24 and '25, which probably also explains why the perceived overcapacity in the market is probably a lot less than many people feared 1 or 2 years ago.

When we look ahead into '26, we expect to see slower growth. Of course, there is a big unknown at this point in time about what the impact will be of the conflict in the Middle East.

In all fairness, also for us, that is still very difficult to assess at this point in time. And as we look ahead into '27, hopefully, we'll see a slightly more stable market. So for this year, demand growth and capacity growth probably roughly in line. Spot rates were remarkably low in the beginning of this year.

I think we saw a decline running up to Chinese New Year, which was much -- I think rates were much weaker than one would expect based on the balance between supply and demand. But of course, at the moment, we also have the contract in the Middle East that is definitely disrupting some of the key corridors, but is also causing a sharply increased costs and certainly someone certainly on the rate side as well.

Maybe if we flip to the Middle East, what have we done, we have suspended all transit through the strait of Hormuz, also through the Red Sea, where we were actually getting closer to returning to the Red Sea. We stopped all the bookings from and to the Upper Gulf region simply because we cannot move the boxes.

We are adjusting our network. We've, we continue to offer the connections from Asia to the Middle East. Even if in some cases, it now goes with a different routing. Costs are increasing sharply. I mean if we look at the impact that this has on us, then we talk easily about $40 million or $50 million per week that we have -- that we are facing at this point in time, mainly related to bunker, but also insurance costs are up significantly and so our costs related to storage and in some cases, also Inland transportation.

We have introduced a number of contingency and emergency charges to try and recover that. But as you know, these things, if they come, will always come with a certain delay. And right now, our priority is to try and mitigate those costs.

But of course, first and foremost, to try and take care of our people, both on land and on the ships in the Middle East and that's going to remain our focus for a while. Then when we look ahead into 2026, we expect a challenging start of the year because we have had very significant disruptions in January in Europe, North and South Europe, mainly because of extreme bad weather, which disrupted our network for a fair bit during 3 to 4 weeks.

And now of course, we have the situation in the Middle East. And in that context, our outlook remains as we have put it together over the last number of weeks. And that's what you can see here, a group EBITDA of between USD 1.1 billion and USD 3.1 billion and an EBIT of minus EUR 1.5 million to plus EUR 1.5 billion.

Very important to say here that for us, the implications of the conflict in the Middle East are at this point in time, very, very difficult to assess. What we know is that the cost -- the extra cost is definitely there. What that will do over time to migrate and when we will be able to recover those costs.

Most likely that will happen with a delay. And that means that we expect to see a soft first quarter, but we also see that the underlying demand actually remains robust and that's also why we stick to the outlook as we have presented this year that in fairness has not changed materially over the last 4, 5, 6 weeks as it is simply too early to assess what the impact could be net-net of the conflict in the Middle East.

Our cost savings program will continue to lower that cost base but admittedly, we won't see that in Q1 because we've had a lot of extra costs, but we stay on that trajectory. And in the course of '26, we will see that coming back. So what are our priorities for this year but also beyond that, at the moment, clearly, the safety of our colleagues, both on land and on the vessels in the Middle East is a key priority, and we have the crisis team in place to manage that as good as we can on a day-to-day basis.

We'll continue to focus on delivering outstanding operational and service quality as we grow not only our digital offerings, but also as we continuously focus on delivering that 90% schedule liability, we'll continue to strengthen our organization by developing our people, investing in training and education and making sure that they get stronger every year.

Cost management was already mentioned and of course, a big focus for us is also the timely closing of the transaction with ZIM, where we still need to get all the approvals that we are all aware of.

And with that, I think I'll wrap it up from our end, and we'll be happy to take any questions that you may have.

[Operator Instructions] The first question comes from Parash Jain from HSBC.

I have 2 questions. First, if you can talk about how has been the upcoming contract looks like? And in uncertain time, do clients want to enter into a contract or they would focus on more a short term contract?

And if you can share about expectation both in Asia, Europe as well as in transpacific? Secondly, with the Middle East crisis, it's highly uncertain when and how it will end. But where do you say if this crisis lasts beyond several weeks, do you see demand destruction as a real possibility? And till now, have you seen any demand destruction as a result of this?

Thank you. I think to maybe try to take them one by one. In terms of contracts, I think we've seen a fairly normal contract season. Most of the contracts also closed before the conflict in the Middle East reescalated both on Asia, Europe and TP, we see similar levels of contracting of the volume that we've contracted is similar to what we saw last year.

I think net-net, we see that rates are probably a little bit down, yes. We have to see a little bit how that works with bunker but net-net, I think that they're slightly down. In terms of Middle East, whether that can result in demand disruption, of course, it could, I think if the conflict last long that will not be good for global trade growth, even if I think that, that will only be something which is temporary.

When we look today at what we see, then of course, we are missing the bookings to and from the Upper Gulf but when we look at the rest of our business, then bookings remain strong and healthy. I think our run rate over the last couple of weeks has been somewhat lower than planned because we made those volumes from the upper Gulf, but the rest is pretty much on plan or even slightly a bit of that.

Just to clarify in terms of the contract rates. Does that include the fuel or the -- do you have a mechanism to impose the fuel surge, given the sharp ready we have seen on your contracts? .

I mean that, of course, normally, all those long-term contracts have a fuel clause.

And in our case, there's also pretty much all the contracts have that. And of course, there, with the formula that we have, then the increase in fuel is going to be reflected in those prices, but with a delay.

The next question comes from Alexia Dogani from JPMorgan.

Just to clarify, on Asia-Europe contract rates, you said a little bit down year-over-year. Is that low single digits, mid-single digits that would be quite helpful. And to clarify, secondly, you mentioned very helpfully that you're incurring $40 million to $50 million additional weekly cost.

I mean if I annualize it, I get to something like $2.3 billion, which reflects predominantly the bunker price increase we've seen to date.

Obviously, you've given a guidance range. What have you assumed within that guidance range given what you know today? How do you assume that full cost hits you and you recover X percent. Can you just help us understand what you have reflected in your guidance?

And then can you give us some indication of what your customers are basically saying about these emergency surcharges you are currently imposing. I think there is some discussion in the industry that perhaps there could be some double dipping because bunker adjustment factors will eventually catch up. I think you mentioned there is a lag.

So putting an emergence charge today is slightly trying to double charge. So can you just give us an understanding of what these customer discussions are focusing on. Yes, that's it for me.

Trying if you answer this, I think your first question was on rates on Asia, Europe. On a like-for-like basis, we talk about a single-digit percentage that they are down. Your second question was around extra cost? And how much of that will you be able to recover?

And how is that reflected in your outlook in fairness that is not fully reflected in our outlook because we did most of the work on our outlook several weeks ago before the conflict broke out.

Right now, we see no reason to adjust that outlook but the net effect of what that will mean in terms of cost and revenue is very difficult to determine. And to your last point on fuel surcharges, our ambition is clearly not to collect that twice. But what we do have is that because of a very steep increase in price that we have, we believe that it is fair that we can pass some of that on to the customers now.

And in return, we would then pass on less labor. I mean, if you go to the petrol station today, you pay more than you did 4 weeks ago, and that's not a delay of 2 or 3 months because we say that the guy in the petrol station just needs to absorb that, and then we will pay more in Q3.

Normally, those type of adjustment formulas that we have with a couple of months delay work fine. But in a period where you see that costs go up with 60%, 70%, 80% that doesn't work because we just -- for us, it is not possible to then just prefund $50 million a week in extra cost, and that's why we have that discussion with our customers. With the clear intention to recover the extra cost, but not with the intention to collect that twice.

And that's also why when we talk to customers, we ask them for the additional charge, but we also commit to them not take that into account when we have to recalculate the regular formula in a couple of months from today.

That's very helpful. And can I just ask a follow-up. When you look back previous situations where you've seen a supply shock to the old price -- how successful have you been historically to recover the increased fuel goals? I mean is it usually that you can recover 100%, 70%, 60%? And what is kind of the variable that defines how successful you are to recover this increase?

I mean, normally -- this is all about contracted cargo, which is, say, 50% or so of the overall volume. Normally, we have been very successful, and I think that's also fair, normally, we have, through our formulas being able to recover that extra cost. And now we have an extraordinary situation because the increase is so steep.

And that's why we believe it's fair that we pull some of that forward. But initially, because of the way that the formulas also work, I think this is an agreement that is fair for -- for the lines but also for the customers.

And if okay, just one final one. In terms of the fuel inventory, do you hold any actual bunker fuel inventory, which means there could be a delayed effect on the price applied. And if there are shipping lines globally that don't hold an inventory. Is there like a cash flow issue potentially because of the mismatched fuel price versus rate recovery.

I mean we don't hold the inventory beyond what we have on the ships.

The next question comes from Samuel Gouldson from UBS.

On the topic of the last couple of questions, and around fuel shortages, especially at ports in Asia over the next few weeks and months. Are you making any contingency plans for fuel shortages? Or do you believe that this is not a problem that is likely to materialize?

I mean I think the short answer is that we are definitely looking into that because we also see that there is potentially a risk of shortage. Asia is not one of our biggest bunkering locations, but it is certainly something to keep an eye on.

[Operator Instructions] The next question comes from Andy Chu from Deutsche Bank.

Could I just ask questions around Q1 just in light of -- I know it's a timing issue, but the sort of run rate of EUR 40 million to EUR 50 million of costs that just might be a timing issue. Let's say, there's a month's worth of that.

That could be triple-digit millions of cost headwinds plus weather disruption in Europe and North America.

So it feels to me that Q1 could be a sort of very heavily loss-making quarter albeit with timing effects. Could you give us a steer as to what the weather effect is going to be and what actual what we should be thinking of in terms of the print for Q1? Are you looking at sort of triple-digit million dollars of EBIT losses. Is that too negative or about right?

I mean it's still a little bit early to comment on what exactly the first quarter will look like. But the first quarter, I mean, we certainly have an extraordinary amount of headwinds because of the very bad weather that we had in that we had in January and part of February.

And of course, the extra cost that we are in disruption that we are facing now.

So I think the scenario that you were outlining is certainly not impossible.

Can I could just ask about demand, which is obviously difficult to predict. Obviously, you've got a tough comp as you outlined 2 surprisingly good years growth and you printed 8% growth last year, the comp is quite challenging.

So against -- I think there was a slide from an industry sourcing market growth of 3% for this year. Where do you think you will land versus that 3%? Do you think you can grow in line with that? Or do you think you'll be now on the wrong side of industry sort of 3%, if that indeed is the right number?

I think we will still be on the right side of the industry, to be honest. Q1 did -- Q1, I don't know because we are a little bit overrepresented in Europe, which was particularly hard hit in January and part of February. But when I look ahead into the full year of 26, I would still expect us to be on the right side of the of industry growth.

And then my last question is around the Middle East. I think you've got some ships that are kind of stranded can you just outline what capacity is kind of stranded at the moment in the Arabian Sea. And then in terms of ports, which are the Middle East ports are kind of share how much disruption is that causing you?

