Hapag-Lloyd Aktiengesellschaft (HLAG) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Hapag-Lloyd Analysts and Investors 9 Months 2021 Results Conference Call. Hapag-Lloyd is represented by Rolf Habben Jansen, CEO; Mark Frese, CFO; and Heiko Hoffmann, Head of Investor Relations. [Operator Instructions] I would now like to turn the conference over to Rolf Habben Jansen, CEO. Please go ahead.

Thank you very much, and thanks, everybody, for making your time available to join us here on this call. Yes, as usual, we have a short presentation prepared, with a couple of remarks from my end in the beginning and then Mark will take over on the numbers, after which we'll give a few comments on market and outlook. Maybe a couple of opening remarks. If you look at the first 9 months, we have seen, as you all know, continued strong demand, but clearly also a fair number of operational challenges. If you look at the first 9 months, we have seen, as you all know, continued strong demand, but clearly also a fair number of operational challenges. If we look at Q3 in specific -- in particular, I think congestion was as expected, pretty severe, yes. Apart from that -- and that has certainly limited us in our ability to move volume because quite a bit of it is actually stuck on ships as we speak. Apart from that I think the two main events that are worthwhile mentioning from our end are the acquisition of NileDutch, which closed in July. And then we also signed the agreement to take 30% in Wilhelmshaven in September. In terms of numbers, earnings are still strong, of course, on the back of high freight rates and transport volumes that are roughly in line with our expectations. Costs are up not only because of time charter but also bunker is up, and we have quite a lot of congestion-related extra costs as well. Balance sheet ratios, of course, improved significantly because of the strong earnings. In terms of market, demand expected to outpace the supply growth not only this year but also next year. Supply chain disruptions will continue. We still think that there is going to be some easing into 2022, but nobody knows exactly when all activity has slowed down, still a fairly sizable order book, but we also shouldn't forget that as we move forward and the environment-related regulations will become tighter, there will also be a need to replace the older fleet. Way forward, we expect also to see a strong Q4, as you have seen from our updated outlook. And in terms of the priorities for the next years, those we will present at the Capital Markets Day in a few days. A little bit more detail on congestion. You see it on Page #3 of the presentation that waiting times outside of the ports are not only up in the U.S., but clearly also in North Europe and in Asia. In addition to that, we also see that port operations in and of itself have lost, for the first 9 months, about 5% of capacity. And of course, if you add up these two effects, significantly longer waiting times outside of the port, but also 5% lower productivity. And that, unfortunately, explains almost on what charter, the key remaining program that we have at this point in time. Because whereas when demand started to bounce back, after the initial phase of the pandemic, we, I think, in reality, had 3 problems. One was that boxes were sometimes in the wrong places and because we needed them longer, we didn't have enough boxes available. I think that problem has been resolved because we have built enough boxes to now be able to provide them. That doesn't mean that every now and then there cannot be a shortage of boxes. But by and large, that program has been resolved. We have enough ships on the water. Everything we have is sailing, but it's really down to this problem, which we see here illustrated on this chart. We've done a lot of things to counter that. We moved capacity to high-demand trades. We try to find alternative gateways. We try to buy secondhand products. We put in additional vessels, we deployed extra loaders. We bought a tremendous amount of additional containers. And in addition to that, we also have added people, have added IT capacity and developed a number of new digital solutions to ease the work. That doesn't change the core of the problem though, but I do think it makes it more manageable. And before I hand over to Mark, last point on current developments, you will have seen that we closed the transaction with NileDutch in July. Meantime, we're in the midst of the voyage cutover and we will, as anticipated, close that by the end of this year. And then JadeWeserPort or Wilhelmshaven, we have completed -- or we have agreed that and have signed the agreement, closing expected over the upcoming couple of months once we have all the necessary approvals. So with that, I'll hand it over to Mark who is going to talk you through the numbers.

