ZIM - Earnings call transcript Q1 2022 | ZIM Integrated Shipping Services Ltd.

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Operator

Ladies and gentlemen, thank you for standing by. I'm Natalie, your chorus call operator. Welcome and thank you for joining the ZIM Integrated Shipping Services Ltd. Q1 2022 Earnings Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. followed question-and-answer be will presentation by session. a The like the of conference Instructions] Relations. I to turn now will Head [Operator over to Elana Investor Holzman, Please go ahead.

Elana Holzman

you, quarter ZIM's call. Thank welcome results financial conference first and Natalie, XXXX to

me and and President Joining Glickman, ZIM’s CEO; the are Xavier call Eli on ZIM’s CFO. Destriau, today

our projections, like We remind we results statements forward-looking company's may will differ that begin, and actual or events that the results. during expectations predictions, or future we materially. events that reasonable. expectations current such Before to to course are I believe make you regarding would or and caution the you statements We of call, assumptions expectations, this only reflect wish including that

like language forward-looking the over documents company update Report You Form this are time, XX-F kindly obligation and Glickman. referred Eli Securities no on filed to would to consider turn our undertake Eli? March in XXXX. At statements. the cautionary on filed We the described CEO, XXXX with the Commission, to the and these Exchange Xth, including risk Annual I to the call factors

Eli Glickman

Thank and call. today's you, welcome Elana everyone to

XXXX out momentum XXXX. another very transportation superior capitalize well-positioned our delivering profitability. am innovative of we an an into provider execution. present closing, on results seaborne continue quarter to proud that strong to and record we and are Following I of market exemplary extraordinary believe carried I today tailwinds as

people war. we hospital for Before donated the continued saddens an and affected violence to into build support effort In I quarterly The field of by Ukraine. those a have address situation us in dive Ukraine, our the care help to the would I to operate highlights, deeply. like to

Ukraine employees, We also in anyway and customers, we to can. support partners continue our

duty our preserve other all considerations. stated life help As I human exceeds previously, to have

accomplishments. QX to year-to-date turning Now, ZIM and

due billion, at and Consistent record ZIM of to slide, capitalize generated $X.X billion the trajectory another implemented adjusted we we've of quarter the strong EBITDA In $X.X results to this attractive record strategy. into QX, the three, proactive we on highlighted the $X.X outstanding billion. and of as net the our As markets of differentiated slide of delivering EBITDA we XXXX, end equity achieved financial strategies for Shareholders and focus in number on both maintain was XX% well. quarter. revenues our billion, record for profit margins with exceptional XX% EBIT. profitability, adjusted adjusted highly $X.X

the for to continue we We outperform several done liner average industry quarters. have as

operationally in number Our as with our results combined impressive respect double to as we of in a stand by we rates long-term our achievement, confidence environment. as last for almost XXXX. customer X, for two words, the well demand see long-term of XXX%, by more that current with in to-date, excess contract out our have can secured, given you very compared average about The long-term sustained starting to reflect strong as of in continuation took than illustrate effect which May Xst, XXXX rate guidance. a ago rate contract, rate both weeks capacity increase other X%. strong This Slide our decreased performance grew that global X% XXXX contract an QX volume the also year. rates particularly the volume QX, is compared boost to This our expectation

$X.X XXXX. billion policy quarterly to is to distribute and income. XX% year that capital expect between rate now in of shareholders As exceptional where performance the noteworthy, allows substantial a at EBITDA generate we billion and dividend to between adjusted are adjusted net $X.X to on billion to us raising to shareholders continue of our to basis return a our XXXX our It EBIT $X.X guidance to such, also, full $X.X billion,

been efficient a Board using strategic $X.XX fuel A We commercial structure by pillars, capacity. component dividend share. operational including our remain across securing has cost and executing Our our excellence. of our core number per focused Slide declared strengthening on X. proposition QX improving

our vessels. secured of to for serve maintain intended We Coast shifted US the XX,XXX. first LNG vessels us prospects. to and for soften throughout our expanded the XX,XXX, X,XXX as LNG QX newbuild vessels tonnage, as charter services dual-fuel commercial total agreement of flexibility we XX vessels container to X,XXX efficient in vessels, East XX,XXX XXXX, for TEU as market dual-fuel expedite agreements highly our long-term of our particularly diversity TEU eight Following to position TEU XX XXXX to our This charter six other of we versatile well TEU services. our with beginning fleet vessels, suited three regional network total, vessels. This Asia as secured XXXX. and total new allow Since delivery well modern is and three will XX approximately X,XXX on service, in and and a vessels In focus and scheduled serve starting added TEU XXXX already build well to XXXX announced capacity

