ZIM Integrated Shipping Services Ltd. Q1 FY2025 Earnings Call

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to ZIM Integrated Shipping Services First Quarter 2025 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Elana Holzman, Head of Investor Relations. Please go ahead.

Thank you, operator, and welcome to ZIM's first quarter 2025 financial results conference call. Joining me on the call today are Eli Glickman, ZIM's President and CEO; and Xavier Destriau, ZIM's CFO. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements regarding expectations, predictions, projections, or future events or results. We believe that our expectations and assumptions are reasonable. We wish to caution you that such statements reflect only the company's current expectations and that current events or results may differ, including materially. You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2024 Annual Report on Form 20-F filed with the SEC on March 12th. We undertake no obligation to update these forward-looking statements. At this time, I would like to turn the call over to ZIM's CEO, Eli Glickman. Eli?

I would like to take a moment to address the market environment. Recently, it has become clear that we operate in a dynamic industry influenced by various external factors impacting supply and demand in both the short and long term. After a couple of months with low Transpacific volumes, last week the United States and China announced a 90-day suspension on mutual tariffs, which has allowed for a shift in cargo movement between the two nations. We view this development positively; however, without a longer-term agreement, we remain cautious regarding our expectations for Transpacific trade for the rest of 2025. It is still too early to know if the increase in demand we've observed in the past few days indicates a return to normal volumes between the US and China. Furthermore, the updated USTR rule introducing short port fees on Chinese-built and owned vessels has added more uncertainty. We are actively working on a mitigation plan and evaluating the financial impact of this proposed measure. Looking ahead, we are focused on navigating the uncertain geopolitical and macroeconomic landscape, and we are confident in our agile approach and competitive position in the industry. Now, moving on to our financial results. After an extraordinary performance in 2024, both financially and operationally, we started 2025 with a robust first quarter that met our expectations. Expanding our fleet and using larger vessels has improved our cost structure and, combined with strong underlying demand, drove double-digit growth in carried volume year-over-year and improved profitability. We generated $2 billion in revenue and $296 million in net income in the first quarter, which reflects year-over-year increases of 28% and 222%, respectively. Our adjusted EBITDA for Q1 was $779 million and adjusted EBIT was $463 million, resulting in adjusted EBITDA and EBIT margins of 39% and 23%, respectively. We had total liquidity of $3.4 billion as of March 31st, which included $382 million paid in early April as the final dividend from 2024 results. We are committed to returning capital to our shareholders. According to our dividend policy, we plan to distribute 30% of quarterly net income, and our Board of Directors has declared a dividend of $0.74 per share totaling $89 million based on Q1 results. Despite the significant uncertainty, we are maintaining our full-year guidance ranges. Specifically, we anticipate adjusted EBITDA between $1.6 billion and $2.2 billion and adjusted EBIT between $350 million and $950 million, with better performance expected in the first half of the year compared to the second half. Xavier, our CFO, will provide more details on our underlying assumptions for our 2025 guidance later in the call.