I think in total, we at the moment have 6 ships stuck in the Persian Gulf with the total capacity of about 25,000 TEUs. In terms of the ports that we cannot call while those are basically all the ports that are inside of the Gulf but we are still able to use, for example, Salalah and others and of course, also on the other hand, Jeddah.

Next question comes from Marco Limite from Barclays.

First question is on the outlook. So you are today providing an outlook with the EUR 2 billion range. If I look at the outlook for '25 at the start of the year, it was EUR 1.5 billion. So clearly, slightly wider than in the past. Now the key question, I guess, is what are your assumptions around the Red Sea. Is it fair to assume that the upper end of the range basically implies not Red Sea reopening for 2026 would be my first question.

Second question is, again, to go back to the surcharge the fuel surcharges. So you have mentioned EUR 40 million to EUR 50 million times 52 weeks and divide it by, let's say, volumes. I do get something like the amount of surcharges that you've been asking.

So am I right to assume that you basically have got a bit of a headwind in Q1 just because of the lag. But then when we think about Q2, Q3, Q4, your surcharges fully covered the EUR 40 million to EUR 50 million? Is that the way you have been calculating the surcharges, please?

And yes, probably the third question. is on the cost savings. In the slides, you are talking now about EUR 1 billion of cost savings, EUR 26 million. I think with the Q3 presentation, you were talking about similar number, but yes, just to confirm that your view on cost savings this year has not really changed since the Q3 results presentation.

And then we try and take them maybe one by one, start with the savings. Yes, you're right. I think our perspective on that has not changed. We've seen good traction towards the end of '25. So that gives us confidence that, that EUR 1 billion is indeed achievable. In terms of fuel surcharge, you are right, that there is a time lag.

How much that exactly is always a little bit difficult to determine also because you just have some notice periods that you need to take into account in some trades. So for sure, we have a mismatch between cost and revenue in March. I think we'll still have some of that in April as well.

But we do expect to recover that additional cost when we look at the full year. And in terms of the outlook, I think in terms of the Red Sea, I think right now, it would not have been right to assume that the Red Sea opens up soon. So the scenario where that remains largely closed for 2026, I think is right now the most realistic.

Okay. And if I can ask you also to follow up on the upper end of the guidance. I mean, what can you tell us about the assumptions you have made on the upper end of the guidance? I assume Red Sea reopening, as you just said, anything on volumes and rates for the upper end of the guidance?

Okay. As I said in the beginning, I mean, I think it's almost impossible to give good guidance at this point in time. We try to take our -- we try to take a good go at it. We think that if you want to get to the upper end of the guidance, then we need to see a reasonably strong volume where we are able to grow ahead of market. And we'll also certainly need to see a normal peak season where we see a fairly good recovery of spot trade. And then it also assumes, of course, the recovery of additional fuel costs.

Next question comes from Ulrik Bak from Danske Bank.

Just on Gemini and schedule reliability. Can you perhaps share the level of scheduled reliability in the feeder network compared to the main trade lanes, which I believe is what the intelligence is tracking? Is the 1 you showed on the slide?

And then also, secondly, can you discuss the robustness of this Gemini hub-and-spoke network in a situation with disruptions that we see at the moment compared to our previous network sales.

I mean, first of all, the -- I think the schedule liability, as is being measured, it includes the main liners, but also the shuttles. So there's actually not a material difference in the scheduled liability across the network. .

The second point on how robust it is. I think this hub and spoke network is definitely more robust than the network that we used to have in the past. If I look at the extraordinary disruption that we have seen in Europe, in January that, in our case, then led to a drop of schedule liability to 80% more or less.

But in April, we will be back to 90% so that has not taken all that long to recover that. If I compare that to the network that we had in the past, we would have dropped much, much more than 10 percentage points, and it would also have taken us a little longer to recover.

And in a way, if you look today at the number of holes that you see in the schedules of some of the other alliances, I think that also tells you a bit of a story whereas we have barely had to blank anything. So to answer your question, the charters in the main liners have a very comparable schedule liability, and the network that we have today is significantly more robust than what we had in the past..

[Operator Instructions] We now have a follow-up question from Alexia Dogani JPMorgan.

Just 2 questions on the Middle East situation. Clearly, you hopefully said you have 6 ships currently stranded. What's the plan to let the ship exit because clearly, we've heard from the UN that there's a bit of humanitarian issue for the seafarers are you working actively to try to secure safe passage to basically evacuate those ships from the region?

That's my first question. The second question, obviously, the region represents something like 3% of global container volumes -- how much is the region's demand impaired at the moment? So I understand critical cargo is getting in. But if you said it's kind of 75% intact, this is 50% intact? That would be just quite helpful to understand what is actually happening to demand near term?

And then finally, just so there's no misunderstanding -- what is your contract exposure? Is it 50% still? And is it fair to assume that if you are successful in passing on the fuel surcharges, really we will see it in the spot rate -- and then the contract share will be adjusted through the BAF.

Maybe to take the last 1 first. I think our contract ratio is indeed still around 50%, and I don't expect that to really change. As far as the ships are concerned that are stuck in the Persian Gulf, we do everything possible to try and get them out and we will explore every possibility that there is -- but so far, we have not been able to find one.

And in terms of volume, I mean, the volume that currently moves into the upper Gulf is very, very low. And yes, there is some cargo that's being moved on the land bridge, but I don't know the exact numbers, but one should assume that the volume that moves there in and out is reduced very significantly. I don't know you take [indiscernible]

No, that's helpful. I understood the point. I guess kind of on the contract of exposure. One question is, obviously, the spot rate last week were flat, week on week.

What does that kind of say, in terms of the industry's ability to pass this fuel surcharges currently. I mean, you can argue bunker didn't move that much week on week. But can you help us read the movement in the rate last week, please?

I mean these things move every week in a couple of weeks before that they moved up quite a lot. No, I cannot -- if I would be able to read what the spot rates are going to do, then I would probably be in a different business. None of us really knows where those things are going.

I think it's quite clear that capacity is reasonably tight at this point in time. It's also clear that costs go up. So normally, one would expect those costs to trend upwards. -- should also not forget, though, that this is more or less the slowest season of the year.

And there is always a lot of volatility and short-term rates post-Chinese New Year until May-June. So that's the period where it's difficult to -- where it's difficult to assess. Overall, I would still say that, especially out of Asia, demand is still pretty strong. costs are up.

So it would be quite logical that those short-term rates also trend upwards. But on a week-by-week basis, that's very difficult to judge.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf Habben Jansen for any closing remarks.

Okay. Well, nothing to add from my side. Thank you very much for all of your questions, and thanks for making the time to listen to us today. I hope that was informative and then hope to see or speak to you again very soon. Thanks very much.

Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the analyst and investors conference call on the Hapag-Lloyd and ZIM merger agreement and live webcast. Today, Hapag-Lloyd is represented by Rolf Habben Jansen, CEO; and Mark Frese, CFO. I'm [ Moritz ], your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Rolf Habben Jansen. Please go ahead, sir.

Thank you very much, and thanks, everyone, for taking the time to join us here on this call, where we'd like to update you on the events that we also published about yesterday, in essence, the signing of a merger agreement between Hapag-Lloyd and ZIM.

Here, maybe we just start with a quick summary of it. We have signed the agreement yesterday as we announced to buy 100% of the shares for a consideration of $35 per share, which means that the total equity consideration is $4.2 billion. We believe that's an attractive offer for the ZIM shareholders with a significant premium over Friday's closing price. We will put in place a bridge facility, but we will pay from available liquidity, and we are partnering with FIMI Opportunity Funds who will assume the Golden Share obligations in a separate entity. Why do we do that?

Because we believe that helps us to secure our global position in the top 5, will bring us to a size where we have more than 400 modern vessels with a capacity of over 3 million TEUs. That definitely will give us access to a better and broader customer base, helps us also, in particular, in some trades not least Transpacific, Atlantic and IRT Asia. And we expect from this significant synergies in the range of up to $500 million, and we know how to do that. And of course, you'll see that mainly in network and procurement, and we expect to realize those within a few years.

Important to say that this merger is subject to the approval of the general meeting of ZIM by a simple majority vote, but also by the regulators, which are not only the antitrust authorities, but in this case, also a number of Israeli ministries related to the Golden Share issue that we referred to earlier. We expect the transaction to close in '26.

Maybe if we move on, quick profile of ZIM and why do we believe that that's a good match with us, and we'll have a bit more on that on the next page where we try to see how that fits into our strategy. When you look at it in terms of size, a little bit over 100 ships, very modern, quite a lot of them on LNG, which also fits with what Hapag has a capacity of a bit over 700,000 TEUs, moving close to 4 million TEUs of cargo and a very talented and good [ customer ] of a people at ZIM of close to 7,000. Publicly listed, as you know, headquartered here in Israel, #10 globally, strong positions in a number of selected markets and also a workforce with a very good reputation.

Of course, and on the right-hand side, you see the numbers, both in terms of volume and the EBITDA that is being generated in the last couple of years and also in the first 9 months of 2025, but more about that later on. We believe that this is a really good fit to our strategy. I think when you look at the strategy of Hapag, we've always said we'd like to remain a container carrier and therefore, Pure Play Plus. I think that's where ZIM would fit in perfectly well. It also helps us on selected trades, as we mentioned already before, very complementary network structure would bring us into a really strong position on Transpacific, but also on Atlantic and would help us in the IRT map, where I would say Hapag is a little bit too strong -- sorry, too small.

When you look at the fleet, very modern fleet, some clever investments and commitments done on longer-term time charters. The fact that we have a higher time charter share once we do this transaction than we traditionally had, I think, is a good thing that gives us some more flexibility, certainly because there is some uncertainty around what's happening in the markets.

Not to forget, I think one of the big pluses that we have seen when we merged with CSAV and also when we merged with UASC is that, that gives us access to a broader talent base. And I'm convinced that also as we bring the teams from Hapag and ZIM together, we are able to build a stronger joint global team, which will also make us more competitive. And of course, also the synergies are important because $500 million is still a very significant amount of money, and we know how to get that out of the system and as such, a very important argument on why to do this transaction.

A little bit more on the trade portfolio and the overall size. As you can see on the left-hand side, transportation volume of the two companies together on a pro forma basis in 2025, around 17 million. We believe that once we close, hopefully, towards the end of this year or going into '27 that we will be able to generate over 18 million TEUs of cargo.

In terms of size, we would remain combined #5, but certainly quite a bit closer to numbers 1 to 4 and with a bit more distance to numbers 6 and 7. I mentioned already the trades. Here, two examples. I think Transpacific, we would have a very strong position between the two of us. I think if you would take the market shares in the latest quarters, the numbers would be even a little bit more favorable. And also in LatAm Asia, we would be -- it would give us line of sight to go back to the 15%, 16% that we have always aspired.

When we look at the fleet of ZIM and compare to Hapag, I would say, very strong in the midsized segments where both when you look at their 15,000s, but also when you look at the category between 8,000 and 12,000, very complementary to what we have. And that would also mean that if you look at it in terms of combined and order book, over time that would allow us to further not only modernize our fleet, but also bring efficiency further up. And of course, in many services, we would be able to deploy bigger ships, which, as we all know, is one of the biggest drivers and levers if you want to achieve the synergies.