Yes. Thank you, Rolf. Also, good morning from my side. And even if the chart is not indicating that I can keep it short and crisp. As already outlined by all 9 months '21 was dominated by continued strong demand from transport from the Far East to the rest of the world, for sure, and that was resulting in some operational challenges, as said. While the operational situation remained very difficult, financials improved strongly on the back of these higher freight rates and volumes. As a result, we were once again able to improve profitability, strengthened the balance sheet, as you can see here and cost of capital. On the next chart, we take a closer look on the P&L. We see that the earnings trends accelerated even further in third quarter. As a result, we see 9M EBITDA quadruple to USD 8.2 billion. The EBITDA margin jumped with that to 45.5%. And in 9 months, group profit came in at more than USD 6.6 billion. Looking at Chart 8 you can see that the transport volume increased by 3.3% to roughly 9 million TEUs in the first 9 months. The strong demand for exported goods from Asia led to the increase in transport volumes, as we have seen on the trade Latin America, Middle East and Far East, and particularly compared to the year or the previous period. The lower transport volume on the intra-Asia trade is attributable to the network optimization and container repositioning to meet demand from exported goods from Asia to the rest of the world. And on the TP, the congestion of local port infrastructure and the resulting delays led to a slight decline in transport volumes despite the higher demand for container transport as mentioned. Looking now to Chart #9. While the higher volume growth was impacted by the continued supply chain disruptions, our average freight rate increased heavily due to the scarcity of vessels and containers. And on the other side, we have to cope with bunker prices, which -- with a number of USD 514 per tonne in Q3 was already close to the level we have seen in Q1 2021 -- 2020, when the introduction of the IMO 2020 low-sulfur regulation led to that temporary surge of bunker prices. Now to Chart #10 on unit costs, they continued to increase, clearly due to the global supply chain disruption, as said, as well as general cost inflations, and we have to say more to come. In particular, expenses for handling and haulage have been negatively impacted by the operational challenges, higher container storage costs and at the ports and interim terminals due to longer dwell times led to that increase of 16%. D&A was also up on previous year, primarily due to the rise in the percentage of ship chartered in on medium-term basis at simultaneously higher charter rates and the resulting increase in right of use. Due to the very good earnings, looking at Chart #11, situation -- operating cash flow increased to USD 7.5 billion, while investing -- or investments have also gone up as we have acquired NileDutch, invested in additional containers, secondhand tonnage and made first installment payments for our new orders, the ultra large container vessels. Despite these higher investments, free cash flow surged to EUR 6.6 billion compared to the EUR 1.9 billion of the previous year period. You know that we have used the cash flow to pay out a dividend of EUR 3.50 per share and to pay down financial debt. And we have to say that the investments in Q4 are expected also to increase. Last chart from my side. As a result of the very strong earnings trend, our balance sheet ratio improved further. In 9 months 2021, we reduced our net debt by USD 4.3 billion to USD 1.2 billion. Net leverage is now close to 0, and we certainly will be net cash positive by the end of the year. With that, our balance sheet gives all the strong financial and strategic leeway we will need for tomorrow. And having said that, I will hand it over back to Rolf to conclude and comment on the market.