Thank you, Eli. And again, on my behalf, welcome to everyone. On Slide 7, we present our key financial and operational highlights. Our strong Q1 results reflect the success of scaling our fleet, supported by positive underlying demand trends. ZIM generated in Q1 revenue of $2 billion, a 28% increase compared to last year. During the quarter, our average freight rate per TEU was $1,776, a 22% increase year-over-year, though 6% lower than the Q4 average freight rate of $1,886. Total revenues from non-containerized cargo, which reflects mostly our car carrier services, totaled $114 million for the quarter compared to $111 million in the first quarter of 2024. To remind you, since November 2024, we have been operating 15 car carrier vessels. Our free cash flow in the first quarter totaled $787 million compared to $303 million in the first quarter of 2024. Turning to the balance sheet, total debt decreased by $150 million since the prior year-end. Throughout 2023 and 2024, our total debt increased, mainly due to the net effect of receiving the new build capacity, namely larger vessels with longer-term charter durations attached. This trend is now reversing as the repayment of lease liabilities is higher than new liabilities being incurred. Next, the following slide provides an overview of our operated capacity. Eli already discussed certain aspects of our fleet strategy, and I would like to highlight a few more data points that we believe are important to underscore when thinking about ZIM's split. ZIM currently operates 126 container ships with a total capacity of approximately 774,000 TEUs. Around two-thirds of this capacity comes from the 46 new builds received during the last two years, which carry charter duration from five to 12 years and also another 16 vessels that are owned by ZIM. To remind you, we opted to secure our new build capacity on long-duration contracts rather than continue to rely on the short-term charter market, and that is to ensure that we have secure access to fuel-efficient and cost-competitive tonnage. We view this as our core capacity, and as such, maintaining flexibility with respect to this capacity is a secondary factor. 25 of the 28 LNG vessels carry a charter period of 12 years, creating predictability in our cost structure. Moreover, we hold options to extend the charter period for these vessels as well as purchase options, giving us full control over the destiny of these vessels, very much as if we were the vessel owners. We had a similar agreement for the 10 11,500 TEU dual-fuel LNG vessels we recently committed to with a charter period of 12 years and options to purchase the vessels at the end of the chartered period. The remaining one-third of the capacity that we operate, approximately 260,000 TEUs, allows us to maintain important flexibility. By the end of 2026, there will be a total of 44 vessels up for charter renewal, with 22 vessels or 81,000 TEUs up for renewal in 2025, and another 22 vessels or 74,000 TEUs in 2026. This optionality to keep the capacity or deliver to owners allows ZIM to adjust its capacity according to changing market conditions or shifts in our commercial strategy. Longer term, our focus is to ensure that we maintain and continue to enhance the competitive position of our fleet. Now turning to additional Q1 financial metrics here on Slide 9. Adjusted EBITDA in the quarter was $779 million, or a 39% EBITDA margin, compared to $427 million in Q1 2024. Adjusted EBIT was $463 million or a 23% margin compared to adjusted EBIT of $167 million in the same quarter of last year. Net income for the first quarter was $296 million compared to $92 million in Q1 2024. We carried 944,000 TEUs in the first quarter compared to 846,000 TEUs during the same period last year. That represents an increase of 12%, well ahead of market growth of 4.5%. Our Transpacific volume grew 11% in Q1. It is important to reiterate that we maintain flexibility to reshuffle vessel capacity as the market evolves, driving resilience in our business. Notably, we achieved a 22% year-over-year volume growth in Latin America in this first quarter, and we anticipate further increasing our market share in this trade as we continue to strengthen our presence in the region. Next, here we present our cash flow bridge. For the quarter, our adjusted EBITDA of $779 million converted into $855 million of cash flow generated from operating activities. Other cash flow items for the quarter included $582 million of debt service, mostly related to our lease liability repayments. Debt service in Q1 cash flow includes $72 million reflecting the repayment of lease liabilities related to the two second-hand 8,500 TEU vessels we acquired in the quarter, as well as the down payment of the last remaining LNG vessel that we received in January. Moving now to our 2025 guidance, we have reaffirmed our outlook and expect to generate adjusted EBITDA between $1.6 billion and $2.2 billion and adjusted EBIT between $350 million and $950 million, with the second half still expected to lag the first half. We have maintained wide ranges, reflective of the high degree of uncertainty related to global trade and geopolitical issues. Before touching on our underlying assumptions regarding freight rates, volume, and bunker costs, I would like to update on our contract volume. As can be expected, contract negotiations this year were affected by the uncertainty regarding tariff levels. And as such, the new annual Transpacific contracts, which went into effect on May 1st, represent approximately 30% of our expected Transpacific volume for the coming year, somewhat similar percentage to the one of last year. Our view on freight rates and operated capacity are unchanged as compared to our guidance assumptions from March. We expect freight rates to be significantly lower in 2025 versus 2024, with average freight rates in the remainder of 2025 lower than Q1 average. Also, we currently assume the sailing through the Red Sea will not resume this year, continuing to absorb significant capacity. We assume that we will maintain similar operated capacity on average to that of 2024 over the course of the year, as we renew some of the existing capacity or similar tonnage, though at lower rates than those fixed in '21 and '22. As such, we expect to continue to see an improvement in our cost structure. Given our exposure to the Transpacific, we revisited our volume growth assumptions and now assume low-single-digit volume growth year-over-year. Finally, as for bunker cost, we now expect slightly lower costs per ton in 2025 when compared to 2024. Before we open the call to questions, a few more comments on the market. The current environment is marked by a range of factors greater and more diverse than ever, which significantly impact the supply-demand balance we typically track to assess the health of the industry. The expected growth in capacity is known. The current order book to fleet ratio is significant, approximately 29% or about 9 million TEUs of equivalent capacity. But there are mitigating factors to consider with short-term and long-term impacts. First, the delivery schedule for this capacity is spread out over the next 4.5 years, with more modest deliveries in 2025 and 2026. Scrapping has been minimal in recent years, and projections for the coming years are also low, resulting in an aging fleet. At some point, scrapping should catch up. Also, the industry's decarbonization agenda and the need to meet stricter emission targets or customers' expectations will also require a higher pace of fleet renewal and could spur further scrapping. Yet the most significant factor impacting supply today is exogenic to our industry, the rediversion around the Cape of Good Hope. As the current consensus is that we will continue to do so for the coming months, the outcome for 2025 is likely to be mostly demand-driven, namely when and how we see resolution on US tariffs. Last week's agreement by the United States and China to bring down the level of mutual tariffs for a 90-day period is a positive step and will allow demand to recover at least in the near-term. It could also be viewed as mutual recognition by both sides of the need to reach an agreement. The efforts of the current US administration to address its trade deficit are not yet resolved. The tariff rates that will typically be established between the United States and China, as well as other US trading partners, will determine whether demand will return to previous levels or whether tariff levels will establish new trade barriers. Equally important is the timing of these agreements, as the ongoing uncertainty on tariff levels impacts purchasing and, as a result, booking decisions, leading to possible disruptions within the supply chain. Notwithstanding these tariff actions, we motivate trade and manufacturing diversification as both the US and China will most probably seek to reduce their mutual dependency. This in turn will further complicate supply chain management, which could present both risks and opportunities for our industry and also require further investment in inland and port infrastructures which, if insufficient, could hold higher potential for disruptions. Thank you. And on that note, we will open the call to questions.