When you look at scale and size, I think here are the numbers for '24 and '25 in terms of what's being generated between the two companies in revenue, EBITDA and EBIT. I think you can see that when you look at 2025, that both companies still reported very decent earnings, both on EBITDA and EBIT. I think also if you keep that in mind when you look at the overall consideration that is going to be paid, that relationship is certainly not crazy.

But moving on to the next page. When looking at synergies, we do think that the $500 million is a realistic ambition. And of course, one then also needs to look at what do we actually pay and what do we buy. When you look at the overall assets and equity that ZIM has, we are talking of something that is fairly close to $4 billion. In addition to that, we would, if you want, invest to secure those $500 million synergies. And that also means that we believe that once we look back on this transaction, hopefully, in 3, 4 or 5 years, that we will be able to conclude that this was economically a very sound deal.

A couple of points on the right-hand side. I think when it is around realizing synergies, I think we've been doing that in the past. The way we look at this right and up here is very much the same. We think that in year 1, we will realize about 65% of the synergies. In year 2, around about 90%. And in year 3, we would be able to get to 100%. Most of those synergies lie in the network. But of course, there are also other categories where we can -- where we will save money.

Then finally, this will also mean that we will have not only initially, but also in the mid and long term, a significant presence in Israel, which we believe is crucial on the one hand, because of the market position that we will have, but also because of the capabilities they, for example, have on the technology side, which is something that where certainly the current Hapag organization could benefit from.

So maybe with that, let me hand it over to Mark for a couple of more comments before we take your questions later.

Yes. Good afternoon, and thank you, Rolf. I think -- before we jump into the structure, I think it's good to build on what Rolf said that this transaction not only complement and support our trade portfolio and our vessel fleet, but adds significant scale and earnings potential. And building on that, I think it's quite important that we can build our presence in Israel and that we are benefiting from the key skills employees of them have. So therefore, it's a good starting point. When we look now at the transaction structure, let me briefly walk you through. The process is straightforward and follows Israelian corporate law. Then, an Israeli company, so the entire merger will be executed under Israeli law, including the required regulatory approvals and shareholder procedures.

The merger requires, among others, I would say the following approvals, a simple majority of votes cast at the ZIM General Meeting on the one hand side, the consent of several Israeli ministers under the terms of the Golden Share, so the approval at the end of the government of Israel and clearance from antitrust authorities in the relevant jurisdiction.

At closing, after having received all approvals, a dedicated SPV will merge with ZIM and ZIM will become a 100% subsidiary of Hapag-Lloyd. Existing shareholders of ZIM will receive USD 35 per share compensation and this ensures a clean and efficient implementation of the combination of both companies. We will work closely with all stakeholders for sure, to ensure a smooth and for sure, timely approval journey.

Jumping shortly on the next page for the Golden Share topic. A key element of the transaction is the treatment of the so-called Golden Share held by the Israeli State. And to ensure full compliance, the transaction is structured in two coordinated streams. First, Hapag-Lloyd will acquire ZIM and the vast majority of ZIM's global business activities will be integrated into that bigger Hapag-Lloyd, so to say. And second, FIMI Opportunity Funds will establish a new independent Israeli shipping line, which will provide Israel with broad and reliable global connectivity.

FIMI is Israel's largest and most established private equity firm founded in '96, headquartered in Tel Aviv. They are highly respected across both industry and the government. They manage over $9 billion across 7 funds and have executed more than 100 investments with quite a strong track record. FIMI is known for disciplined execution, responsible ownership and for working with regulated and strategically important companies. Overall, FIMI brings exactly the execution capabilities and local credibility needed to set up an independent Israeli-based carrier.

The new company, so the new ZIM will take over the obligations embedded in the Golden Share, the necessary assets as well as the ZIM brand rights will be transferred to enable full operational independence. This setup meets all Golden Share requirements. The new ZIM remains an Israeli-incorporated independent carrier with capabilities essential for the National Maritime interest. FIMI and Hapag-Lloyd will enter into a slot charter agreement securing access to our global network. At the same time, it allows us to fully integrate the international ZIM business into the carrier.

Let me turn now to the financial metrics for a moment of this transaction, especially the consideration and how we plan to fund the deal. We will offer USD 35 per share. The financing structure is straightforward and entirely within our existing balance sheet capabilities. The acquisition will be funded primarily from our liquidity reserve, which currently stands at roughly USD 7.5 billion. To provide additional headroom and flexibility, we have arranged a bridge financing facility of up to USD 2.5 billion.

Post closing, we expect limited incremental liquidity needs, neither company faces meaningful debt maturities in the near term. So we enter the integration phase from a position of financial strength. Importantly, all vessels -- vessel deliveries scheduled between '27 and '29 are already fully funded and financed long term. This removes a major uncertainty and keeps our forward CapEx profile stable.

Overall, the transaction is fully financeable with resources we already have in place while maintaining a strong liquidity position and balance sheet resilience. And having said that, I hand it back to Rolf.

Yes. I think that brings us to the end of the presentation. I think last couple of words on how we look at closing of the transaction. I would say the first step will be the ZIM Extraordinary General Meeting that's going to take place where it looks right now in the middle of March. And then we seek the approval from the Ministry of State of Israel. And in parallel, we'll also pursue antitrust clearance. And based on the assessment that we can make at this point in time, we hope to be able to conclude the transaction in the fourth quarter of this year or somewhere towards the end of '26.

And I think with that, we wrap up the introduction from our side and happy to take any questions that you may have.

[Operator Instructions] And the first question comes from Alexia Dogani from JPMorgan.

If I start firstly with the timing of this announcement, can you kind of explain a little bit the outlook you see for the business and actually both businesses and what gives you confidence to increase capacity and your exposure to, well, the upcoming container shipping cycle and kind of the parameters you see on that?

Secondly, obviously, the outlook is up to debate and rates can have different scenarios. But at which scenario would you potentially step away from the transaction, meaning given the quite long lead time to closure, rates could potentially worsen and the financial performance of ZIM could potentially be a little bit worse from the trailing performance you're showing here. I guess at what point would you reconsider?

And then finally, in terms of your Gemini partnership, what is ZIM's role into the Gemini alliance? And would you be looking to put ZIM's tonnage in the network? I'll leave it here and then maybe I'll come back.

Well, maybe let's try to take them one by one. I think when we look at the outlook of the industry, as you also pointed out already, that's always very difficult to judge. I think when we look at the last couple of years, we've actually seen much stronger growth than many people anticipated, 6.5% in '24 and close to 5% in '25. That actually has a -- that actually really helps to bring the anticipated overcapacity by many back to a relatively low number. That does not take away that we also think that there may be some quarters where the market may be somewhat weaker after a very long period, where markets have been very strong. But when we look at the combination of Hapag-Lloyd and ZIM, we look at that more longer term. We know that both companies have performed very well over the last 5, 6 years. And we think that combining those and then delivering also significant synergies is a really good value proposition. As I already said, that's also why we look at it -- let's look at the amount of assets we acquire, the synergies that we acquire, and then we think that the total consideration is actually very reasonable.

Your second question, there are no clauses in the merger agreement based on which we could step out dependent on how market goes. At some stage, you have to take a decision. Do you believe in this case? Yes or no. We believe in ZIM. We believe in the strength of that organization, and we also believe in our combined competitive position longer term. So that's why we did this transaction.

Your third question on Gemini, I think it's very likely to assume that indeed, some of the tonnage that we -- that ZIM deploys on the East-West trades would also phase into Gemini, which would generate cost savings there. And we think that, that's actually a good thing that will help Gemini gain a little bit of scale that will help us to bring unit cost further down. And I think as many have seen, Gemini has been a very good product in the market. So strengthening that further with an organization that is also very customer-centric, I think, is a good thing.

And if you don't mind, can I ask a couple of follow-ups as well. Just firstly, on the timing, I guess I appreciate what you said. Obviously, if you look at kind of the share price of ZIM, when we had the correction in 2023, it was a much more attractive price point than what you're paying now? Did you consider it back then? And I guess, what kind of created the sense of urgency today? Is it in terms of kind of access to tonnage near term? That's my first follow-up.

And then my second follow-up is on the synergies. Obviously, the $300 million to $500 million look interesting. But in 3 years' time, obviously, the rate could have eaten up or kind of the rate decline potentially could have eaten up some of the synergies. How do we measure your success in integration? Should we just be looking at the unit cost to see the development of that synergistic opportunity because obviously, the earnings are much more influenced by the rate.

Yes. Well, maybe first thing on timing. We think that the timing is right. That also depends a bit on when is there an opportunity. Of course, since late summer last year, there was a process going on where people looking for -- were looking for strategic alternatives for ZIM, and we then raised our hand because we felt we could do something with that.

In terms of synergies, I think the interesting thing about a combination like this is that the one thing that, as you rightfully point out, nobody knows is where the rates will go. But what you do know is what you can do on cost. And that's where taking out cost in a case like this actually makes the business case more resilient. If we would look at the simulations that we did, then we see that the basic payback of this case is very good. But in cases where the market would be less good, this is also a very resilient case because the cost savings will be there. And in addition to that, you will also still be able to cut some CapEx that you otherwise would have to do if you have less scale.

So all in all, timing is also when there is an opportunity. If you look at the value of the ZIM shares, I mean, they have been anywhere between very low and very high on the last 5 years. When we look at the assets that we acquire and when we look at the synergies and the resilient case that we actually see, especially also in the downturn, then we believe that this is a very sound case.

[Operator Instructions] The next question comes from Lars Heindorff from Nordea.

A little bit about the fleet composition with the combined fleet now how it will look, you will have roughly half of your fleet chartered in compared to what happen on a stand-alone basis is slightly below 40%. So maybe the first question is on that part. Is that a desired level that the share of chartered fleet should be?

And then secondly, on the order book, as far as I can calculate, it will stand around 21% measured in TEU compared to what the combined entity will operate. That's still quite a bit below where the market sits around is 24%, I think it is at the moment. Is that also a desired level? Or do you need more there?

Well, maybe I think to take your first question, you are right that the TC percentage would go up to a level that's a little bit above where we would normally want to be. I think that over time, we will bring that percentage also back down again, probably closer to the 60-40 that we looked at. Having said that, as we go through a period where there's a fair bit of uncertainty, then to have a slightly higher time charter percentage can actually also be an advantage because it makes us a little bit more flexible and agile if we have to react to things that are happening in the market.

In terms of order book, I would say that the 20% is actually a decent number. If you take into account that the order book covers these days typically 4 years, 5 years, then that is probably roughly in line with what we would need to cover the growth in the market, combined with a bit of scrapping here and there as well as our ships also in some vessel classes are getting older.

Okay. If I may, just a few follow-ups as well. So ZIM, they have a number of VSAs with other carriers at the moment, probably most predominantly on the Transpac with MSC. First part here is, what is the time line for -- sorry, not for MSC, for ZIM stepping out of those VSAs in terms of -- you talked earlier about the speed of the synergies. And then in connection with that, the synergies that you aim to achieve, will those mainly be achieved in ZIM or in Hapag? And then last but not least, and sorry for my -- maybe it's a stupid question, but I got in a bit later in the call. Will ZIM continue to operate as a separate brand under Hapag or will be rebranded?