Thank you, Mark. I mean, yes, only a few things from my end before we open up for questions. Maybe a little bit as usual on supply and demand. First of all, if we look at volume growth, of course, volume growth has been strong after the decline last year, which was much less than was expected. I think when you look at container volume growth, there's probably a little caveat to that as well because I still think that a lot of that is actually being measured based on an export basis. And there is a tremendous amount of cargo currently probably stuck, yes. So if we would measure it based on what actually arrives at destination, then the growth is probably going to be less than the 7%. And then also when you look at the growth rate that most of the larger liners have reported, you will also see that, on average, you will not get to this 7.4% at the moment. Having said that, healthy growth, and I believe also the outlook for next year, with still a lot of pent-up demand and low inventories around the globe on that front is definitely healthy. When we look at the order book for a second, I would say that the order book is up, yes. It's above 20% at this point in time, which I think was a little bit to be expected. Newly placed orders are slowing down a little bit quarter after quarter. We'll have to see when that orderbook will really be delivered. When we look at the situation that we have today, you could also see that the idle fleet is at an absolute low point with lots of people pushing out scrapping, but also pushing out dry docks and regular maintenance. So we will certainly need some additional capacity to take care of that as well. And we also shouldn't underestimate the impact of the new rules that are going to kick in as from 2023. Having said that, looking at it for now in the short run, I think we see that in '21 and '22, where demand growth will probably outpace supply, and then in '23 and '24, it might be a little bit the other way around. But personally, I still think that like that scrapping and the impact of additional dry docks that a lot of people need to catch up is actually higher in '23 and '24. So the guess that's being suggested here is probably a little bit smaller. And as such, looking at it from today's perspective, I think it's fair to say that the next number of years, right now, look to be reasonably balanced, yes. and of course, that, that picture can still change. But until '23, not a lot of relaxation to be expected. And as I said, I think the big wild card there is the impact from new environmental regulations. Then looking at the outlook. This is the last one that we've actually published. Transfer volume roughly in line with previous year. Bunker consumption price up quite a lot. We still see bunker prices being pretty high these days. Freight rates up, of course, and EBITDA in the range of USD 12 billion to USD 13 billion and in terms of EBIT between USD 10.3 billion and USD 11.3 billion. So how do we look ahead? Operational challenges will remain, but we do expect some normalization, not before the first half of 2022 though. We need to make sure we stay close to our customers. That's also where we invest a lot and where we try to do our utmost to help them also through this period. We'll continue to be prudent on the financial front, and we also start looking ahead 3 or 5 years from now because we need to make sure that the unit costs start going down again. Shipping midterm definitely will again be the most efficient way to move your cargo probably also at the lowest possible cost. And then, of course, digital solutions being very, very important. We have seen that in terms of some of the stuff that we have developed already and more in the pipeline. And then we'll talk more about our priorities for the next roughly 3 years, yes, and we'll also talk to our sustainability strategy at our Virtual Capital Markets Day in a little bit less than a week from today. So with that fairly short introduction, this time, we'll hand it over to you for any possible questions you may have.

[Operator Instructions] First question is from the line of Sathish Sivakumar with Citi Group.

I have 3 questions. My first question is actually on contract rates. Could you please actually update on the progress that you have made so far versus last year? And then where do you expect this year for 2022 in terms of volumes to differ versus, say, 2021, i.e., split between spot and contract rates? And second one is actually slightly related more on freight forwarders. Given the current tight capacity that we are seeing, are you actually seeing increased pressure on freight forwarders, actually, to buy capacity for longer duration rather than say, typical 2 to 3 months ahead. And then in terms of congestion, I understand the reason why U.S. is actually seeing an increased congestion. But in Europe, what is actually driving it? Because we are not seeing a similar demand compared to U.S. So is it mainly related to land site bottleneck? And where do you see congestion normalizing in the Europe?

Sorry. Let me try and take them starting with number three. Congestion in Europe is definitely mainly land side related. I'd also say that demand has been going a little bit up and down, but has also been strong in certain pockets, but main bottleneck there indeed on the land side. When you look at the position of forwarders, your second question. Of course, forwarders operate in the same market as BCOs and that means that right now, we have a market where space is tight. And of course, that puts some pressure on the duration of contracts, the same pressure we face when we talk to people that charter our ships. And when it's around contracts, I think your questions were, how is the split between short and long term? And yes, that's shifting a little bit more towards the long term as we look into 2022. Certainly also a segment where we contract for multiyears. In terms of the progress that's being made, I would say we're probably a bit ahead of where we were last time -- where we were last year around this time, but still the majority of the volume is basically under negotiation now, and we are closing deals daily as we speak.

So do you expect the split to be significantly different versus last year on the spot versus contract?

I suspect that the contract chunk will go up a bit.

Okay. And -- sorry, and just a follow-up on freight forwarding. So what would the typical exposure actually between the spot market and contract set back in 2019?