Your first question comes from the line of Muneeba Kayani with Bank of America. Your line is open.

Thank you for taking my questions and thank you for the detailed commentary around what you're seeing in this market environment. So firstly, on the market side and demand, what are you hearing from customers in terms of inventory levels right now? And we clearly have seen the surge over the last couple of days. Are you expecting possibly an early peak season in ocean shipping this year and then a slower year-end? Just wanted to understand some of your thinking and feedback from customers. Second question around the Red Sea. There was some news recently that the Suez Canal expected, the authority there expects liners to resume transiting through the canal within a month, after they offered some discounts on those fees. So I think you just said that you don't expect to open. So how are you thinking about that situation currently from an industry perspective as well as from a ZIM perspective? And if I may ask a third question, I totally understand maintaining your guidance at this point. But now with 1Q behind you, and you clearly said that, the 1H second half comment. Can you give us a sense of where do you think you'd be at this point landing within your range, upper-end or lower-end, midpoint? Thank you.

Thank you, Muneeba. Starting with your first question with regards to the market and the demand, what do we hear back regarding the inventory levels of our customers. Clearly, I mean, we've seen ups and downs in the market over the past few weeks in line with the changing situation with respect to the tariff. So if we go back a little bit in time, when the 145% tariff barrier was announced not so long ago, a few weeks ago, five to six weeks ago, that had a clearly significant immediate effect in reducing and canceling the bookings that we've experienced. So the volume of cargo being moved out of China went down meaningfully from almost one day to the other. As a result, clearly on the other end, on the receiving end in the US, retailers had to tap into their inventory levels in order to continue to offer products to their customers. And there was always a debate and a risk that if the situation was to remain as is, at some point, inventory would dry out, and the risk of empty shelves in the US was looming around. Now the recent announcement of a pause in the 145% tariff had also an immediate effect to somehow revitalize the demand, and pretty much all the shippers were willing to bring cargo as quickly as possible for many reasons, because of the threat of no longer having inventories, I believe is one, but also because the window is now known to be 90 days and what will be thereafter is still very much unknown. So I think everybody is trying to take an opportunistic view here in this respect to try to move cargo during the times when the effect of the tariff is potentially minimal. So does that mean, and you're right in saying that from a timing perspective, this is potentially not too far away from the start of the peak season, maybe we are a month in advance here in this respect. Time will tell. I think the more important element that will allow us to have a more definitive view as to how volume can look like for the second half of 2025 will be very much where we'll land from a tariff discussion perspective once the 90-day pause has elapsed, which is now coming up soon July 9th. With respect to your second question regarding the Red Sea. Yes, today we are of the view that it is more likely than not that in light of the current situation, the Red Sea canal will not be used by the industry for the foreseeable future. I think and we are, of course, well aware of the incentive that the canal authorities have conveyed to the market, trying to attract capacity back to the canal. The way we look at it is clearly for us, we will only come back to the canal when we are certain that it is safe to do so. We will not take any risks with our seafarers. We will not take any risk with our assets in terms of vessels. We will not take any risk with the cargo of the customers that we carry. And also importantly, we will not just give it a go and try, because what I think is important to remember is that now we have a stable network going around the Cape. If we were to return and when we will return to the Red Sea this in itself needs to be for the longer time. We cannot go in and out and assume that this is neutral to the repositioning of the vessels and the effect that it has on our network. So that's why for us it is not really a tariff discussion or a canal fee discussion. This is not what is preventing us today from crossing the canal; it's very much the safety concerns that we believe are still extremely high. Then to your last question on the guidance, I think you will agree that it is extremely difficult today to have a clear view as to how the situation will be like especially again after we've gone through the various milestones that are ahead of us. I mentioned July 9th, which is a key date where the discussions on the tariff levels that will potentially prevail for all the countries, but China will potentially also change. We will get to the end of the 90-day period. August 14th will be the end of the 90-day pause on the China tariff. So those key dates are still ahead of us, and depending on what will be the outcome here will have a significant potential effect on the financial performance of the company going into the second half. So that's why we kept a wide range of options in terms of guided figures both for EBITDA and EBIT.