Thank you. Let me take the last one first. I think the ZIM brand will go to FIMI as they will operate the new ZIM, which will take care of the Golden Share. So that means that the rest of the business will operate under the Hapag brand. As far as the cooperations with other carriers are concerned and in particular, also MSC, we will -- once the time is right, we will talk to them about how we deal with that. There are certain contractual obligations that we will, of course, live up to. But we believe, and that's also why we have a certain phasing in the realization of the synergies, why we say it's going to be probably 65% first year, 90% in year two and 100% in the last year. In terms of where the synergies will occur, that will be difficult to record because we will put the business together. And I think in reality, some of those synergies will be achieved in what is currently Hapag and some of those synergies will be achieved in what is currently ZIM.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Rolf Habben Jansen for any closing remarks.

Yes, not much to add from my side. I really appreciate that you took the time to join in fairly large numbers today. We hope that the information we gave you was informative. And we thank you for your attention and wish you a good rest of the day. Thank you very much. Bye-bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

Ladies and gentlemen, welcome to the Hapag-Lloyd Analyst and Investors 9 Months 2025 Results Conference Call and Live Webcast. I'm Iruna, the Chorus Call operator. Hapag-Lloyd is representative by Rolf E. Jansen, CEO; and Mark Frese, CFO. [Operator Instructions] The conference is being recorded. The presentation will be followed by a Q&A session. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Rolf E. Jansen. Please go ahead, sir.

Thank you very much, and welcome, everyone, and thanks for taking the time to be with us today. Yes, short presentation, as always, before we jump into the questions that you may have. I would say that when we look at the first 9 months, a couple of things to mention. I think good strong volume growth over the first 9 months, again, a decent quarter in Q3, on the back of that, good revenue growth.

When we look at Q3, I think earnings improved sequentially. But of course, year-to-date performance remained below last year. When looking at Q3 in isolation, I think that was actually a fairly solid result. I think we start to see that the first cost savings from Gemini are starting to come in. We see the network running smoother and smoother. So that gives us a lot of confidence that we'll see further improvement as we go towards the end of the year and moving into 2026.

We will continue to invest into the future. We also have some things -- we also continue to work on our Terminal division, but nothing specifically announced there at the moment. think we have narrowed our outlook a little bit going forward. And when you look at the midpoint on EBIT, then you see that we have slightly raised that compared to what we had a couple of months ago. Switching to market. Let's still say it's a fairly robust market. When you recall all the forecast that there were for the container trade in the beginning of this year, but also in fairness in the beginning of last year, then certainly over the last 7 quarters, we have seen a stronger market than many people had expected.

In 2024, the market grew over 6%. The first 9 months now, we are again looking at close to 5%. That's a lot more than people had anticipated. And I think that's pretty encouraging and shows also that global trade is quite resilient. We still expect the last quarter to be somewhat weaker, but of course, that remains to be seen. Spot rates under pressure after the relatively early peak season, seen a bit of an uptake in the last couple of weeks with last week again a bit weaker. But I think we also see that demand still remains fairly strong and utilizations remain high. So hopefully, we'll see some further recovery of those spot rates as we move forward. Switching briefly to Gemini. I think it is fair to say that we have set a new benchmark for reliability in the industry. I think with very consistent performance even in very volatile markets and under difficult market positions. I think the network has delivered on its promise pretty much every month. I also believe that drives our above-market growth.

We also see customer feedback very positive with our Net Promoter Score that we measure twice a year at the moment at an all-time high. And we also still see, as I mentioned before, quite a lot of things that we can still do better. And we will continue to implement those smaller improvements month after month after month, and that will allow us to get to our anticipated cost saving run rate in the course of 2026. Next steps. make sure that we continue to grow volume on the back of an excellent product and also make sure we get adequately paid for that because if we are able to help our customers to run their supply chains a lot better, then that must be more efficient for them as it allows them, for example, to take out inventory. And of course, we would like also to be adequately paid for that. We will also come with the introduction of a new quality promise for on-time delivery on box level because that's, in the end, the ultimate promise to customers that we make that we deliver their box on time.

A little bit on investments before I hand it over to Mark. We have announced also this morning a decision to invest in up to 22 new ships in smaller vessel classes as we have a significant amount of tonnage in those vessel classes that is going out of service in the second half of this decade. That means we need to replace them. We also have to reduce our exposure to the highly elevated time charter at the moment -- market at the moment. And of course, that also helps us to reduce our operational cost base, and it helps us also on our decarbonization journey. The ships that we will order will probably be in a couple of different classes, one around 1,800 TEUs, class around 3,500 and class around 4,500 TEUs.

With that, let me now first hand it over to Mark.

Thank you, Rolf. Good morning also from my side, and thank you for joining us today for our 9 months results presentation, which will show that in a complex and volatile market environment, we have delivered a solid operational performance. Our strong volume growth, which is well above the market average, demonstrates the benefits of our strategic positioning, particularly the successful implementation of our Gemini East West network. In the coming quarters, we aim to sustain this growth momentum and still keeping the flat capacity stable.

As anticipated, earnings are lower than last year's exceptional performance, and that is primarily due to softer freight rates and continued cost pressure. To address this, we are intensifying our cost discipline and further optimizing our network to enhance efficiency and competitiveness. At the same time, we maintain a robust balance sheet with ample liquidity and a moderate leverage, providing the flexibility to pursue whatever strategic priorities. We focus on or opportunities come up, and we navigate market volatility effectively with that.

Let's now take a closer look at our financial performance. Revenue and earnings in the third quarter improved sequentially, driven by a temporary higher spot rates resulting from front-loading effect in the U.S. EBIT increased from USD 189 million in Q2 to USD 228 million in Q3. However, compared to last year's exceptional results, earnings were lower due to the significantly weaker overall freight rate environment.

Looking at the first 9 months, revenue grew by 5%, supported by strong volume growth across both operating segments, which helped offset partially the lower freight rate environment. At the same time, persistent cost pressure weighed on operating performance, for the period, group EBIT reached USD 905 million and group profit totaled to USD 946 million.

Looking now at the performance of the Liner segment, we can see that revenue in the business segment increased to USD 15.7 billion in the first 9 months. This development was driven by above-market volume growth, particularly in the Gemini trades. EBIT amounted to USD 858 million in the first 9 months, that is compared to USD 1.9 billion during the same period of previous year.

In Q3, EBIT improved sequentially to USD 219 million, a temporarily higher cost -- higher spot rates out of Asia lifted our average freight rate by around about 5% compared to the quarter before. After the 9 months of '25, we transported or in the month '25, we transported 10.2 million boxes, representing a volume growth of 9%. As said, well above market rate. This strong performance reflects our sustained investment in efficient fleet capacity and the successful transition to the new Gemini East West network.

Particularly noteworthy given the tariff-related demand fluctuations we have navigated through. So growth was especially strong on the Pacific and Asia-Europe trade routes. In contrast, Atlantic volumes improved only modestly due to the soft demand between Europe and North America, while transport volumes between Latin and Europe -- Latin America and Europe were constrained by operational disruptions in ports.

Following a persistent decline in the average freight rate improved, which improved 5% in Q3 2025 quarter-over-quarter, driven by front loading effects. However, the first 9 months of '25, the average freight rate stood at USD 1,397 per TEU, almost 5% lower compared to the prior year. Having a look on the unit cost in the first 9 months of '25, they increased by 5% to USD 1,338 per TEU, and this increase was driven by higher storage costs due to port congestions and operational delays, increased hinterland transportation costs from growing the growing share of door-to-door business and plant start-up investment associated with the Gemini Network.

In addition, external factors such as rising trade imbalances, higher regulatory compliance cost and for sure, as we all know, the FX effects, which we have experienced generally, elevated the cost base. To mitigate these external factors, you can assume we structured strong, and we are executing already a comprehensive cost program.

I would also like to provide more context on the Gemini startup costs as these are likely more pronounced for Hapag-Lloyd than for Gemini partner, as well as on the initial cost savings that are already becoming visible. For us, the new network represents a more significant transformation, which is temporarily associated with higher unit costs. We have not only redesigned the network but also changed the terminals we call the capacity we operate. While we already see clear cost benefits per available slot right now, such such as reduced ship system costs and lower bunker consumption, the unit cost per transport book are still elevated for now.

But when we look ahead, growing volumes at stable capacity and further network optimization will drive unit cost down, resulting in tangible positive impact on our P&L in the coming quarters.

Let's now have a closer look on the T&I segment. Revenue in the Terminal business increased, as you can see here, by 15% to USD 370 million -- USD 375 million in the first 9 months. This growth was supported by encouraging throughput developments. We have seen and the acquisition of our Terminal in Le Havre, in France this year in March. EBIT amounted to USD 46 million, which is below the prior year level, primarily due to weaker performance at Latin America terminals. This was driven by the U.S. tariff related market volatilities. And we have seen strong unfavorable weather conditions there.

Additionally, we continue to ramp up this relatively new business segment which is quite normal that is associated with a temporarily higher cost base.

Turning to our cash flow development on the next chart, operating cash flow for the first 9 months. As you can see here, '25 amounted to USD 2.6 billion. We invested around about USD 1.5 billion, mostly investment in containers, as well as in the modernization of our fleet, under our fleet upgrade program. These investments are designed to enhance the cost efficiency and to reduce CO2 emissions across our operations.

Including income from interest, dividends and divestments of USD 309 million in net cash outflow from investments totaled to USD 1.2 billion resulting in a robust free cash flow of USD 1.4 billion. Financing cash outflows amounted to USD 2.5 billion, primarily reflecting the dividend payment of more than $1.6 billion to our shareholders, along with debt redemptions and interest payments. Overall, the cash position decreased by USD 1.1 billion, resulting in a still robust cash balance of USD 4.6 billion at the end of Q3.

For sure, we continue to maintain a very resilient balance sheet with ample liquidity and moderate leverage. Strong liquidity reserves still there, which includes cash fixed income investments, undrawn revolving credit facilities, which totaled to USD 7.5 billion. This provides us with significant flexibility to fund strategic initiatives and for sure, navigate effectively through difficult market period and volatility.

And with that, I will hand it back to Rolf now for the market update and our outlook. Thank you.

Thank you, Mark. Yes, maybe just a few words on supply and demand. I think we see here the trend that we have seen over the last years, I would say, a remarkably strong growth in '24. Personally, I would also expect that the '25 is going to come in a little bit stronger than we anticipated. That's a better picture we have seen over the last couple of years. Of course, it's uncertain what's going to happen in '26. It's, however, quite encouraging that over the last 2 years, if you add them up, I think, 6-plus percent in '24, I think we're going to be close to 4% in '25. That's accumulated close to 11% in 2 years, which is well above what everybody expected.