I didn't really understand the question.

So out of the capacity that freight forwarders buy from liners, what the typical mix would look like, say 2 to 3 months' worth of capacity versus mainly on spot?

That's very difficult to give a clean answer to that. I mean they tend to operate in 3 segments. One is the annual contract. One is the 3-month contract, and then you have the spot market, and it varies really a lot between which forwarders. Some are more long term, some are more short term. But I would say they probably typically have a decent presence in all 3 segments.

Next question is from the line of Sam Bland from JPMorgan.

I have 2, please. The first one is, again, on contracted rates. Could you just confirm whether your 2021 guidance includes much of a benefit from contracts being renegotiated early? Or does most of the sort of contract renewal uplift kick in from early 2022? And the second question is on spot rates. We've seen some decline in some of the indices and there's been some press articles recently. Do you -- I mean, it's a bit of a crystal ball question, but do you think that's a sort of start of a normalization? Or could it be maybe more of a seasonal effect and we might see an uplift later on?

I think on spot rates, maybe first, I think the decline that we see right now is probably less than you'd normally see in this time of the year compared to what we see in peak season. And of course, we also come from a very high level. I would, nevertheless, hope that these spot rates normalize a bit more as they are today, still on a very high level and going into 2022. I think it would be better for everybody if we see a little bit more normalization. We don't see a lot of that just yet, so to be honest. When you look at the effect of contract rates on our '21 forecast, I would say that the effect of that is fairly minimal. Most of that, you will only see in '22.

Next question is from the line of Andy Chu from Deutsche Bank.

Just on the current contracting season for Asia -- Europe. I think, Rolf, I think I saw some comments that you saying in the press and I wanted to double check whether this is correctly quoted that you were saying that actually the absolute amount of contractual rates on Asia-Europe was actually not that high relative to the current sort of spot rates. And then a lot of your other sort of competitors and sort of top 10 players are talking about contract rates Asia-Europe in the market that's early stage rates up 100%, 200-plus percent. So I just wonder if you could comment on Asia-Europe and how those negotiations are going? In terms of Slide 15 in terms of supply/demand, just a couple of sort of points here. Just wondered, therefore, is it right to conclude for 2022 that the only way really year-on-year is really given that supply-demand balance looks favorable for 2022 that freight rates should go up year-on-year? And then in terms of the sort of supply coming on board in 2023 and 2024. If you were to take, say, 2023 and so to the jury and others that are sourced into the 7.3% supply in terms of closing that gap versus the demand that you alluded to, you're starting with 7.3% demand. What percentage would you chip away at for, say, delivery delays, higher scrapping? Why now the sort of category, how should we think about the sort of chunks in terms of closing the gap to the demand at 4%?

Yes. Let me try and take them start with the last one. When you look at 2023, 2024, I mean I think the likelihood that there will be some slippage in production is definitely there. Likelihood that there will be some more scrapping is also there, and there will also be some impact from IMO 2023. How much of that gap that will close, I really don't know. But I would not be surprised if it closes anywhere between 1% and 3% of the gap. And I think that is gap is predicted to be 3% or so. But I would be surprised if it's going to be more than 2%, assuming the demand indeed comes. Then your question on whether in next year, we expect rates to go up? I do expect contract rates to go up on average because quite a lot of that was closed before 2021, but I do expect spot rates to go down. What the mix of that will be, that remains -- it's too early to tell. And then on Asia-Europe, yes, project rates are over there significantly below spot rates. I think that's also what you see in other markets, and that spread is considerably bigger than you normally would see. If you look at how much the contract rate is up versus last year, it's difficult to put a percentage on that also because the contract rates that were closed for 2021, especially in Asia-Europe, have been closed over a longer period of time, which means that you still had some very low rates that will be closed. But at the end of the contract season, rates were already up quite significantly. So the percentage probably goes from a high double-digit to somewhere in the triple digit percentages.