cost forefront than among we our LNG opportunity and be LNG our us continue take vessels US core value, vessels, chartering prevailing which of LNG is company green position. fuel are own in also operating at our market position ESG remind to fleet to this delivery When powered will industry that to fleet competitive is consistent ZIM one-third road meet carbon the objectives. of liner or is the enable We their decarbonization highlight represent today based capacity, Our XX our approximately vessels, conditions new global would support whether new the will an the ZIM. an will more first decide our ZIM future on that intensity shipping we efficient represent customers will expansion anticipate will becoming sustainability important Asia Coast. our that you carbon replacement. vessels XX these of improving East to to it deploy of for also strategy this to I the container of in with reduction It to

more can when by opting we also operated to our environmentally these replace capacity vessels to Moreover, to Given chartering they X. LNG other newer maintaining easily are if technology we become commercially tonnage. our and flexibility capacity, ZIM, to charter Slide transition friendly on than mostly viable. number

high vessels. ZIM changing other trade specific market of track identified outstanding now vessels that of adjustment adjust You of minimum and deployment, increased to agility has drive of is making we capacity by remember market our Since approximately results exporting fleet that meet established added the significant beginning superior profitability. the and pillars. and have operate year, XXX optimizing our XX%, vessel ability currently important record to an It supporting can we we've and operated the utilization capacity to decisively see operational with commercial third our to conditions, advantages a condition on in direct based our opportunities to is and adjust recent weeks [Technical our sales and act and ZIM collaboration are to anticipation strategic market Difficulty] exceptional our success quickly. in the changes party. of to operated ability

strategy advancing We demand. continue our market to global customer meet identify to new new opportunities,

[Technical to notably four have far modes line, that exclusively service network e-commerce launched expansion eXpress its new customers replacement promoting US keeping Asia Difficulty], of of ZXB, kind, our are alternative XXXX, in focus from meet a As our launched six speedy result we in and first line transport lines, East and including on better to XX ZIM. for e-commerce Baltimore Southeast Coast customers. China by We the our recently operated of

time in building to our block customers identified a when our strategy, this add As opportunity ZIM Baltimore alternative we part Line, Xpress another to vision the at airfreight. of seeking a and competitive are launch service Ecommerce

Importantly, customer destination. to rail, expedited including offers and a advantages road of ZXB connections wide range inland air

to Med equal independent trades. move discussed services collaboration Coast extended cooperation on our our on Alliance XM the and we've call, previous ZIM and joint US Finally, is these partner Coast earnings while an operating operational exchange the to slot now with trades, Asia to PNW sharing, ZIM of Golf The the on as in basis making vessel the US East on the services. and Asia we we

demand, for meet development, remarks our particularly serve I financial key routes. turn please? market over to and results the our call on competitively continue his We will to on now CFO, our and growing customers, transpacific Xavier,

Xavier Destriau

Eli, everyone. you, and respective significant quarter differentiated proactive operational our another demonstrates financial of result delivered Slide and versus quarter. both a strong financial again, as of year We the well historically here performance as X outstanding results Thank and rates as improvement prior welcome, key approach. and indicators freight high across our

cargo again capitalize significantly demand, than higher record year. cargo driven prioritize on freight us kept ZIM continued to which initiatives were e-commerce market rates and once enabled results by to improve which mix. undertaken conditions, positive has Our prior to the better-paying continued

XXXX, first in preceding our $X,XXX of TEU compared per rate higher and also quarter freight than X% XXX% the the the average of higher rate to freight was our Specifically, in first quarter quarter. average

cash quarter Our to free in an totaled flow the XXXX, in XXX%. $XXX of comparable the $X.X of quarter million billion, increase first compared

prior as increased longer balance charter by the fixture, rates. million mainly $XXX since Turning of year-end, to our well number Total sheet. vessel as driven debt charter increased by higher duration daily

approximately Over the grew cash substantially by same billion. $X.X position our period,

quarter, closed for in result down ZIM’s effective position. level, which positive company net has at an to second been cash a a consecutive net period the As debt the driven the

the And to between that our intact. XXXX, capacity vessels be Our from our to of of scheduled the XX only adapt March capacity also optionality fleet for believe The XXXX. fleet potentially to to reviewed in months in now our management XX.X slightly and in in XX end is ability match strategy scheduled is chartered the months, XXXX. now things our change we remains to demand newbuild current as XX.X breaching duration the of remaining our Also, to maintain average renewal operating with fundamentals. today, will current of are take up renewed delivery capacity demand size We and vessels. and chartered XXXX, XX