For next year, the expectations for now are a little bit lower, but also also fleet growth will be a little bit lower. So for now, we anticipate an environment where there is going to be somewhat lower growth. But when we look at the last couple of years, there's certainly also a scenario thinkable where things remain fairly robust because also when we look around the globe this year, then we certainly see that trades to and from the U.S. have been under pressure, but quite a few other trades have actually done fairly well.

Looking at the order book. Order book is still quite big. Could that be lower? Yes, could be. On the other hand, let's also not forget that we are still expected until the end of the decade, overall growth will be 15% to 20%. And we also expect that there's quite a bit of the capacity that is going to be taken out as towards the end of this decade, more than 4 million TEU of capacity will actually have to be replaced by newer tonnage, which is also the background of the order that we just earlier talked about. And on the back of the demands that are being put upon us to work on decarbonization. Also, that is certainly an incentive to sell a little bit slower, which normally would require a bit more capacity.

So all in all, no very significant change in the order book. It definitely remains on the high side, but it means it also covers a much longer period as when people order ships today, you can get them in '28, '29 or sometimes also only in 2030. So contrary to what we used to look at in the past when we had an order book typically covering 2.5 years. Today, it covers more to even 4, 4.5, sometimes even 5 years.

Moving to the outlook before we hand it -- before we wrap it up and then hand it over to you. We made some slight adjustments to the outlook. As you can see here, mainly on group EBITDA and group EBIT, where we narrowed the range, which we would also expect, if we get closer towards the end of the of the year, and we also raised the midpoint a bit.

Then when we look at priorities, I would say, make sure that we leverage the Gemini performance to continue to grow our business at adequate pricing but also make sure that we get all the savings into the book, make sure that we continue to focus on high customer satisfaction. We've been doing that now quite consistently over the last number of years, and we need to make sure that it stays like that. We will try to further expand our Terminal division through acquisitions and potentially also investments here and there also because it drives quite a lot of synergies with the Liner business. We also will invest in the expertise and resilience of our team amongst through a large leadership program. And then finally, we have to ensure that we maintain strict cost discipline as costs are currently definitely at an elevated level. We already mentioned [indiscernible] , and we need to ensure that over the next 12 to 18 months, we see the planned improvement in unit costs.

And with that, I would hand it over to the operator, as I think we now move to Q&A.

[Operator Instructions]

The first question from the phone comes from Omar Nokta with Jefferies.

I have a couple of questions. Maybe just first on the new buildings. Can you give us a sense of what kind of capital expenditure you're anticipating for these vessels? When you expect to take delivery of them? And also, where do you plan to deploy them? Are these going to be in that sort of the ideal workhorse for the Gemini network?

Okay. If I take that, maybe, Mark, you can say probably something around the CapEx but I think if we look at delivery, most of that will come in '28 and '29. And when we look at where we can deploy them, those are many places across our network, but it would not be illogical to expect quite a few of them to be deployed in our shuttle or feeder networks in Europe or Asia, but only some of them will also be used in IoT Americas or in Africa in Latin America.

And then in terms of cost, any sense?

I mean, I think in the end, we will commit to those ships. I think we're still figuring out what will be the exact split between the various categories and some of it will be time charter and some of it we will own. So it's a bit too early to say something about what the overall CapEx will be.

Okay. And then just a final one for me, just on the operational costs. I know you mentioned that 2026 is when we'll start to see the benefits of Gemini. Are you able to give any kind of maybe quantify the type of cost savings you anticipate to show next year?

I mean what the type or the -- sorry, I didn't hear it -- type or size?

Yes, just like the dollar amount you anticipate or percentage change versus this year, any kind of range you're able to share?

I think when you look at the cost savings that we expect from Gemini, we have, I think, earlier on, gave an indication that we expect it to be net [ $350 million to $400 million ]. And at the moment, I have no reason to have -- to pull out a different number.

The next question from the phone comes from Alexia Dogani with JP Morgan.

I have 3 please. Just firstly, on the 4Q outlook, clearly, the low end of the range is very negative and we're only 6 weeks away from the end. How should we interpret that low end that you've provided today? And should we see this as the potential exit rate into 2026? That's my first question.

Secondly, Rolf, you made some comments about the Gemini pricing. And can you elaborate a little bit on what the alliance wants to do in terms of kind of capturing the value of this new operating model? Is it really about pricing? Or is it about volume gains? And there has been in the press some discussion around Maersk considering an on-time surcharge. This is slightly counterintuitive because obviously, you operate a scheduled business, customers should expect it to be on time, otherwise, the schedule -- kind of point is missed.

And I think at the 2030 strategy presentation, you showed that actually the top thing that customers want is low price. How does that actually change given your experience over the past 12 months? And then my final question is, you helpfully show that the market expects container volumes to grow 15% to 20% by 2030. That implies a 4% to 5% per annum volume CAGR and suggest a multiple of 1.5 to 2x real GDP based on kind of current global forecast. What gives you confidence the multiple can be staying at these higher levels? Because clearly, in '24 and year-to-date, '25, we've had a lot of, let's say, external events affecting demand, be it disruption and tariff front loading. Is that your feeling? And if not, isn't it slightly counterintuitive that tariffs have no impact on trade?

Let me maybe try and take them one by one, and then Mark, you may want to add something on the outlook. Maybe start from the bottom. To be honest, I can't really reconcile your math, yes. Because when I look at 15% growth until 2030, that's 5 years. So that's roughly 3% a year growth, which is roughly a multiplier of 1x of GDP when you look at the long-term average of 3%. So personally, I think that's actually not looking at 1.5x GDP, but more looking at just onetime GDP, which I think also when you look at the last number of years, it will not come every year, but on average, we're actually not so far from that.

Then when we look at Gemini pricing, I think there is definitely value to be captured from a difference in reliability and a difference in OTD between one and the other, whether you should call it a separate charge for being on time. I think I can relate to your comment that putting a separate charge for being on time is probably odd. But I would also say that if I can choose between 2 carriers, where one of them is going to be on time, and the other one is very unpredictable, that I am willing to pay a little bit more for people that are on time because it allows us to take -- it allows me to take money out of my supply chain. And we have clearly seen in discussions also with customers that they see that and that they do see real opportunity to take 1 or 2 weeks' inventory out of the supply chain, which clearly has value.

And then, of course, we need to make sure that we sell that value as well. And part of that to your point, will come in terms of hopefully higher prices or adequate prices and the other one may also be above market growth. I agree with you that there's a those 2 value components in there.

And then maybe, Mark, do you want to comment on the outlook.

Yes. Thank you. Yes, on the outlook, you might call it a cautious view. It's maybe 2, but it's due to the scene short-term volatility, which is more attributed not only to the general shipping volatility but also due to the geopolitical uncertainties we are facing, and we are looking at a freight rate environment, which is under pressure right now. Volume growth is slightly slowing down. So let's see what the last weeks are bringing for this year, but I think that is the character of our outlook overall.

Thank you for clarifying the growth rate. Can I just do a little follow-up on the GEMINI pricing. When you're competing or when you are on the same route, and you're offering kind of your customers a contract price, should we expect much differentiation between you and your partner? Or given you operate the same network, you're on the same alliance, kind of the pricing opportunity is equally spread? Or just trying to understand a little bit kind of the potential divergence or not.

I think your pricing differential you should mainly see with those that have a different product. So I would expect, but I don't know -- and we operate completely independently from that perspective. But I would assume that the Gemini partners are able to get a price premium for being on time compared to those that are not on time. So that's where I think the delta that you will see and that will not come from one day to another, and it will not come in every customer segment. But I think the delta that you will see will be more between Gemini and the other networks then between the partners within Gemini.

The next question from the phone comes from Cristian Nedelcu, with UBS.

If I can please come back on the cost savings. Could you help us a bit what was the run rate in $1 million that you expect in terms of cost savings in Q4? And what is the time line to get to the $1 billion cost savings that you are flagging in the past?

The second one on Gemini. Could you remind us, looking at your ocean volumes, what's the percentage split between BCOs and forwarders. And within your customer base, what proportion do you believe are the time-sensitive BCOs that most likely will find on time proposition as very appealing?

Maybe start with the cost savings. I think what we have said is that we expect that in 2026, well over half of that $1.3 billion that we are targeting is going to be effective. We expect to get to full run rate in 2027, and we will see some effects already in the fourth quarter, but those will be limited.

In terms of ocean volume, our split traditionally, we have been a bit more focused on the forwarder side. I think at some point in time, we were like 70-30 for orders for BCOs. Today, we are closer to 60-40. And as far as it's around what's the percentage of the customer base are time sensitive, I would say that probably the majority of the BCO business.

Understood. And could I please add one question if you allow me. Coming back on the very strong volumes from China to the rest of the world. So leaving aside the U.S. for a second. The last 4, 5 months, we've been seeing China, Europe, up 10%, 12% and so on. Do you have any data from your customers, what are the inventory levels in Europe or other LatAm or other countries? I'm just thinking to what extent part of this growth has been just an export push that is currently leading to higher inventories and we actually might see the consequences of that over the next months. And I'm asking this because the value of Chinese exports in October was down 1% year-over-year, and there was a steep deceleration in the exports from China to Europe from double digit to low single-digit growth year-over-year.

I think what we saw in October, it's definitely a slower return to work, if you want after Golden Week than we have seen in previous years. In some years, that's good, some years, that's a little bit worse. I think you shouldn't look -- I don't think we should read too much into that. If I look at the last couple of weeks, demand has really been, again, quite strong. We just were a little bit slow coming out of the [indiscernible] After Golden Week. So I don't see too much into that.

In terms of inventory, I think that speculation is always out there. I think I'm now hearing since 1.5 years that we are front-loading. At some point in time, one would argue that, that has to stop I think listening to speaking to customers, I do not think that there are many of them that sit on very excessive inventory. What will be critical is what consumer demand will be towards the end of the year, which typically for retail is a peak season, that will probably drive what's going to happen post-Christmas. But I don't see huge amount of front-loading.

And yes, you hear -- you speak to one or the other that has high inventories. We also speak to people that have actually fairly low inventory. So difficult judge and there's only a limited amount of really reliable data on that out there.

The next question from the phone comes from Marco Limite with Barclays.

My first question is again on the '25 outlook. This time on the upper end of the guidance because the upper end of the guidance basically implies Q4 EBITDA as strong as Q3, but Q4 is seasonally weaker from a volume perspective. So basically, I guess, implies spot rates up quarter-over-quarter. I mean, is that possible? Do you think that, that sort of scenario?

Second question is on your Gemini start-up costs. If you can remind us how much startup costs you had in Q2, how much they have been in Q3 and how much we should expect in Q4? And the third question, if you allow me. I mean if I look at the Q3 results, it just like OpEx was behind of consensus. Is there a single factor or maybe among the many factors that you will point out for higher inflation? Could that be, for example, very strong headhaul growth, but backhaul growth and backhaul volumes not being that strong. And therefore, how can you offset that going forward?

Maybe I'll start with the -- I think when you look at the Gemini costs, I think we overall once gave an indication that, that was between [ EUR 150 million and EUR 200 million ]. I think that prediction still holds. The majority of that we incurred in the first half of the year, and we have still a little bit in Q3 and Q4.