And maybe just one further question. In terms of all the sort of disruption in the industry where it's land side at the ports, at the warehouses. What would it take -- if you were to sort of offer a solution, what -- is there a solution? Is it trying to clear the bottlenecks at L.A. and Long Beach is a priority, putting extra -- trying to get extra maybe government resource and that's a clear bottleneck? Is that sort of one -- a potential option? And how would you actually go and clear this bottleneck if you were sort of -- I mean, talk further.

I think it also has to be that the efficiency gets improved. If you look at the waiting times that also truckers have in places but not -- like L.A., but not only there, yes, they could move a lot more boxes, yes, if they would just go in and out of the terminal and pick up the boxes and deliver the empty ones. So I think there's a lot that can still be done in terms of efficiency, and that's not only on the terminal side and opening hours, but it's also about the ability to deliver boxes at the customers. Many customers would still accept boxes only during certain times of the day and certainly not during the night. If we all go and think a little bit more 24x7 not only in the ports, but also when you look at the truckers and also when you look at the warehouse and abilities to deliver, you would actually create an enormous amount of additional capacity that would allow us to at least get rid of quite a bit of the congestion. And if you put yourselves in the shoes of a trucker, I mean it's much more fun to do 4 trips a day than to do one trip a day and then all the time have to wait for 5, 6 hours and still make a little of overtime.

And then maybe one small one to finish. In terms of vessel speed, Maersk said that they've speeded up their vessels. Is that what you've been doing as well or plan to do?

I mean if and when that makes sense, we do it. But we will not just speed up to end up in the same queue and have to wait a little bit longer there before we get into the port.

But if you don't fast speed, are you not further back in the queue?

It depends very much on what -- that depends on the burden arrangement that you have. I mean, if I have a burden float at 6:00 this afternoon, and I can sail very fast to be there at 3:00 in the afternoon, it really doesn't make any sense, yes. If I'm otherwise going to miss that slot because I am already going to arrive at 8, yes, of course, then I'll speed up. But most people have slots where they need to get into the terminal, whether it's on a specific day or at a specific time and you would do your utmost to get to that slot. And yes, there are also some terminals where you just have to queue. But for all of us to go and burn a tremendous amount of fuel to see who's first in the queue, I don't know that, that's a very good way of working either.

Next question is from the line of Marc Zeck from Stifel.

Just 3, if I may. One on spot rates. And so my understanding weakness in spot freight rates on Transpacific freight rate providers like [indiscernible] is due to their -- they including a premium freight rates in that. Could you give a reminder what's your share of volume that ships on premium on the Transpacific? A second question would be on the current container dwelling fees in L.A. and Long Beach. I guess just today you set out an FAQ to customers saying these additional 100 stagging fees will pass through fees. And I guess my understanding that this is not the intention of, let's say, the government or the authorities. So would you expect some court challenges to you passing through the fees and what measures -- so what instrument do you have to really pass these on the authorities don't really want these to be passed on? And third question would be on, let's say, first quarter of 2022. So your bigger competitor, they gave a sneak preview on first quarter 2022 saying that EBITDA will be roughly in line first quarter 2022 with third quarter 2021. Is this something that we could expect for Hapag as well? Or is it too early to tell?

Yes, let's start with the last point. I think it's too early to restate something material about Q1 2022, but also we would not expect to see a dramatic change, yes, all of a sudden from one quarter to another, yes. So I can somewhat relate to their comments. Then you made a comment on the additional charges that are being enforced by the ports of L.A. and Long Beach on long dwelling containers. On the one hand, I think it's good to have an incentive to peel out those boxes earlier. I think we'll just need to make sure that it easily can also become a double-edged sword because if there's cargo in those boxes that is not very valuable, you may also end up with a lot of abandoned cargo, which is then going to stay at the terminal for much, much longer. So it's a bit of a balancing act there. I hope it works indeed as an incentive. We'll need to see. And then in terms of your question to spot rates, you asked how much of your cargo is moving on premium rates. Well, I would say that's a small chunk of the overall volume, probably a single-digit percentage.