has consistent in Next XXXX on same see leverage delivering that, from earnings, time can the downward X, we are to our net X.X% improvement you zero. slide in QX trended at

be strength in of continue reflecting we balance Importantly, our to regard, the our the positioned sheet. of industry third-tier in this

next slide, the to slide on X. Moving

to Our increase representing an $X.X we first volume. million the profitably million, rates, the over lesser that driven is comparable were with to and proactive QX as and the quarter in compared XX%. this were quarter was anticipated, to freight of is a was as an first of the quarter company $X.X the grew first delivering to tax primarily ZIM strategy respectively, $XXX currently focus a quarter. to margins compared impact QX industry-leading improved importantly, corporate total such, billion profit event XX%, XXX% as would year. for the math. billion In with the compared and results. income in of the delivered Adjusted year and XX% began Most continues of quarter, incurring our year-over-year of during by XXXX, for also in like Revenue in margins, adjusted that, million. we first to record EBITDA last of I prior increase. on in we the improvement billion and net XX% in $XXX carrying ZIM tax in Those EBITDA Consistent paid amount extent, quarter, last XXXX, generate EBIT to XX% margins QX note XX% $X.X $X.X margins

in XXX,XXX the continue same TEUs the to profitability. outpace year. as to to terms in volumes, in TEUs our last the of Moving without we first compared XXX,XXX period compromising growth quarter XX, carried on during industry We slide carried

rejection. our XXXX X%, for to Volume was transpacific again in while growth volume, X%. we by which market by market negatively over in current trade X%. compared by decline QX non-transpacific contracted carried overall flat, Sequentially, almost QX XXXX, compensate while grew, general the by shrunk volumes in were did the up, our the impacted QX So volume

a we that a of $X with paid flow, totaling cash would which total in cash position bank ended our approximately remind we investment other deposits and billion, and $X.X cash includes, Regarding April, you investments QX billion. cash in equivalents and dividend I XXXX instruments.

cash items converted first billion into flow CapEx in quarter, cash flow the $X.X and million EBITDA $XXX million of Other net the billion service. included our first a $XXX adjusted $X.X from During quarter of operations. of debt

CapEx first of in got XXXX, secondhand the of purchased we QX the we year. quarter to of last that first vessels related in year quarter delivered The this mainly

March approximately main X% this and billion raising full reason do $X.X to and better do for EBIT for generate our provided are $X.X and remain is our billion. guidance, billion be now EBITDA contract we improved growth anticipated than to and year other outlook $X.X rates. we XXXX largely initially Moving adjusted expect in adjusted billion guidance to assumptions is The year Volume between expected $X.X unchanged. between

experiencing. market of congestion the to and X% The now. Ocean also for This shaping to March has Timeliness in chain in still underlying into XX% view to been increased from going in of ships forward. especially the have strong in demonstrates even supply currently to strength and depth containership capacity strength year congestion reality port Jury in over strong that turnaround our fleet XXXX. XX% not Indicator forecast and the factors positive XXXX demand, and resolved congestion. port are of Exports congestion and we absorb The United market and below a XX% on the today, combination XXXX. are port operating capacity expected and near Turning a shipping be estimates XXXX. slower States, industry resulted long the queues operations port container its effective waiting disruptions Port persistent for ship future potential the outside being in is

shortened, port-specific, East we and qualities. longer as than As measures and time estimated near that backroom more US in congestion wither. transport that the holistic should outside that passed. creates rather crisis stood The view pre-pandemic, demand the Coast Beach be of XX longer cannot days. signs the as next groups, for no supply in the queue location demand It XXX in is viewed which exporters and containers be taken. China more ports LA recent more weeks chain is slide the And days doubled absorb remember future. States around at to Long started as port see, has on to These supply saw be to to congestion the of the is currently expected you to can to destination show United shows robust This the important from chain the in end-to-end remain port global to significantly

inventory. are chains Continued high disruptions levels. for level space to inventory demand required to global of growing a in ratio at looking container inventories far States, Despite shippers demand in below which guarantee normal support supply and shipping expected sales United strong maintain pre-COVID to remaining is are the results to or