When you look at OpEx, I think we already mentioned that we also started [indiscernible] Because we believe that OpEx needs to come down. We start seeing that also. So from that perspective, pretty comfortable that, that is indeed going to happen. I think your point to backhaul volume, I think we have certainly seen in the repositioning costs. We've seen a little bit of a spike. Some of that is catch-up and there's still something to do with Gemini, but that's certainly a factor that plays a role.

And then I'll leave the comments on the outlook to Mark.

Yes. When we look at that right now, for sure, that scenario is thinkable in the sense that what's reflected in the perspective. And that's why you can see it. But overall, it stays, I think a cautious outlook.

Okay. Just a follow-up to that. Is it fair to assume that you still have got a lag in revenue bookings, so the weak September that includes Q3 actually was in Q4. So basically, we are implying a very strong October, which we have seen also November remaining at very strong with October.

I'm not sure we fully understand the question. I think I mentioned earlier that -- and I think it was called out by the previous person asked the question that export volumes out of China have been -- have been a little bit slow following Golden Week. So that's why volume is not exceptionally strong in the month of October. In the last couple of weeks, we see demand picking up again. That's basically what the comment was that we made.

It's not technical time shift in a sense when that was your question, too.

I was referring to revenue recognition delay between spot and your revenues, but any your answer was clear.

The next question from the phone comes from Lars Heindorf with Nordea.

Also a few one on Gemini. I wonder if you could maybe quantify a bit more about the start-up costs that you have Maersk -- on their call said that I mean, Q3 was the first full quarter with Gemini up and running. So what is actually the difference there between you and them in terms of the start-up cost? Why do you incur maybe later start-up costs compared to Maersk?

And then a second one on Gemini, which is the balance again between you and Maersk, are you a net seller or a buyer of capacity? And maybe if you can -- I don't know if you can say anything about the magnitude of that sort of balance in terms of the vessel sharing agreements that you have on -- in the Gemini Agreement?

And then the last one is on the rates. Well, I think you said you had a comment in your starting remarks that you said you hope that rates will rebound a bit here into the fourth quarter? Maybe just what is behind that? Are you seeing any signs of recovery? I know there has been a few FAK and GRI successful increases in October and then you have seen a bit of weakness as of lately. But yes, just wondering exactly what is behind that comment.

Let me maybe start with the last one on rates. Of course, nobody can predict the rate, unfortunately. I think we saw a bit of a -- we saw some seasonal weakness after Golden Week, then I think we saw rate eroding, which was sort of logical because it took a little bit of time before volumes came back. And we've had a couple of GRIs that ,as you rightfully point out that have been that [indiscernible]. Now we see actually fairly strong bookings. Last week was strong. The beginning of this week is very strong. So I think that gives us some momentum in the market to hopefully get some further rate increase in the short-term market because those [ fleets ] are really very low.

I think your second point on the balance. I mean, from all the mainline capacity that we operate and that Maersk operates, I mean, we are balanced in terms of provision. I think we have -- I think we announced it also earlier, we have a 60-40 split roughly on the main line of capacity and Maersk provides 60% of that, and we provide 40% of that. So from that perspective, we're not a net seller or buyer. I know there was a comment on the earnings call of Maersk, and that may have to do with the technical arrangement that we have made on the shuttle space, but I can't look into Maersk books, so I don't know why they exactly treat, but that's my hypothesis.

On the Gemini start-up costs, I think it is right. I think you are right. The start the changes were probably a little bit bigger for us than for Maersk because we changed a lot of terminal providers. Maersk was doing a little bit more of hub and spoke already. And whereas the corporation runs really well. And I think we're also happy with network. I think it's also fair to say that there was in some processes, that's probably a little bit more learning for us than there is for Maersk because, for example, in our case, also the empty flows change a lot, and that takes a little bit of time to stabilize that. And that's why, I guess, that some of those cost savings might come a little bit later in our case than what we see at Maersk.

Can I just have just another follow-up, but just another one, sorry, is on Suez. there has been a lot of talks lately. We've seen having a few versus going through Suez, also larger vessels. And also now here this morning is some news about Maersk in talks with the authorities down there. Apparently, maybe of course, depending on the security situation that they will return. What's your view on that? I mean, what will it take for you to return to Suez?

I mean, I think we've always said that as soon as it's again sufficiently stable and safe, then we will consider a gradual return to Suez. I think we're talking very closely to our partners which is Maersk but also others in other services on when that is the case. We're following it closely while at the moment, I do not see us returning very soon.

The next question from the phone comes from Andy Chu with DB.

Just one question for me. Just on the cost savings, there are quite a few numbers flying around this morning. I think you mentioned in the presentation the full run rate of savings is expected by 2026. But just in terms of the net cost savings, what should we be putting in for 2026 and 2027?

I think when you look at our -- there's 2 or 3 things I think that were mentioned. One is, what are the run rate savings we expect from Gemini, that we have previously indicated $350 million to $400 million. And there is no reason to deviate from that number. Then we talk about the [indiscernible] Program, where we are targeting $1.1 billion plus in cost savings, and we expect the vast majority of that to be effective in '26, and we expect the full amount to be effective in '27.

Maybe just one strategic question. Obviously, Maersk has had a pretty good performance in Terminals. So when I look at sort of the weighting of Hapag's business mainly being container shipping focus, does that kind of -- does the current environment sort of shift any kind of thinking in sort of the mix of the business?

No, not really. I think we've been -- we've, of course, been in a way we entered the Terminal space much later than some of our competitors. But we will continue to grow that business. I think that if you take into account that we effectively only started somewhere in the beginning of this decade. And today, we are engaged in 22 terminals. I think that's actually a pretty good result, and we will continue to grow that. But of course, we are -- APMT started, I think, in the last century or around 2000. So of course, they have a lot more history and track record there than we have at this point in time. And that's something that we simply need to catch up.

And then just on logistics, you mentioned sort late to the party and Terminals. Is it a party that you'll never join with logistics?

We have no plan to go into logistics, the way that others do.

We have a follow-up question from the line of Mr. Nedelcu with UBS.

Two questions. I wanted to add, the hub and spoke model, how are you thinking about potentially deploying it to other trade lanes and what is the time line there? And secondly, if we leave aside the cost savings initiatives that you mentioned earlier, what is the inherent cost inflation you would expect for 2026? Is it 2%, 3%? Is that reasonable or more or less?

I think to take the last one first. I think when you look at cost inflation going into next year, if we would not take measures, then I think that is -- that would unfortunately definitely be more than 2%, yes. I think that's a low mid-single-digit number that you realistically would have to have in mind.

And then when you look at hub and spoke, yes, we certainly see the hub and spoke model working. So will that also be used in other trades over time. Probably yes, but I don't see that tomorrow.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf E. Jansen for any closing remarks.

Not much to add. Thank you for your time, really appreciate it. Also, hopefully, we were able to give you some insight, and thanks also for the questions. Take care. Bye-bye.

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.

Good morning, ladies and gentlemen, and welcome to the Hapag-Lloyd Analyst and Investor H1 2025 Results Conference Call and Live Webcast. My name is Josef, the Chorus Call operator. Hapag-Lloyd is represented today by Rolf Habben Jansen, CEO; and Mark Frese, CFO. [Operator Instructions]

At this time, it's my pleasure to hand over to Rolf Habben Jansen, CEO. Please go ahead.

Thank you very much, everyone, and really appreciate you making the time available to talk to us today. Happy to take you through our half 1 results. Maybe let me start with a couple of highlights. I would say when looking at the first half, we've seen strong volumes, good revenue growth with roughly flat freight rates compared to the first half of last year. Overall, I would say solid financial performance, even if there was certainly a fair bit of -- we had a fair bit of operational issues. And as expected, we had significant network transition cost as we move into Gemini.

I think that phasing is now largely concluded. I think we can be really happy with the results that we have achieved so far, delivering 90% schedule reliability every month since the start. That's probably not what a lot of people were expecting, so really good. But of course, such a transition into a very different network is complex, and that means that we will definitely still do further fine-tuning in the course of the second half when we also expect to start seeing the cost benefit to come in.

We've continued to upgrade our vessel and container fleets, and we've also continued to invest in our terminal business that will continue to grow also over the upcoming couple of years. We narrowed our earnings outlook as we simply have 6 months on our belt by now, and that means that we have better visibility of what's going to happen in the second half.

Looking at the market, I'd say that the U.S. trade policies have certainly caused a fair bit of volatility, both in demand and also in short-term pricing, as you can also see from the graph here on the chart.

We also would say though that in the end, the first half was probably a bit better than many people feared. When you would talk to all the analysts and economists at the beginning of the year, most people would have anticipated no or maybe even negative growth of the container market in 2025. And now we are looking at 4.5% growth after 6 months. I would say that that's very positive. That also means that we now see that the forecast for the full year are being lifted. I think a little bit closer to what we've said earlier, because we've always said that we still anticipate some growth.

Of course, quite some differences between the trades, Transpacific very volatile, initially a bit of a rush, then a slowdown after the tariffs were announced, then a rush after that was the 90-day truce, then it settled down again. And I think when we look at the last couple of days since we see that, that 90-day period has been a standard, we see again a slight uptick.

On spot rates, a peak in May and June, which in our numbers, you will not see very much of in Q2 as we report end of voyage, but we also saw those rates again coming down after that fairly soon. In terms of routing, we continue to go around the Cape of Good Hope, and we currently see no signs that we would be moving back to Suez before the end of this year.

When we look at the latest situation on those tariffs, here is a short comparison between what did we see as initial announcements and where are we now in terms of base tariffs. I would say that in most cases, we see that those tariffs are a little bit lower with the notable exception for now of India and one that's not on this list is Brazil. But apart from that, we see that with a number of important trading partners from the U.S., these -- the tariffs are still there, but they seem to be a bit lower than initially announced. I think that's entirely as was to be expected.

I do think though that in the long run, the tariffs are not good for global trade. I think we can all agree on that. But I'd also say that predictability is probably even more important than the exact level that we see. We've seen a lot of people having a wait-and-see type of attitude over the last couple of months. And now that we have a bit more clarity on what is happening, for example, with the EU, but also with a number of other larger trading partners, I expect things to start settling down again a bit.

That will not mean an immediate surge in volume. I would still expect, though, that when you look at, for example, the Transatlantic that now that people know what is coming towards us -- them, and they also know that it's not going to be some of the numbers that they may be feared initially that we're going to see somewhat of a recovery there. But admittedly, that still remains to be seen.

Two more charts before I hand it over to Mark on the numbers. One on Gemini. I think we can really be proud of what the teams have been doing. We've delivered that 90% schedule reliability every single month since we started, I don't think there's a lot of people that would have expected us. That's also a key factor behind the growth that we are delivering in the first half as we simply have not lost many voyages, which typically tended to happen in the past years, because if you look at the weekly capacity that we intend to make available, that has not changed all that much compared to last year. But now we're sailing it every week, and we're not blanking a ton of service or losing them simply because of delays.

Also a significant improvement in on-time delivery on box level. That's something that we -- that will still go up further. And what's also quite encouraging is that on the back of Gemini, we see improvements also in non-Gemini services. So that means that, that lifts our performance overall.