The single digit is like specifically for Transpacific or related to the overall upload volume?

I think it's -- I don't know for the rest, but I mean your question was on Transpacific and there is definitely single digit. If you look at other trades, it's the same. Because even if our freight rate is up very significantly year-on-year, of course, it is still very, very far away from -- the increase is still very, very far away from what one sees on these premium rates. So that's indeed a very small percentage.

Next question is from the line of Dan Togo from Carnegie.

Yes, Dan Togo, Carnegie. In the upper end of your guidance range, you guide basically for an even higher EBITDA in your Q4. Could you give some flavor what will take it there? Basically, is it expected higher rates? Is it your end of voyage, so to say, methodology or even higher volumes? I guess volumes is difficult to really target for as it's difficult to push through more volumes in this market as it is right now. And then a second question would go to whether you see increased business with the forwarders that so to say, is pushed out. For instance, in -- we have other carriers that are taking the battle right now with the forwarders and are losing some business or at least losing some plants here. Is it something for you to grab at the moment? Do you do sense, so to say, a change here as of late. So that will be my 2 questions.

Maybe, first of all, as of Q4, I think you are right. I think we see a little bit then when you look at rates, they start to plateau a little bit, at least, yes. So we would still expect a strong Q4. You are also right that we have an end of voyage accounting mechanism, which means that with us, you would typically see the uptick essentially a little bit later. The swings in the results can still be quite high, though, because you also have big swings in terms of what percentage of completion and these type of things can influence. So I think, yes, the upper range is a little bit higher. Volume is going to be probably as much as possible. Rates are very strong, and we have the end of voyage principle. In terms of the forwarders, I mean, we see certainly very healthy demand for space from the forwarders. And how much of that is related to other carriers offering them less space, I really don't know, yes. We also see healthy demand from BCOs. So it's not a one segment that is that much stronger than another. And also with us the split between NVO and BCO is largely unchanged.

[Operator Instructions] Next question is from the line of Lars Heindorff from Nordea.

The first one is a little bit getting back to the contract rates. I don't know you're probably going to transport something like 12.5 million TEUs next year, ballpark. Could you give an indication how much of that would be on multiyear contracts? That's the first one.

I mean, it's still a little bit early to say that, yes. But I would like to -- I think that in the end that it's going to be a small double-digit percentage.

Okay. All right. So that's -- and I assume that, that will be up from close to nothing last year.

Yes. I mean, I think traditionally, that has been a small segment, although we've always had some, yes. I think we've had a small to mid-size single-digit percentage of cargo that's moved on multiyear contracts. And I think, right now, we're going to see that moving into double digits. How far up in double digits, I would guess small double digit.

Okay. Got it. And then on the cost side. I'm a little bit curious about the development and how sticky your costs are. We have seen other carriers even going out buying vessels instead of taking in on time charter because the time charter is completely outrageous just like the container rates are. So what I am trying to get at is sort of the length and the stickiness of your network cost given that I assume that if and when you roll new time charter contracts with the suppliers that you will have to make multiyear contract there also compared to earlier, if I understand it correctly.

Yes. I mean, that's certainly a challenge. I'd say though that Hapag has a relatively high owner share -- ownership share. So that makes us a little bit less exposed to that side of the market. We also, when we entered into the pandemic, did a number of -- extended number of our existing contracts at lower rates. So overall, I think we're actually reasonably well covered. Even, of course, we also have some expensive shifts in there. But I'd still say that our exposure is quite likely below average there. There are also other cost categories that have been up. I mean, if you look at storage in terminals, also terminal handling, bunker costs, some congestion-related surcharges that we face here or there. So I mean costs have -- there's been quite a lot of upward pressure on cost. Some of that will stick, some of that won't. I think the structural cost increase that we will see is hopefully going to remain excluding the bunker component, but actually in the bunker component, I think that's still going to be a single-digit number.

Yes. Okay. And on the TCN...

Single digit percentage, just for the avoidance of -- yes.