You last can our by see on XXXX, in normal year higher that here experienced by when also right March global to XXXX industry. volume the X% the is compared

balance newbuild hours emission for projections zero-tolerance the more retailers to The anticipated supply-demand Moving at aggressive remain on primarily With when overall positive the balance book significant XXXX aging The pressure the ZIM a consistently that The downwards, expected. and several We the book impact least our to the slide. order mid-term including Ukraine policy. to remained [ph]war due despite near reverses setting fleet. to shipping also view be next scrap response COVID effective past supply-demand Supply major the overall to renew for XXXX, and of market over yet the the the green less newbuilding also months, positive. for in XXXX, believe is [ph]are to adjusted increased vessels capacity. decarbonize partially illegal China's offset more of carbon fundamentals grown in efficient order reducing than deliveries, disruptions of growth in and reduction XXXX. in in partially older, will mandated, will grow, chain deliveries motivation effect the has

But compares on freight believe may and volume United of recovery from which the we SCFI for in certain are in are XXXX short-term, the factors freight the extended Year. QX Shanghai to lockdown. prior additional show contend would stabilization we that Chinese price all ports The the is by normal third lockdown trend typical our growth strained when higher typical changes compared previous chain average and seasonality added keep see in due graph spot the supply up and more overall sustained vertical left to that Eli development incurred January QX pursued year. contributed respect more freight starting most and in to in decline already is rates to Yet, the the in the freight shipping, when XXXX to With compared structural We entering now expected. year graph trend on in returns than of on put again, concluding freight slower to a to prior Index for that, to-date, finally that right pressure seasonality. and in second Shanghai longer quarters to the to the manufacturing the again, to impacting the row, to shows be XXXX liners consistent downward New congested cost than historically prior remarks. The the years, strategy his the with will normalize. rate this rates elsewhere. following declining we -- XXXX first players Comprehensive turn year Next seasonality our China demonstrates in container in higher industry. peak as rate similar With is the and when for and likely back a States The would decline in including season, rate rate, picks call will levels since by expectations shorter with I year pre-COVID rates, XXXX, rates demand various consistent being the the

Eli Glickman

Xavier. you, Thank

our on outstanding long-term for commitment and profitable growth deliver while to continue We success. ZIM to execution positioning

our underlying demand. Xavier our strategy customer As future market fundamental niche leverage optimism growing outlined, for meet global the strong support just we to as

position our in commercial capacity. efficient while flexibility newbuild forward, operated our prospects Importantly, capacity we secured have maintaining moving ample fuel strengthen will and that market

advance carry seaborne to transportation We services digital for our incredible position stakeholders. with our a logistics company forward, are excited value maximize and momentum public all as innovative of to to continue as and pleased ZIM today leader progress

questions. you much. open to Thank the will call very We now

Operator

Ladies will from question-and-answer ahead. time, and question the first gentlemen, session. this from And Please Sivakumar Citigroup. [Operator the at line begin Instructions] go we Sathish is of the

Sathish Sivakumar

for got Thanks presentation. I the again Hi. two questions.

Obviously, firstly, So rate rates the contract your doubled. have side. been on almost

Obviously, So on, spot you what are on, is that would is And what to there alone? might that upside US and probably just So QX into one. you like contract they QX? extend element starting negotiation rate in if rate should actually, while -- one because actually the look Asia and go rate terms give say because disruptions -- more do slides, your that contract about if you does far, the further could expect EBITDA see given think do some at guidance on how color then for so moved of even your the second we and XXXX. we you in How your imply your is steep into you normalization you seeing right? HX as of rate

as that I then you wanted So terms versus, rate spot compare how you. relevant see mean visibility? into months, just sorry, What my system? you does what in current on does have do back visibility go that say, to to Like And could expectations if bookings say, your in those understand Thank ask the third HX? your three are like, it I you in questions. two months three XXXX? of one. your demand Yeah, And in is

Xavier Destriau

one. Yes, the starting with first

next Xst is May one think are XXth on actually. extend will starting of the The up us second contract and year. intertwined until season one and first of the the for transpacific I from April, quite the the

risk because both next have And over and agree the few are the anticipated why explained the we on is finalized all with on higher the talked ago to risk is we what are our on So months our in discussions prevail customers we March at when done we trade than were concluded the weeks that in the have initially when of discussions two XX we for last middle we transpacific we allocation increasing would then this past average that we guidance. predominantly the months. the what

will the rates Xst the May. on that So in kick-in of to we start guidance to of kick-in, increased started anticipated higher than back or contract the