In terms of investing into our business, we continue to do that. The last 4 of the 24k ships that we had, orders have been delivered. Meantime, about 40% of our existing fleet has gone through the upgrade program. We still see customers willing to buy Ship Green this year, again, significant growth compared to last year. And then the green methanol thing, I think we have announced before.

If you look at where we are today, we have an order book of about 300,000 TEUs at this point in time for delivery between '27 and '29. We are going to do a number of methanol retrofits that fits, of course, also with the offtake agreement that we have signed in China. And when you look at the newbuilds that we've gotten into our fleet over the last couple of years and what we are going to have, you see that we are renewing the fleet as we should for a company of our size.

And with that, I'd hand it over to Mark for some comments on the numbers.

Yes. Good morning, and thank you for joining us today. Let me start with a short overview in the first half of '25. As you can see here, we recorded strong volume growth which outpaced the market and solid financial results. And that is despite the challenging environment, and Rolf alluded on that and we will talk about that a bit.

Group EBITDA and group profit remain broadly stable compared to the prior year period, and we continue to generate robust free cash flows while investing in fleet modernization and maintaining a strong balance sheet, which ensures that we are well positioned to execute on our strategic priorities.

Let us now take a closer look at the financial results. We delivered strong revenue growth of 11%, reaching USD 10.6 billion in the first half of '25. This solid top line performance was driven by robust volume growth across both our Liner Shipping and Terminal segment, and despite uncertainties around the U.S. tariff situation.

Group EBIT amounted to USD 677 million with strong revenue momentum tempered by temporarily higher costs related to port congestions and the phase-in of the new Gemini network. Group profit for the first half of '25 came in at USD 775 million, broadly in line with the last year's level.

Looking now at the financial performance of our operating segments. The Liner Shipping segment recorded revenue growth of 11%, mainly driven by higher volumes. And that is while the average freight rate remained stable in the first half of '25. Higher expenses related to operational issues in ports, the ongoing ship diversion around the Cape of Good Hope, and for sure, start-up costs for the new Gemini network, that impacted the operating result as expected. Despite this challenging market environment, Liner Shipping posted an EBIT of USD 639 million.

In second quarter, our growth momentum accelerated further, with transport volume exceeding 3.4 million TTEU. For the first half, volumes rose by 11% due to more than 6.7 million TTEU, and that is significantly outpacing overall market growth. This performance is particularly notable given the tariff-related demand fluctuations we have to navigate through.

The strong growth is a direct result of our sustained investment in fleet capacity and the successful transition to the new Gemini East West network, which delivers a compelling value proposition for our customers. Growth was particularly strong on the Pacific and Asia-Europe trade routes. On the Atlantic volumes between Europe and North America increased moderately, while growth between Latin America and Europe, as you can see, was constrained by operational disruptions in ports. And the overall average freight rate for the first half stood at USD 1,400 per TEU, which is virtually unchanged compared to the prior year period.

However, we have to say the trend within the year differed markedly to '24. The downward turn pressure on freight rates persisted in to Q2, resulting in a sequential decline of 11% to USD 1,324 per TEU. For Q3, we expect this trend to reverse due to higher spot rate rates at the end of last quarter with a positive effect on at least Q3.

Coming to unit cost. In the first half of '25, they increased by 4% to USD 1,320. This increase was driven by higher storage cost per container, and that is the result of port congestion, operational delays, higher hinterland transportation cost due to a growing share of door-to-door business and the planned start-up investments associated with the Gemini network.

These cost increases are transitional. The reshuffling of alliances combined with highly volatile demand from the U.S. has added to operational challenges for both carriers and ports. At the same time, we fully acknowledge that rolling out an entirely new network structure in this market environment is a complex task and that certain start-up costs were unavoidable. While Gemini phase-in now is completed, we have turned our attention to further fine-tune the network and delivering cost efficiencies.

In addition, we have launched a comprehensive cost program that targets more than USD 1 billion in savings by the end of 2026. And this program will extend across the entire Hapag-Lloyd network and will include the synergies and efficiency gains already anticipated from the Gemini Corporation. Furthermore, we will also streamline our non-Gemini network, focusing even more on procurement excellence and review our SG&A expenses.

The Terminal business delivered good revenue and profit growth in the first half of this year, supported by higher throughput driven by robust overall demand and additional volumes resulting from the transition to Gemini. The performance also benefited from the terminal, the new terminal in Tuticorin in Southeast India and the acquisition of our new terminal in Le Havre.

The improving operational performance together with the gradual realization of synergies with our Liner business was partly offset by ongoing ramp-up costs associated with this new business segment.

And as we said, it's our ambition to develop Hanseatic Global Terminals, our terminal brand into one of the leading global terminal operators and that has some investments as a consequence. Over the next 5 years, we aim to expand our portfolio from the current 21 terminals to a total of at least 30 terminals.

For this reason, Hanseatic Global Terminals has established its first regional headquarters in Santiago in Chile on the 1st of August, which will serve as the operational hub for both North and South America. In addition, we expect the new terminal in Damietta, in Egypt, to commence operations by the end of this year, and become our 22nd terminal participation.

Now jumping over to the cash flow development. Operating cash flow for the first half of '25 amounted to USD 1.8 billion. At the same time, we invested around about USD 1.3 billion, mostly invested in containers as well as the modernization of our existing fleet under the Fleet Upgrade Program. These investments are aimed at enhancing cost efficiency and reducing CO2 emissions, especially, and emissions across our operations. And I can tell you, payback times are short.

Income from interest, dividends and divestments generated a cash inflow of USD 200 million. The total cash outflow from investments amounted to USD 1.1 billion. As you can see, as a result, our free cash flow amounted to over USD 700 million.

And following the approval at the AGM, we distributed more than USD 1.6 billion to our shareholders. Including debt intake and it's interest payments of a combined USD 0.5 billion, total financing cash outflows reached USD 2.2 billion. And at the end of Q2 '25 the cash position amounted to USD 4.2 billion.

As usual, I would like to conclude now my remarks with a brief outlook at our key balance sheet metrics. Mainly due to the lower cash position following the dividend distribution in May and investing activities, net debt increased to USD 0.9 billion. Nevertheless, we continue to maintain substantial liquidity reserve, which includes cash and fixed income investments and undrawn revolving credit facilities and that in total amounts to USD 7.1 billion.

And with this strong liquidity reserve, which provides us with ample flexibility to fund our strategic initiatives and to navigate effectively through periods of market volatility, we are very well equipped.

And having said that, I hand it back now to Rolf for a market update and our outlook. Thank you.

Thank you. Thanks, Mark. Yes, a few words on market and supply and demand. As I said earlier, I think at the end, this year is going to turn out better than many people thought initially. Having said that, we do expect that growth will slow down in the second half of the year as we do see higher tariffs than people had faced last year. And normally, that doesn't really help. I believe also a lot of people have been in a wait-and-see type of mode. But still, also in a historical perspective, 3% annual growth is more or less what one should expect in this industry. So all in all, actually, a better year than expected.

When we look at the supply side of things, we see that the vessel deliveries this year are clearly lower than they were last year. And also in '26, those deliveries will be less than we had in '23 and '24. And then, I think on the right-hand side, when you look at the capacity that's older than 25 years, one should assume that between now and 2030, but already between now and the end of '27, there's going to be fairly considerable scrapping, because we see that an increasing number of ships are just becoming older than 25 years.

And as you can see on the bottom, in normal years, so I would say pre-COVID, we saw that the average age at which ships get scrapped or recycled is below 25 years. And as such, I think it's a pretty realistic assumption to think that until '27, '28, we'll see quite a bit of scrapping, which also means that the net increase of ships on the water, when you look at '25, but especially '26 and '27, it's probably not all that crazy when you look at global fleet.

And what happens beyond that, I think that remains to be seen. The global fleet is still or the order book is still at a relatively high level, but let's not forget that at the moment, this order book covers a significantly longer period than it normally did. And we have significantly more older ships. So yes, one can certainly argue that it's a little bit on the high side, but it is nowhere near comparable to what we have seen in the past.

Then before I wrap things up, maybe a few words on our outlook. I think when we look at outlook, there's a few things where we have made some changes. I think, on transportation volume, in view of a somewhat softer second half of the year, we believe now that transport volume will increase moderately. We do expect that also, at the end of the year, we will grow significantly ahead of market on the back of a strong first half, but I would expect that also to see something similar compared to market in the second half.

Freight rate, we expect still that, that's going to decrease moderately. First half was more or less online. But whereas last year, we saw the trend as increasing. If you look today at it on a start of shipment basis, we see that since the spike that we saw in May and June, tariffs have -- short-term tariffs have started to erode.

Bunker price looks lower at this point in time than the last time we looked at it. And because we have 6 months under our belt, we, in essence, narrow the outlook from where we used to be. In U.S. dollars, you can see we go from $2.5 billion to $4 billion on EBITDA to $2.8 billion to $3.8 billion. And in EBIT, we go from $0 to $1.5 billion to $0.25 billion plus to $1.25 billion. So quite a logical step, I think, at this period in the year, but in essence, confirms what we saw also earlier.

Priorities for us for the next -- for the remainder of this year but also for next year. First of all, focus on further fine-tuning of the Gemini network and make sure that we continue to deliver that schedule reliability day in, day out. Maintain the high customer satisfaction. We get good scores since quite a long time from all of our customers and make sure that we remain focused on that to deliver that day in, day out. We'll keep focusing on growing our Terminal business, actively working on all kinds of things, and hopefully, we'll be able to show some results of that either in the second half of this year or beginning of next year.

We'll continue to invest in making our teams better. And that means we invest in training, but also definitely in the use of modern technology and data. And then finally, of course, with the market as volatile as it is today, we need to remain vigilant and make adjustments if and when that is required, and we will continue to do so as we also put more and more emphasis on this competitive cost structure, which is the point that Mark also made a little earlier, certainly one of the priorities for us over the next 12 to 18 months.

And with that, I would hand it over to you, and we'll be happy to take any questions that you may have.

[Operator Instructions] Our first question comes from Omar Nokta, Jefferies.

Rolf, Mark, thank you for the update. Appreciate the detail. Just a couple of questions for me. And maybe just as a follow-up to your commentary on industry volumes, which you expect to moderate here in the second half. 3% perhaps you mentioned is normal for the industry. Your volumes were up obviously 10% in the first half. Are you thinking also for Hapag 3% is realistic for the second half? Is that what you're anticipating for the business?

I mean, I expect the second half to be lower. I mean, I'm not entirely sure what your question is. The way I understood it is what do you expect to see as industry growth. I expect that the full year will probably land somewhere around that 3%. That would mean that the second half is, of course, a little bit weaker. When you look -- when your question is, what do you expect as volume for Hapag, then I expect that to be lower than the 11% that we delivered in the first half. But I would also still expect it to be a bit higher than the 3% that we see for the entire industry across the board.

Okay. Yes. So that was, just wanted to be clear, more on, it was not that you're going to grow with -- in line with industry volumes, you still expect to outpace it, but just not to the same degree as in the first half?

