Sam Bland : It’s Sam Bland here. I have two questions, please. The first one is on the charters; you mentioned the sort of maturity profile. Is your current plan to let them run to maturity on the sort of agreed time scale, or are there any options to either accelerate or delay how you thinking about that? And the second question is, you mentioned slippage of the order book in the presentation. We’ve heard that from elsewhere as well. Do you think it’s possible that the slippage could be quite a material amount of the orders or the deliveries planned for €˜23, €˜24? Or are we talking about sort of small bits around the edges? Thank you.
Eli Glickman : Yes. Good morning to you, Sam. Yes. The first question in terms of the charter, clearly, we need to differentiate here, I think the long-term charter, the newbuild vessels that we’ve ordered over the past two years. So those, clearly, we intend to take delivery of each and every vessel, we are eagerly awaiting those vessels, they are clearly in line with our vessel’s strategy and commercial strategy. So, there is here, no intention from the company to cancel or delay any of those contracts. On the more traditional charter markets, when we charter from the tonnage provider existing tonnage, as opposed to the new build tonnage I was just referring to. In ’21, ’22, we did enter into a significant amount of contract for a duration of three to five years.
So by and large, this is what is driving the average duration of what’s left in our chartering agreements. So, meaning that between ’23, ’24 we have a few vessels up for renewal, but it will really come back in 2025 and beyond. Now, when we look at the vessels that come up for renewal, in €˜23 and in ’24, that’s clearly 50 vessels, most of them it is very likely, depending on what the market does, but if the market conditions remain difficult, most of those vessels will be delivered. We do not intend to break any of our commitments, vis-a-vis any of the tonnage provider, we will make the decision to redeliver tonnage when we have the ability to do so, or engage early with some tonnage provider to potentially discuss extension, if we think and at a lower rate, obviously, if we think that this suggests will be overused for us for longer period.
With respect to your second point and slippage is difficult to assess, to what extent it will have a significant impact. Clearly, for us, we are very much in front of that matter, because we are waiting the 15,000 TEU ships, that we’ve ordered out of the 10, nine of those ships initially were expected to be delivered in 2023. We have received the first one, we know that we will receive the second and the third in the coming weeks. But we’ve been advised that there might be a delay for some of the vessels that were meant to be delivered to us in 2023 from that very specific shipyard. So, we do think that some of the shipyards in Asia do have manpower or resource issues and which is it affecting us there’s no reason to think that it is not more widely affecting the overall industry.
When it comes to the other vessels that we have up for delivery towards the end of the year and 2024. Today, we don’t know yet but we anticipate that there might be as well some sudden delay.
Sam Bland: Just be sure on the first answer when you say redelivered, so your current jobs will be redelivered. Does that mean handed back to the charter?
Eli Glickman: Correct. To the Vessels liner.
Operator: The next question is coming from Sathish Sivakumar. Please go ahead.
Sathish Sivakumar: Thank you, thanks for the presentation. I got three questions here. So firstly, on the restocking, right? So obviously, there has been this sense of optimism that volumes are looking, at least, it trends into second half of the year looking great? Or we are seeing signs of recovery? And what are you actually seeing, based on your conversation with the shippers? And how does it actually differ from say normal seasonality related moments that you would normally get out on this point the year? And the second one is actually around the 2M Alliance. Obviously, with the Maersk coming out of the alliance, what does it mean for you are you looking? How much of your DSA is actually related to Maersk? And What is your exposure to Maersk versus MSC?
And then say into the dividend payment for FY ’23 given that we all might see a second stepped down on normalization. Would you still stick with your quarterly dividend payments, given the potential will be quarters that you could probably end up loss-making? What are your thoughts on the quarterly dividend payment? Yes. Thank you.
Eli Glickman: Thank you, Satish. So, with regard to your first question on potential restocking, this is the early days to come to a different conclusion as to when the volume or the demand will come back up. But clearly, we are getting some early indication and early signs that, the inventories and once the inventories have come down to the level where the main retailers want them to be, the demand will be serviced. And that, from a seasonality perspective also indeed collide in the first quarter of 2023 with the traditional slack season that is the period in terms of ordering and demand affecting the trade lines where we operate. So today, in the early days of 2023, we have the combination of those two elements, which is the destocking and the slack season.
Hence, while again, we truly do believe that, we are near to a bottom in terms of demand and therefore in terms of potential rates in some trade lanes. When it comes to the second question, the 2M and the future breakup of the alliance, between Maersk and MSC. I think by and large, this doesn’t come as a significant surprise for all of us that have been watching this industry and how everyone is pursuing different strategies. As far as we are concerned, we have been collaborating with both of them, and we do collaborate with both of them on different specific trade-ins, obviously, but also individually on some other trade. Our relationship with Maersk and with MSC is extremely good. We have benefited — and I think all of us did benefit from working together over the past five years now, or four years should I say we started in 2018 in the summer.
And we intend to continue to discuss with all the major shipping lines on the trade where we do believe it makes sense from a company perspective, from an industry perspective, and from an end customer perspective to better utilize and better operate our fleet. So, we are an important player in terms of market share under Transpacific. And we see no reason why we will not continue to work with Maersk, with MSC, with both of them, with one of them in the longer-term. For now, the relationship is still very strong and very efficient up until I think January, 2025 is the date when they will pathways. And with respect to your last question on dividend, yes. It’s been very important since day one for the company to return a significant capital to shareholders.