that still for what spot what of there make and in that market, that assumptions and in spot might QX spot we need guidance in on some of the generate the year the we compared half anticipate be rates today, QX half market terms we a start second year. extent, do. contract the and but last respect of with to market to the largely uncertainty impact of would offset in XXXX. We assumptions the those. revenue will in second the we again, embedded and our lot normalize the spot this cargo to to made work by would the So And With reduction to is incremental

the terms sense of about a see do half been And what a expect conservative important of especially that whole the will a question, Shanghai it second when demand. is the of that placed think we of the in view still the the and of out we normalizing that there is spot third you talking we of in I with lockdown being in -- affecting that believe very So, market know, the aspect has possibility start this that Shanghai situation year. in Shanghai relevant China. the the Currently, export as industry, your

in Shanghai. there's a of reduction been So, out volume

months, back resume at deteriorate, until Asia. the to allowed export production, the have you we that Shanghai lockdown by the our some come filling should shortfall by see were is compensate and we come Shanghai end sites looking full. see that go would that production don't months reallocating couple do Up and resume to remain reading situation June, same should a to come, to the of factors, to to I that manufacturing concerned. we cargo -- to weeks think Southeast We the and to of as some far should as for as forecast, situation the the our few idea ease, stay to today, production also the the start point, for And -- in is we managed the also situation indeed, normal is to are at if so and are to start as of hearing and if happening. then start South of and -- was volume back the expected but from China to booking terms But vessels not of should

Sathish Sivakumar

that You stands do today? months a two have ZIM visibility of the

Eli Glickman

say again? sorry, that I'm

Sathish Sivakumar

wanted I clarify. to just No,

two you visibility about of So, got months booking? of terms in demand

Eli Glickman

Yes, bit on have spot. contract, due terms the we a the that And -- the but little for then our only on than more risk, negotiate more we contract importantly not in of to the do customers today space volume.

Sathish Sivakumar

Okay, ask follow-up actually. another got quick it. I you Can

market, You've say, outperformed and actually or how of on overall And that? think volume to year? of the should growth is let's the Transpacific, it driving part the we versus right? Is exposure remaining what for your about, because

Eli Glickman

an of where If last year, the the congestion we X% at we on generated first same we were increase look the Transpacific. affected by quarter versus quarter the

dynamic US. reduction for a on in we So, Southeast allowed been to lines network trade. new due Intra-Asia region, extremely so seen on quite cargo to within active anticipated. between including volume and the Intra-Asia been growing we the opened we where quite us congestion is carry a Australia, Intra-Asia has to our initially on the But than compensate bit growth have in we've the few Asia the We've slight less the

Sathish Sivakumar

quite That's Yeah. Got helpful. much. very Thank you. Thanks Okay. it.

Operator

is next Bank go of from Kayani America. from of ahead. the Muneeba The question line Please

Muneeba Kayani

on What what a for you about at expectation Port new disruption you. further And of in XXXX, Thank And be talk season? union the Thank delayed the negotiations peak into deliveries that going secondly, disruption for risk Beach. in your is the could you. And terms hearing? I China the those Long because for that? of expected if of market then chain? is in could lockdowns wondering like and are supply that you are LA, was

Xavier Destriau

Yes.

for question we Port comment case, what regards the the best could the be always is in discussions can union very what to the ready as outcome, The discussions on LA, the for us for we get first in is of work. current that hope say difficult the and with to

So disruption. be what the it and customers some in of was there We've existing their some of the chain to risk be anticipation to already LA. could cargo our threat discussions, of current is or a the be of – in the some a directing the also seen an if action potential of outcome in on Port action supply

it being from cargo there Coast, US the some US some in know, With West be the to respect your why also significant a may is explains, Coast that original per which maybe being East as to Coast than we is going the in zero-COVID is of are So – China, where US planning that not as China, indeed terminals. affected, delivered. to congestion and time to in question, possible enforced already will more tell, that Korea in East you shipyards, or increase is moved as were possible the expected of year It schedule. suggested be XXXX new amount struggle a we extent, of initial are being especially deliver an the by years vessels the where XXXX, policy the to see expected be has second the paper all and are to XXXX, building to delivered and sensing shipyards the been will significant the the some on new we tonnage is in are active

terms delivery in might the So to be new in of late. a little of some building bit XXXX of there sliding capacity

in ZIM vessels as XXXX. some we know far you expecting are vessels concerned, are that because As

February be be delivered schedule. one seem in to XXXX, we The to on expected being first