That is clear. Thank you.

Your next question comes from the line of Omar Nokta with Jefferies. Your line is open.

Thank you. Hi, Eli and Xavier. A couple of questions for me. Xavier, you mentioned the 2025 contracts on the Transpacific will be around 30% of volumes like they were last year. Back a couple of months ago you mentioned you had a bit more of a constructive negotiation period, and that you sounded like you were going to go back to maybe a 50-50 spot versus contract. We know obviously a lot has happened between March and May, but can you give color as to maybe what happened or what drove the decline in that expectation going from 50-50 down to 30-70?

Sure. Thank you, Omar. Look, I think what I should start by saying is that this year, just like last year, when we go into those discussions with our main customers on the Transpacific trade, the state of mind has been the same. So we were indeed open to up to 50% contract and remaining exposed to 50% of the spot market. But also, just like last year, we had a minimum rate that we were not willing to compromise on in terms of expectation rate per customer that we believe was the fair rate for both parties to agree and settle at. Clearly, the discussions this year were very much also affected by the current market uncertainties with respect to the trade and tariff discussions. So we also had some of our customers that were more on a wait-and-see mode. And this is why, again, at the end of the day, the outcome is the one I mentioned for the reason that I explained from a customer perspective; maybe a little bit more willingness to wait before to commit. And from our end, also the clear instructions given to our commercial team to not go below certain rates that were pre-agreed internally led to this outcome of a 30%-70% split.

Okay. Thank you. And then just kind of shifting a little bit maybe towards just volumes and expectations. You're talking now for '25, low-single-digits versus single-digits initially expected. I know it's not a substantial change, but I wanted to get maybe if you could qualify what's behind that. Is that because of what you saw in April and so you've adjusted accordingly, or is it more perhaps a more modest outlook for the remainder of the year?

There are two things here. First of all, I think when we look at our volume in Q1, we are very pleased with the 12% volume growth year-over-year. However, initially, we had expected a little bit more than what we delivered, and we faced the few weeks after Chinese New Year. The recovery of volume in and out of the US took a little bit longer than what was initially anticipated. So that's one. And this volume that we did not carry in the first quarter may not be caught up in the future ones. The second element is also, as you know, we've transitioned to a new partnership with MSC, moving away from the 2M, and that transition has had a little bit of an effect on the overall utilization of the fleet, contributing as well to a little less volume being carried. So that too, the conjunction of those two elements, I think explains what has happened between now and May. And now also looking forward, we clearly do see a pickup in the demand from cargo movement between China and Asia to the US. We also, as Eli mentioned, did take decisions to redesign and adjust our network not so long ago. We are now canceling those decisions and bringing the capacity back. So that also has a little bit of an effect on the overall utilization of our fleet. Most of why overall we are a little bit more conservative in our volume assumptions for 2025 compared to what we communicated earlier on in March.

Okay. Thank you. That's clear. And then a final quick one perhaps and then I'll turn it over. Are you able to give what portion of your Transpacific volume is direct China-US related?

You mean out of the Transpacific, what is the weight of China in our loadings? Is that the question, Omar?