Yes. Yes. Very clear. On the TCN part, I don't know if you can give any indication about how much you length of your TCN is up. I don't know if you have a measure for that.

How much of what we see is up for renewal, you mean?

No, no. I mean, I don't know, historically, you maybe had a -- on a charter in fleet average length of the time charter of maybe 6 to 12 months maybe that is up by a year or 1.5 or whatever it is. That was what I'm trying to get at.

I mean I'm just looking at HEICO now, but I would say that it's up a bit more than a year. Is that fair?

Yes.

Between 1 and 1.5 years. Duration is up on average between 1 and 1.5 years.

Okay. All right. And then the last one, very shortly getting back to the contract part of your business. Normally, I mean, as you mentioned, you're making a problem making a lot of negotiations these days as you normally are at this time of the year at Eastern Europe. But on Transpac, most of those will normally start in March and then take place during April and step into fourth on the first of May. So I'm a little bit curious to get if this is -- has that changed? Or have you seen a similar demand also on Transpac, which means that you're getting out of the normal seasonal pattern with great negotiations on the Transpacific as well?

I mean there are certainly significantly more early for us or yes, early negotiations on the Transpacific then there were -- than there are in normal years. And in quite a few cases, you then also do discuss multiyear discussions, which is something that we tended to discuss throughout the year anyway, but now there seems to be a little bit more appetite to conclude that.

Next question is from the line of Parash Jain from HSBC.

I have a couple of questions. Maybe first, a quick one for Mark. Mark, so with your current capital structure, is it fair to assume that with pretty much achieving net cash balance sheet, any excess cash will return to the shareholder in an absence of any loss ticket acquisition or CapEx? And is that understanding correct? And to this regard, do we have any guidance? And secondly, for Rolf, I just wanted to understand what percentage of fleet today has been stuck because of all of these congestions? I mean, the slower asset turnover. And does it mean that whether in second half of 2022 or at some point in 2022, when this congestion unwind, your active capacity increase will substantially outpace any new build number that we are seeing. And that would put perhaps a larger impact on the spot rates. Is that understanding correct?

Starting with your first question. Your general understanding of the potential balance sheet structure end of the year and the net debt position is absolutely right. And there is no -- on top of our dividend policy, no additional planning. So for sure, as you know, our dividend policy is to pay and give back a decent dividend to our shareholders. Much too early to say how it will look like. But yes, we are prepared to let our shareholders participate, but nothing more than that is planned.

And in terms of your second question, how much capacity is stuck in ports? I think realistically, that's probably somewhere between 5% and 10% these days. That will never go down to 0. But can that give a boost to available capacity when you look at 2022? Yes, definitely, and we are also anticipating that next year, we will be able to move more because of that.

Mr. Jain, are you finished with your questions?

Okay.

Next question is from the line of Anders Karlsen from Kepler Cheuvreux.

A little bit more on your charter-in fleet. I was wondering how much of the fleet on the charter-in side do you have optionality to extend? And how -- is there a percentage of legacy charges that are done on historically lower rates than what you see today? And then in terms of contract negotiations, are you seeing -- I understand it's towards the tail end of the season. But have you seen any clients asking for early negotiations in order to secure space for next year and onwards?

I will take the second question first. Yes, we have certainly seen that to see people trying to extend early to secure space, not only on Asia Europe but also on Transpacific. In terms of your question on charters and how many cases we actually have options to extend? To be honest, I don't really know the answer to that question. I know that next year, we do not have a lot of charters that are running out. So the number of fixtures we have to do next year is actually reasonably small, yes, which puts us in a fairly comfortable position. But how many of those actually have extension options, I really don't know.

That gives some clarity to it.

There are no further questions at this time, and I would like to go back to any more questions to the Investor Relations team. And I would like to hand back to Rolf Habben Jansen for closing remarks. Please go ahead.

Thank you very much for your time. I appreciate the questions and you taking the time to listen to us. Hopefully, it was informative and hope to speak to you again soon. Take care. Bye-bye.

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