Muneeba Kayani

comment demand any seen in And what have Thank you. you And US? change recent can you the you're weeks? of sort on seeing from right now

Xavier Destriau

we us for we what going think to track. Today, ratio displaying that is I sales strong. is point show reference. graph, what's US, we we the is inventory key keep a when in in There one on metric demand – of this still the is is And which extremely which to want the illustrate that is and on Asia

look is obviously, Asia crisis some The trade, the at trade demand is Ukraine still expect resilient, we in in exposed if And Europe, Asian that the as see not trans-Pacific is the also we dynamic US on front. link. we extremely know, far are having as on the exposed you Europe, any Russia, is haven't the are to we so North we in terms one of softening to than same. other seasonality offshore is we would -- the experienced there's which the effect But Asia, not The one, don't extremely more still to strong.

need that be space looking they placed still are have Asia orders we will we that is at our are in industry us, Southeast season the there, to prior the pre-Thanksgiving, able for point to space There in have might season, that some weeks. to is is pre-Christmas to that lockdown which China, the peak to -- the ensure US. activity also the happen is start all And coming been to lifted shopping earlier to what and initially a than still anticipated. the may still Shanghai So you from customers enjoy allocated them be know,

early a and is the all are stars all will aligned, Shanghai before as be June, there or lockdown could in demand situation the surge indeed as if towards July. be So somewhat that

Muneeba Kayani

Thank you.

Operator

Robertson ahead. go from line next The Jefferies. from is Chris question of the Please

Chris Robertson

for taking you thank and questions. my morning Good

Xavier Destriau

Good morning.

Chris Robertson

you first percent and per average off duration per on charter duration. of the operated average charter average, fleet rolls the or current Could question time what your year? charter My quarter is about talk time on

Xavier Destriau

exception what on acquired have, we much of -- Pretty are them charter if operate XXX that we we the have XXX vessels the secondhand vessels average today. last look we at of late all we The vessels, -- year. with

of on is book for all that months. than to a for XXXX the The already has we've between we charter, contracted charter more when they the of are duration we XX charter throughout we remaining When or That five renew more charter. all average since a year; contract changed. on average So they not three of duration, are we and in year. a than still charter in a terms XXXX, duration XXXX, in charter And now today, vessel, a renew late fix is and when years. have

that sum That's in row. in quarters five should or the three mind. we keep of now since think a rule I

So three five to years years.

Now of second you're and is we terms -- into a your XX the will end of vessels come when XXXX that will up that come what the renewal today fixture for vessels, in question, and an have is which looking important very and the this into And year. we come. in for I operate, think out quarters that raising it XXXX, XXX to of to point between ahead the of charter part now left in the end to the comes

those we want So into charter might contracts of it to years -- the three vessels. vessels that five enter between those to then and duration vessels XX rightly XXX charter, is for renew for we XXX again out

the So the of market stock not for to charter exposed we remainder that are XXXX.

XXXX flexibility and ahead we XXXX, where leave looking buildings that's and cover be will will delivered in that and that in However, into to the delivered want that the XXXX. us into new we XXXX to need order room we be for --

XX an have end. XX. we come in we to And another or vessels have XXXX, charter that XXXX, So in will

chartering and same So over into to come XX that period. perspective vessels, to that’s charted to altogether put the an of XX be newbuilding in it be compared agreement, to us end the terms will will with that

Chris Robertson

the Yes. Okay. speak we terms Baltimore eCommerce to earning Express line, lines. market second other that. the on and that should rate? also a my – and for of on you is the premium the Thanks about of of new versus a question eXpress in generally How average can think And kind --

Eli Glickman

lines that those arrives both vessel it arrival that that the on The onto the also as -- terminal time-sensitive can at the once are can swiftly. ready have ensure be time cargo. to and transit is have that as short we that chassis organized we -- transportation the this is objective the Yes, rail be dedicated to inland

that So lines. a service whole on this provide those the when book they customer specific is to we

or premium So would that more do what generating per are generate indication line income is on it better commend better as we premium. we average, we but It TEU that to yes, a those or lines, percentage traditional of to price they is trade give difficult the on on margin an a

Chris Robertson

your around following guidance EBITDA my first on guidance. And of it’s what on asked negotiations spot? percentage based the contract locked is is of final question question in fluctuations kind of your in the to What kind EBITDA up Okay. versus exposed