Yes, yes. Just basically the bilateral relationship China-US, US-China, that portion of the business perhaps maybe in 2024 what Asia was?

Yes, that's clear.

Yes, yes, that's the significant majority of the cargo that we move originates from Asia to the tune of 60% to 70%. The rest would be Southeast Asia, neighboring countries, Vietnam, Thailand, Korea, you name it.

Okay. Thank you. I'll pass it back.

Your next question comes from the line of Marco Limite with Barclays. Your line is open.

Hi. Thanks for taking my question. I've got two. So the first one, the CEO clearly mentioned in his opening statement, but if you could comment a bit more about your exposure to the US port fee. So if you could just remind us how much of your fleet is Chinese-built and what actions could you take in order to mitigate the risk? Second question is about your, let's say, Q2 outlook in a way. So you have reported a very strong Q1. Now, if we think about the second quarter, spot rates are possibly going up sequentially because of the disruption and volumes are seasonally stronger. So do you think it's right to think about the Q2 profitability that is up quarter-over-quarter, or in Q1, is there any sort of special effect maybe delay in revenue recognition, which will have an impact in the second quarter? Thank you.

Thank you, Marco. First, on the USTR and the fee that we potentially may be required to pay by us if we were to call the US with Chinese-built or owned vessels. We are clearly looking into it right now. To answer your question, the fleet that we operate globally, as you know, we've changed meaningfully in profiling our fleet over the past couple of years, namely in '23 and '24. This is when we brought those 46 brand-new ships that today allow us indeed to be far more competitive in our industry. But as those vessels are recent, we are more exposed to Chinese-built tonnage than maybe some of our competitors that have not had such a big new build activity over the past couple of years. Just to give you a little bit of an indication, we today, when we look at the fleet that we operate, the 780,000 TEUs of equivalent tonnage, a bit less than half of it is Chinese-built, and the rest is non-Chinese. So when we look at the potential levy or fees that may come in October this year, clearly, we are now, first of all, looking at how we can shift swap tonnage between trades to ensure that we minimize the effect of that fee on our cost structure and as a result avoid having to incur incremental costs that we would need to at some point try to return. So it is work in progress. We are looking at what options that we can take here, again, to ensure that we minimize if not neutralize the potential impact of those fees. With respect to your second question, I think I understand what you have in mind here. Clearly, as we said, the volume is picking up over the past few days. We've seen that as I'm sure you have as well. As a result also, when the demand comes back up, the rates tend to follow. It is a likely scenario that, at least for the few weeks to come, there will be a positive driver to support the profitability of the trades. But I think what we are very careful about is how long will that last. I'm going to go back to the key dates that are still ahead of us. Yes, of course, we are focusing a lot on China, and we have up until August 14th; if nothing changes, this is the 90-day window where maybe trades will be supported in that period. But we also have, as I mentioned earlier on, in between or July 9th still a key date as to what will be the situation concerning tariff levels that are today back to a minimum level, but we don't know if that's going to persist after July 9th for all the surrounding countries around China, Vietnam, Thailand, Korea, Cambodia that I was talking about not so long ago. Those may be hit hard if there is no resolution between the US and those respective countries in terms of trade discussions. So there are a lot of uncertainties still ahead. Yes, good news to start with. However, how long the momentum will continue is the big unknown.

Okay. Thank you. And if I could stick with one very quickly. So over the last one or two weeks, China to the US has recovered very strongly. How are the other trade lanes doing? Because my understanding was that other Asia to US was very strong as an offset to China to the US. Are those trade lanes, if those trade lanes normalize, or are they still very strong as well? Thank you very much.

I think today, where we see a lot of movement in a way and fluctuations and variations are clearly those trade lanes that link China and Southeast Asia to the US, I would say that on the other trade lanes, it's more business-as-usual, if you will.

Your next question comes from the line of Alexia Dogani with JPMorgan. Your line is open.

Yes, good afternoon. Thank you for taking my questions. And just firstly can you discuss a little bit about your kind of network development and thoughts near-term? I think in Q1 you kind of exited from one Transpacific trade. Where did that capacity go? And how quickly would you reintroduce services in the region should there be a more lasting trade policy agreement? Then secondly can you help us distribute your capacity in different charter duration buckets? If you talk about how much of your capacity can renew within the next 12 months, how much between one to five years, and how much over five years, that would be quite helpful to understand the profile. And then finally, are you looking at your cost base more structurally when you think about unit costs compared to, let's say, pre-pandemic levels where there could be some savings, where could those savings come from? So we can understand a little bit of the current levels of profitability on I guess kind of current spot rates? Obviously, last week was a big move, but just to give us kind of a broad understanding of how close we are to breakeven currently? Thank you.