Correct.

Okay. And then maybe just another just a follow-up. Obviously, Gemini is now up and running. You've been achieving 90% reliability fairly consistently. You also say that there's still a few things left to do to optimize the network. Can you expand perhaps on what those would be and how that would affect or improve the network further?

Yes. I mean, for us, it's been a big network change. I think in fairness, the structure of the network, I think the change was probably for us a little bit bigger than for Maersk also because we changed a lot of terminals. And you simply need to get used to that different mode of working.

And I think we see week in, week out that things are getting better. It's probably just that we still see a lot of further improvement potential at this point in time. And that's why I think that you will see improvements in Q3, further improvements in Q4, but probably still more in Q1 and Q2 of next year as well. I mean, it's just a fundamentally different way of working compared to what we did in the past. And that means that you just uncover new things that you can do better almost every day. And we also see it in the indicators that we look at on a daily basis.

[Operator Instructions] Our next question comes from Cristian Nedelcu, UBS.

The first one, if I may ask you on the unit cost performance. If we exclude the bunker, I think in Q2, your unit costs were up somewhere around high single digits year-over-year despite some maybe operating -- positive operating leverage from higher volumes. You've alluded to some of the reasons behind the higher cost, but could you help us a bit visualize the contribution of how much of that extra cost was the Gemini, how much were congestion costs or other costs that led to that development. So if you could offer a bit more clarity there.

Also on the cost savings, the EUR 1 billion (sic) [ USD 1 billion ] cost savings until the end of 2026, roughly could you give us a bit of a split? How much of that is Gemini versus the rest of the network? I believe Gemini represents around 60% of your deployed capacity. So should we use that to split also the cost or if you can offer more?

And the last one, if you allow me, just I guess, as we go into Q3, you flagged the higher sequential freight rates that are helping the Gemini benefits, which are also helping sequentially. Is it fair to assume that the Q3 EBITDA should start to see a more meaningful increase versus the Q2 EBITDA level?

Let me try and take them one by one. I think, when you look at unit cost, I think there's basically three effects that play a role there. One is indeed the -- or basically it's four effects. One of them is the transition cost, indeed, which I think in our case, was fairly significant, and that was definitely a 3-digit million dollar figure looking at it in U.S. dollars.

I think the second element that plays a role when you look at unit cost, but that's more the way we calculate it is that we've significantly grown our share of carrier haulage. And that has also an effect on unit cost.

The third effect is indeed, as you say, congestion. I think the fourth effect is that, when -- as we are growing into the new network, we have certainly had some trades and some ship systems where the utilization was as planned, a little bit lower than normal, and that is something that will take us also a couple of quarters to get that up, that has actually a fairly sizable effect.

As far as the savings, I mean, to split that between Gemini and the rest of the network is actually not all that easy. Because on the one hand, we have network effects that are related to Gemini, which I think we, in the past, have also indicated that being $350 million or $400 million, once we are on full run rate, we still expect to deliver that as from 2026.

There are, of course, some other savings that are also directly and indirectly related to that when it's around productivity, some of the stuff around terminal handling and also some other categories. But if you would want to look at whatever it is directly linked to Gemini, then I would still stick to the number that we had before, plus probably some. But there's clearly also a lot of things that we do in other areas. So I mean, if you would assume a 50-50 type of split of, in the end, $1 billion or a little bit more than that, then you're not that far off.

Then when you look at Q3, then you say sequential freight rate -- sequential freight rates should indeed be somewhat up. When you look at Q3, whether in the end, that will result in a significantly higher EBITDA. I think that, that remains to be seen to be honest, because we also have some effects that will actually impact us in Q3 in a different way. So I would still expect that Q2 is going to be at least at the -- sorry, Q3 is going to be at least at the level of Q2, yes, possibly a bit better, but that's probably all we can see at this point in time.

[Operator Instructions] Our next question comes from Alexia Dogani, JPMorgan.

Just going back to the previous question. Can you discuss what are the effects that impact you a different way, just to kind of understand what we need to be thinking here. Then on the cost program, is that cost program going to be enough to bring back unit costs closer to pre-COVID levels? I think, last time you showed a very helpful chart that basically demonstrates there has been a lot of inflation that has led to a permanent increase in your main cost components. I guess, is the $1 billion cost out enough to bring you back to more competitive levels?

And is there any costs that you think are more transient and let's say, over the next couple of years will get repriced if I think about charter rates or any other cost items, that would be quite helpful to understand.

And then finally, on the scrapping opportunity. Clearly, there is a finite scrapyard capacity annually. What do you think that number is? And are you seeing investments in that area that could accelerate the scope for scrapping in future years?

Well, I think initially I was asked to give a comment on Q3, yes. I think, when I look at Q3, I think the underlying performance in Q3 will be better than in Q2. In Q2, we had a couple of favorable one-offs, which we will not have in Q3. So I think that's mainly the delta between one and the other.

When you look at the cost saving program, I don't think we're going to get back to pre-COVID levels for the very simple reason that some of our factor costs are simply very different. We did not have EU ETS before COVID. We did not have low sulfur fuel. Those alone will drive up cost quite significantly. And then, there has been inflation that impacts our cost as well, and you certainly cannot negotiate that away.

We put ourselves a target to bring unit cost down in a double-digit percentage versus what we saw actually in 2022. I think that is achievable. I also believe that this $1 billion or $1 billion plus is realistic to get that out until the end of next year, but that will not bring us back to 2019 levels.

I think also anyone who believes that freight rates would go back to that level, it's just not going to happen. Because we see EU ETS, we see low sulfur fuel, we see the prices of shipyards having gone up significantly, also investments that need to be done for newer ships. We've seen more congestion as such. We turn the boxes slower, many factors that we will not be able to manage away.

Last question on recycling capacity. I'm with you that there is significantly more capacity needed in the upcoming years compared to what we saw in the last few years. I do see a lot more activity from people that are considering investments in that space. Not that many projects that have already been executed, but I do expect that we are going to see more investment in that space within the next 12 to 24 months.

And can I just explore a little bit the point of rates will not go back to pre-pandemic levels? I mean, clearly, they did in 2023. What do you think has changed in the past 2 years that makes us more confident they won't go back to those levels?

Well, they didn't go back in -- they didn't go back to pre-pandemic levels in 2023. Yes, in Q4, there were a couple of trades where we saw very low spot rates for a 4- to 6-week period. And that could also still happen in the future. I'm not ruling that out. .

I'm just saying in the somewhat longer run, and we've also seen that even in the periods where we were pre-pandemic, then rates will always tend to land somewhere a little bit above cost. And the base cost today for all of the liner companies is simply a lot higher than what it was pre-pandemic. And as such, I cannot see a scenario where for a longer period of time -- it can always be for a quarter or maybe even 2 quarters, but for a longer period of time, those rates are going to hover at a level that is 10% or 20% below the cost that everybody incurs.

Our next question comes from Ulrik Bak, Danske Bank.

Just if you could provide a status of the bookings currently and whether you have seen an impact following the extension of the U.S.-China tariff truce just the other day? And also if you could provide your impression of the inventory level at the moment? Is it high? Is it low? I think we hear different things depending on which company you follow.

And then also to your comments about softer volumes in H2. Do you think that will be broad-based or just on certain trade lanes. I mean, Asia-Europe growth has been quite strong in H1. Do you also expect this trade line to soften in H2?

Maybe first point on current bookings. I mean, since this 90-day period was extended for 90 days, certainly in the first couple of days of this week, we've seen somewhat stronger bookings from Asia to the U.S. or from China to the U.S. and in particular, how much of mini rush that is, I think that remains to be seen as a bit early to say that. But we've certainly seen an uptick in bookings.

Inventory levels, I mean, there's mixed, I think, views on that. I would not think that inventory levels are excessively high at this point in time based on the conversations that we have, but I also don't think that they are excessively low. So I think they're actually pretty normal.

We saw them running really low when everybody paused their imports from China, especially into the U.S. That's also why we saw that mini rush in May, beginning of June, after that volumes have come back to more normal level. So I think it's not very likely that inventories are very low at this point in time.

When you look at softer volume, I personally think that's going to be a little bit across the board. But of course, probably a bit the trades into the U.S. are probably going to be impacted a little bit more than some others. And whether that's going to be Atlantic or Transpacific or also, for example, trades from Brazil, I think all of them will be hit to some extent. Because in the end, it's the tariffs, but let's also not forget that the U.S. dollar is also a lot weaker, and that in reality, adds actually some percentage points to the tariffs for U.S. importers. And as the dollar has weakened about 10%, yes, compared to what is it, 8, 9 months ago, I mean that's not immaterial.

Our next question is a follow-up question from Cristian Nedelcu, UBS.

Maybe two questions. If we zoom in on Asia to North Europe, if we're looking at the rates, we saw a strong increase in June, resilient July. I think the SCFIS is still 50% higher today than it was in Q2. So very strong performance. But the last few weeks, we've been seeing the quotes coming down from most of the ocean carriers. So we were starting to see some pressure on the rates there.

Could I ask you -- what do you think is driving this? Is it as simple as there's more incremental capacity sequentially added on this lane that is causing a bit the quotes to weaken? Or is it is demand softening a little bit? There was strong demand. We saw the CTS volumes in May, and there was strong demand for Asia, Europe and maybe that's slowing down a bit. Do you have a bit more visibility there? You could help us into August and September.

And the second question on the USTR, the U.S. port fees, I expect that to start in October. I believe they don't have direct implications for you. But indirectly, as some of the carriers may need to reshuffle capacity deployment to the Transpacific in a meaningful way that the Chinese carriers, do you believe there could be consequences for the freight rates post October on the Transpacific and indirectly on other lanes as capacity is reshuffled?

I mean the last one, I mean that's at the moment, pure speculation. I mean, I don't have a crystal ball, unfortunately. I think that for the industry, the impact of USTR 301 will be very manageable. So I expect that in the end, that will not have a massive impact on trade. It will be a little bit more difficult for one or two carriers, but I'm sure that they will somehow also find a way to manage that. For us, the impact is 0.

When you look at Asia, North Europe rates, yes, they have been fairly strong. And yes, they've been coming down. To be very honest, I think that's quite normal in this period of the year. Sometimes the peak season is ending a little bit early. It looks right now that we don't see a very strong peak running up to the end of September. But you never know, sometimes it also comes later. So these things that we are -- we've learned over the last couple of years that these things can be very unpredictable.

As you said, I think volumes into Europe have been pretty steady. And I think they still are. Bookings are still robust. We just now need to see what's going to happen in the upcoming couple of weeks. It's not that a lot of capacity has been added or a lot of capacity has been removed. So I would say that's just a fairly normal fluctuation in the last couple of weeks, the fluctuations have also been less than they were before.

Ladies and gentlemen, that was the last question. This concludes today's Q&A session. I would now like to turn the conference back over to Rolf Habben Jansen for the closing remarks.

Thank you very much. And well, thanks, everybody, for taking the time to listen to us today. We very much appreciate it, and hopefully, that was informative one or maybe even insightful for you in some points. Thank you very much.

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.