Eli Glickman

that mix a will trans-Pacific, to country mix XX%, volume contract at is are rest is look -- about XX% when a be volume South our trans-Pacific. or and to every contracted basis trade the -- the The long-term and non where of cargo Asia on talking is we America. operates, or spot. The our we are where long-term XX% remain XX% exposed trans-Pacific, -- from Intra-Asia, Atlantic, contract. so we is of And But

that our more So from you and can first contracted a perspective, criteria. our line can volume is think of you than apply volume a -- XX% XX of that bit

The may obviously, -- other of -- the is in needs second of terms differ to in taken to be per terms trans-Pacific the in of terms lines one that TEU. profitability into that in of volume EBIT consideration margin terms

profitability is is a just already in talked being it in quarters. perspective, about for from that XX% locked So the north the I of future

Chris Robertson

Thank the color, Great. I for and Yes. you appreciate Okay. time. the

Operator

The of Please line Alexia ahead. is from from next Barclays. Dodani question go

Alexia Dodani

Yes. good three. had my taking for I also afternoon. question. Thanks

and as in up. call you increase little Xavier guess, is with period utilization you're the operating talked a volumes prior ahead, from now quarter. Just about we the line talk XXX most comments are quarter that of I vessels. That Can this that firstly, recent you yet previous XXX how the assets lines the move bit at just about to on in the a and significant expect pick these carried your

I demand? little weakness retail a able some to of be is fleet, implications. give of you a capacity. growth terms plan high-level forward-looking if size give from of exposure volume in there I'm of by or confusing are carry. clarification rather And product kind if the would us clearly is US mix else bit the guess than number some to of what terms you secondly retail? And volumes the balance trying of the then the you're can in understand price or largest being on there and of can e-commerce sales that associated us customer I one capacity in on useful? driven there Is very mean, just to that's terms retailers So from on news a mix

So terms it there any line more great. then color in in inflation, there labor And you be going kind would inflation. give seafarer nuance? Is with of Thank to the up can wages of something final or on question is cost you. is flag

Eli Glickman

first the compared on regards vessels of question Maybe your utilization, to the fleet XXX. Alexia. with you, part Thank to the XXX

We slots as XM. relationship that to capacity. operating to adjust fleet the the we with remember well with are we our more vessels the we new with buy also the partnership on And own used to have increased board our now we also replace and size that our of partners

operating partner’s So on translation that explains the space our also some quantity, in carried used we -- net to same vessels. exact why vessels see extent and board a are to we of said, you I of be don't of terms more because buyer as

thing translated strong every asking I been voyage. think, important The place congestion same transit impact, a is on is, cargo one which had the meaning into you issue, to volume utilization. that is element, Second nevertheless, XXX% has to of the an has the from about Utilization and single longer close other. that time, waiting carry the extremely time of to one that very were terms in

a overall a the of moving So, -- boat an A have time a effect there the that less been result transit B. has on as to port from of congestion voyages in

fleet So, with and very Vessels to vessels utilization with is strong. relationship volume of our also adapt in XM current line the impact congestion. the the more -- the with the

and make necessary important foothold to not that for our XXXX, will to all tonnage need to in that increase on come to the ensure will our newbuilding plan much taken also that very to vessels is have core have leaner that lines our in the Looking very position that very capacity only the forward that we have already those and we capacity we this very to steps trades. the that allow which a out, get we we in strong us sure defend, XX that order very want will position And earlier and is a XXXX strongly. competitive efficient way we the referred but us

we If option have And to I delivery will earlier continue the are we those is we will so, -- that renew trade enter into we alternative the very enter was explore why one opportunities The in we does then top opportunities lines. capacity to sense, see referring XX cover this options will. us it to where the as to if make on We of them vessels some we that to -- into of there of on we on renewal that new because to trades, will XX will for and top XXXX-XXXX. that or we or see for are pleased get do new for. new charter see

have So vessels coming years. to obligation the the option, will operate the we not more into

about Asia this to China question Zealand. that same expand trade, it between to question type raised, type L.A. of Asia, think, with you into liaison I e-commerce a our Southeast Southeast starting aggressive we in very the between and New third to trade of and The entering percentage of We've our activity. Asia, Australia been, a then

Asia announced just opening same of Coast. we're similar US a the length the trade Now service, East the to between between sorry,