Thank you, Alexia. So, taking your questions in order, the first one with respect to the network. I think what we mentioned is indeed we've tried and we will continue to try our best to always dynamically react to changing market conditions. And we have reacted and we did react following the hike in the tariff between the US and China. This is precisely what we did to suspend and we announced the suspension of what we call our ZX2 service, which is a service linking China to the West Coast to LA. Because we did clearly see the bookings from China dropping meaningfully as I mentioned earlier on following the announcement of the 145% tariff. But a few weeks later, we are in a very different situation and indeed with the pause in the enforcement of this 145% tariff, we've announced that we were unwinding our decision to suspend and we have resumed the service as from next week. So we are very quick and very fast, and I think agility is the name of the game here to try our best to anticipate changing market conditions, but more importantly, because anticipation is difficult, and more importantly, to react extremely fast to changing market conditions. With respect to charter duration, when you look at the capacity that we operate today, 780,000 TEUs worth of capacity, two-thirds of that capacity is on long-term charters. To your question, we define a long-term charter commitment that exceeds five years. So, two-thirds, 520,000 TEUs today are either owned, and that is 16 ships, give or take 100,000 TEUs, and the rest 460,000 TEUs give or take is chartered for periods or durations exceeding five years. That allows us to have clear visibility on our cost structure because those charter rates are known. Also as I mentioned earlier on, we have options to extend. We have the option to buy those vessels at the end of the charter duration, so we have clear visibility of what the cost structure of the company can be as far as those vessels are concerned for the foreseeable future. The remaining one-third, approximately 260,000 TEUs, consists of smaller-sized vessels that are being chartered and sourced from the short-term charter market, lasting maybe even to the vast majority, less than three years. So we have 80,000 TEUs of capacity that come up for renewal in '25, a similar number in 2026, which gives us the flexibility to adjust some of the capacity that we will operate in the coming quarters. Then lastly, to your question, when we look at our cost structure, there are, of course, areas to potentially improve. We are always looking, obviously, at extracting costs in our cost structure. I think we've achieved significant improvement by finalizing our fleet transformation program. But what we are also looking at right now is maybe, as opposed to reducing costs, also try to avoid costs that could potentially be not incurred. This is ensuring that we are doing better at reducing the repositioning of empty containers. That requires digital tools to know precisely where the equipment is, where the equipment will be in the coming weeks, in order to motivate also the commercial team to take an export cargo and make sure that we optimize the flow of equipment. So that's one area that we can talk about. Another one is clearly also, as you know, we've been and we will continue to invest heavily in further digitizing our industry and our company to ensure that our customers enjoy a seamless experience when working with ZIM and potentially trust us with their cargo more than to others. So that will continue to be a key element for the company. Now the one thing that unfortunately we do not really control is the cargo handling charge that we pay when we call terminals. As you know, the effect of the discussions that took place between the unions and the terminals in the East Coast led to an increase in the cargo handling charge in the US and that obviously is somewhat affecting our cost structure.

Thank you.

This concludes our Q&A session. I will turn the call back over to Mr. Glickman for closing remarks.

Thank you. We are pleased with ZIM's strong first quarter of 2025 in which we grew carried volumes by 12% year-over-year and delivered improved profitability. Our performance reflects the benefit of our transformed fleet, improved cost structure, outstanding commercial agility and execution, as well as strong underlying demand during the first part of the year. We continue to share our success with investors and declared a dividend of $0.74 per share or a total of $89 million consistent with our dividend policy and capital allocation priorities. In a few weeks, ZIM will mark its 18 year anniversary. From a humble beginning as an operator of a single passenger ship, ZIM has established itself as a global container shipping company, holding more than 330 ports and serving over 30,000 customers worldwide. We are proud of our market position and the reputation we have among industry players as an innovative provider of seaborne transportation and logistics services. Following our successful strategic transformation and fleet renewal program, we are confident even against the backdrop of a highly uncertain market environment that our differentiated strategy and enhanced industry position will drive sustainable goals over the long term. Thank you again for joining us. We look forward to sharing our continued progress with you all.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.