And we’ve been, I think, true to that statement since day one. For now, there’s no reason to think that our dividend policy may change as of today, it stands as it is, as every quarter, no matter what irrespective of the dividend policy, the board makes a decision and renews a decision every quarter as to what is the dividend that is due to be paid. So, we’ll see where we end in 2023, every quarter the discussion will take place at the board level.
Sathish Sivakumar: Okay. Thank you. Just to follow up on that commenter on Maersk and MSC. So, would you mean to say that into 2025 or beyond that you would still work with both MSC and Maersk on an individual basis?
Eli Glickman: What I’m saying is I don’t know whether we will ask no reason to think today that we won’t. That’s what I’m trying to get to. I don’t know — we don’t know today what will be the new set or the new scene in terms of whether Maersk and MSC will continue operating independently, whether they will be some reshuffling in the way, the other shipping lines do interconnect. We don’t know that. What we know is that, there is no reason for us not to consider working with any of them or with some others. By the way, it could also be very possible. We will see what we think is that we are a very important player, again, in terms of the market share that we command, especially on the Asia, U.S. East Coast, trade lane. We have a very efficient fleet with the 15,000 TEU ships that we are currently scaling up in this trade.
So, we are a very interesting partner — to partner with. And there’s no reason for us to think that the future when it comes to cooperation is not going to offer opportunities for ZIM and for our potential future partners.
Operator: The next question is coming from Alexia Dodani. Please go ahead.
Alexia Dodani: Hi, thanks for taking my question. Alexia here comes from Barclays. Just three as well, please. Firstly, on the outlook for 2023, given Eli’s comments around profitability improving in the second half, are we basically expecting EBIT losses in the first half? And subsequent to that, obviously, you’ve talked about, Xavier, your expectation of spot rates improving from here. How much improvement are you expecting to meet your guidance range? I mean, to the extent you’re willing to share. Secondly, on — following up on some questions on the vessels and the 58 vessels that are coming up for renewal over the next two years versus the 41 that you’ve already chartered. The net of this should be kind of a double-digit decline in unit costs or less, and just on the comment of handing it back, would you be willing to reduce your feet size from 138 containerships at the moment down by 58 and under which scenario, would you do that?
And then finally, in terms of CapEx, can you remind us cash CapEx expectations for ’23 and ’24 and these CapEx as well? Thanks.
Xavier Destriau: Sure, thank you, Alexia. First, on your question with regard to the output for 2023. Yes, we, as we said that we expect the second half to be an improvement compared to the first. We do not, as you know, provide the calendar view. When it comes to the guidance. You were asking whether that meant that we were expecting EBIT losses in the early part of 2023. Not necessarily that, we didn’t say that. In terms of improvement also for us, when it comes to the question on freight ways. What do we expect to see, as far as we’re concerned, it will be also a function of where we ended up in our contract discussions with our customers on the transpacific trade lane? If we are saying that to 50% of our volume is meant to be contracted then, and then 50% will be on the spot, it’s going to be a different effect if we end up otherwise.
But providing that we ended up where we think we will from a contract rate perspective, this provides us the comfort that we think that the second half in 2023 will be better market conditions overall for them. With respect to your second question, the 58 vessels that potentially come up for renewal against the 41 that we will take delivery from over the next two-year period, so all the way to the end of 2024. As to whether we will let go all of those for 58 vessels we will see is not a one-for-one. I think this is what we need also to bear in mind, very likely that the smaller capacity vessel the feeder size, type of shifts that currently we employ are we deployed mainly on the Intra-Asia business as a feeder in line but also as an Intra-Asia in our own traditional services.
Those vessels are needed by the company to maintain servicing those areas where we think there is, by the way, quite significant opportunity for growth. So, what will happen is, there will be a cascading effect, we will take on larger capacity vessels, those will come and replace ships that will be redeployed elsewhere. So, we start with the 15,000 TEU ship that will come and replace the 10,000 TEU that we currently employ on the Asia, U.S., East Coast, those will go and upsize the ZXB and so on and so forth. And then at the end of the day, we will let go some vessels that will be in the Panamax size type of segments mainly. So, the big ships will keep on the Big East, West trade. The smaller feeder-sized vessels will be very much needed also in the regional trains where we operate.
And in terms of dressing your last question on CapEx. We have the commitment to pay down at delivery each of the LNG vessels that we have ordered via down payment, as you know, $13 million per ship for the 15,000 TEU vessels and $20 million per ship for the 7,000 TEU vessel. So that adds up to roughly $140 million in 2023 and another $350 million in 2024, according to the current delivery schedule. On top of that, we will have the renewal of equipment, which will be limited because we have already secured and purchased a lot of equipment back in 2021. With the congestion being less of a problem this year, the rotation of the equipment is being facilitated. So we need less equipment in order to carry the same cargo. But still, we continue to replace all the boxes with newer one.
And we will continue to as well invest in developing our digital solutions, which is very important to us. We have been at the forefront of the digital transformation of the industry and we intend to continue to keep this technological edge.