So our a opening customers wish of and the lines type that solution provide reason why to because them. those is there this we we're do is demand

we were Ukrainian’s of we trade are know, well So Ukraine’s lesser of what a the Australia, XX% very And have Ukraine on of there's lot to trade XX% cost over which with a board. and and question, maybe and as transpacific the current XXXX, your e-commerce last all extent employment. much Intra-Asia trade well a trading. in terms on with at seafarers look is Obviously, of e-commerce then about situation lane. split it greater our our we of seafarers Intra-Asia impacting was as the pretty much If situated

to the do part daily the as has support. the rates well For us, the management And rates, as tonnage impact that the capacity in the the include we pay we vessel seafarer the technical mentioned, chartering ship manning we we it the a because operate. limited the honor wages as of are includes of that vessel, of charter that and largely that

owner the So tonnage more is if there it absorb. us is it's to for than an from impact,

Alexia Dodani

the follow-up Very ask just you changed mix of one clear. your Thank much really you that. Xavier can on portfolio. I mean, I haven't very Actually, contract volumes. And for contracted spot on locks-in there the XX% transpac or for are increase on the level you higher some a is more of that opportunity confident that market? these an increases to to longer,

Xavier Destriau

from We addressing would long-term It the throughout contract of in a the with lack to we respect to could one and that we And allocate of customers. first demand space was was we on this discussion, the them. that have were our of increase each could not basis. question our decided a volume that every the customers amount the

especially to was more that, season, the – as strategic also with company it from stick we can allocation to peak outpace XX% the spot during is contract to rate. where normally able the spot benefit the the the spot it contract a from to the market, and to So between be decision like expected be contract

recipe past to front been change for over has we didn't see worked for a ZIM has the drastically any and this reason that that years, season. on that specific few very So contract

Alexia Dodani

Great. very Thank you much.

Operator

Bland Sam the The of next Please question from ahead. line is go JPMorgan. from

Sam Bland

got you. Thanks the three, please. for question. Thank I also have taking Hi.

these one First contracts. is the, transpacific on

they've the the – second question rate the spot lane, The vessels. you the Could been talk current I where doubled. about rate is particular doubled versus contracted on XX has roughly have that please? think are the, on rates agreed

just is, ships, Thank how And at please? could that, known the all XX? out take liability you you. you final we question if think some be a of for would on lease there option payment. that's on if all an of is upfront the Could if or you And of or payment all max assume around million, on confirm the and there's it kind big those, charters at, think renew XXXX, I them, existing of flexibility $XXX that is XX some maybe do sort the upfront XXXX roughly that? so, where in least the

Xavier Destriau

did will not we we or that was currently was regard time some spot the from pay the with or otherwise over the some we looking that gap equity. put between than Okay. is to – – compared that to vessels. double – on indeed are – of rate, at we question, – a actually agreed cash that and would And get to from – are strong the it time XX – the – we but is more transpacific to average the yes, same in more us risks time the at we of we same you from far the our large we or cash agreed upfront where owners providers, that, some last request versus did tonnage the past put that terms the the today, depending demand to some we service latitude it have is what delivery also rate not stuff as settled to your But off the of rates of contracted first vessels, question, those respect we mention signed The on at today. too With to to request good able to the year. were contract the to by spot there the or when various of few to But charter very opposed remunerate the completely agreed. on that a equity weeks. – what be But remuneration use, a second

So, that the XX,XXX I for think And we a by TEU us would the the agreement. duration for to over paying we the did series rate with chartering the of tenth daily charter reduce it be communicate – way and vessels first of Seaspan vessels. large, was

subsequent vessel, agreed the terms order per million vessels, XX vessels. in $XX altogether the so them, about for million for talking And X,XXX are XX TEU we of of then $XX payments. altogether the of We for million $XXX

will what to to the the one, in the the currently rate over the we because or answer cash everything to if of be, that add of the difficult that in renew operate $XXX delivery chartering that it's don't be be terms Sam, were obviously, the get will last to you region go make we the opposed will would know, as XXXX delivered to we ones So, And if million. question, for renewal let would vessels in time, XXXX us. at room the and charter to out we commitment of be altogether, those newbuild

for this and where grow if difficult say. for our know, you But perspective, believe is do the a enter it's on right -- that very was it can and a ongoing high felt So only that, as profit. bit it, we from to sustainable do would obviously, we thing into business to trade, that agenda we to generate profitably we to

have are continue we But to we do grow. no in to aggressively. to pleased grow we the have the feel So obligation to way, continue very option to

Sam Bland

Understood. Thank you very much.

Operator

our Q&A concludes have session earnings call. for This and you a pleasant and the Goodbye. ZIM QX Thank day. joining,

ZIM Integrated Shipping Services (ZIM) 18 May 222022 Q1 Earnings call transcript