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

Good morning, everyone. It's a pleasure to welcome you at Hapag-Lloyd's Virtual Capital Markets Day. We would have loved to welcome you in person today, but unfortunately, the pandemic still does not allow us to hold those events physically. But we hope strongly to have you with us next time in person again. Today, with me on stage are Hapag-Lloyd's, CEO, Rolf Habben Jansen. Good morning, Rolf. And Hapag-Lloyd's CFO, Mark Frese. Good morning, Mark.

Good morning, Heiko.

Both will guide you through the presentation that we have prepared over the next, let's say, 2.5, 3 hours. And of course, we plan to finish around 12:00, 12:30 German time. We have planned to guide you through a presentation. We have made a couple of slides and switched that into 2 sessions or less. In the first session, Rolf will give you a short recap of Strategy '23 and the reasons for our strategy review, followed by our Sustainability Strategy presented by Mark. Before I hand it over to Rolf, please let me briefly make a few organizational remarks. The presentation will be followed by a Q&A session. We'd like to invite you to join our discussion and ask your questions right here on the screen. If you wish to participate, you can use the Hand Raise function in Zoom, and we will switch you live into the studio. In addition, you have, of course, the option to submit your questions via the Q&A tool. Of course, we would love to see you live and hear you here in the studio. But nevertheless, there's the option to raise your questions via this tool as well. We plan to answer all your questions throughout the day. In the case, there are too many questions, we might not be able to answer all and everything. In this case, we will reach out on an individual basis afterwards. Now I would like to ask Rolf to start with his presentation. Please go ahead, Rolf.

Thank you very much, Heiko, and thanks, everybody, for making the time to join us here this morning. Very much appreciate it. Maybe if I can give 1 quick hint to the people that are monitoring. There is a small issue with the screen here. So the perspective is a little bit different than it was. I'll get started. Nevertheless, yes. But I mean, what we'd like to do with you first is to give you a quick overview of the Strategy 2023, which is basically where we are, what we have achieved and what we have not achieved just yet and what we still need to do better. And then afterwards, I'll hand it over to Mark and talk -- he will talk a little bit around sustainability. Let me go back, though, a little bit to where we started when we made our Strategy 2023, which we also presented to you back in 2018. We did that then on the back of what was a pretty unprecedented wave of consolidation. We also had done quite a few things as Hapag-Lloyd already as we had been able to improve profitability and our cost position quite a bit on the back of the mergers with CSAV and UASC. Having said that, we were also at a point where we had to think hard, yes. And where it was not -- no longer only about unit cost and economy of scale. And at that point in time, we came up with our strategy, which, in essence, was all about delivering better quality as we felt and still feel that those are things that are increasingly determining who will be successful and who will not. That means that, as you may remember, at that time, we defined our strategy and basically said there are 3 main objectives that we would like to achieve. The first 1 being tried to deliver this unparalleled quality, become more customer-oriented and create value every day. I think even today, that's more relevant than ever. But at that time, I think we set out what we wanted to do, and I'll talk a little bit later about what we wanted to do more specifically on that. Then we gave ourselves the objectives to do -- to be not only profitable when we have an up cycle. But clearly also when the cycle is down, as I think 1 of the main challenges of the shipping industry has been, when you look a little bit further back than a couple of quarters is to deliver returns to shareholders all the time. And that's why we said we need to be profitable throughout the cycle. And then we said we'd like to remain a global player, which builds on certain markets where we are strong, but also tries to grow in some of the markets that we consider to be attractive and where we believe that growth is going to be stronger than average in the long run. And in terms of the market share, we've said we'd like to aim at a market share, which is around 10% globally, excluding Intra-Asia because we believe that in most of the markets, that will actually give us the scale that we need in order to be competitive. As you may remember, we, at that time, tried to summarize it all in 1 page where we said, on the 1 hand, we will always continuously need to work hard to earn and keep the right to play. As this is an industry and it may not seem maybe like that today, where continuous cost management is going to be also in the future, incredibly important. So that means that we need to focus on that every year. Same goes for revenue management. We need to make sure that we get the best possible cargo mix on board. Those are the sort of basics that were relevant in 2018, and that will also remain relevant going forward. We then defined a couple of levers to differentiate ourselves from others. One is this point on quality. The second one is building a stronger inland capability. The third one is growing in some what we would call attractive markets and segments where you can achieve better than average yield. We talked about taking our environmental responsibility series, probably today, even more relevant than at that time. We launched our online channel, and we've always said that in terms of M&A, we'll only look at it opportunistically. And of course, we need to further develop our organization and invest more in digitization and automation. So what did that bring us? Because when we look back on that strategy that we defined in '21 and where we said that's what we want to achieve by '23. And I think it's fair to say that we have made very good progress on that. And although, of course, this year has been very extraordinary. I think it's worthwhile pointing out that also in the years since 2017, we have made steady progress. If you look at our equity ratio, we've been able to pay dividends every year, and we have been getting quite close already to our target, 45% towards the end of last year. And when we look at our return on invested capital, we've been growing steadily. And I would say that even without the peak that we would have -- that we saw since the end of last year, we would have been hitting our WACC in 2020. And of course, this year is very extraordinary. In terms of our leverage, when we closed the transaction with UASC, that was very high but it has been steadily coming down, of course, today to very low levels. Then let me talk a bit about the other topics that we put in there because in the end, you can talk about the financials there, I think very healthy progress, and that gives us also some room to think beyond our strategy today, but still good to also hold for a minute at the key points of our strategy. The first 1 being quality. We defined at the time when we launched our Strategy 10, what we called quality promises. And in the meantime, we have launched 8 of them with numbers 9 and 10 in the pipeline. I think that's still given our organization quite a lot of focus and things to work on. And even if a lot of people today are probably not happy in terms of the service that they require -- that they get from the shipping lines also because there are simply so many delays that the predictability of the service is not there where it's supposed to be. I would still point out that, that are actually -- our actual performance in terms of how do we perform against those quality promises is actually improving? We are today getting close to or are achieving our objectives in 7 out of the 8 quality promises. If you go a year back, that was just 2 out of 8. And also if you compare it to 2019, so pre-pandemic, our actual service delivery in many aspects is actually better than it was. Having said that, that does not necessarily result in only happy customers because, of course, everybody would like to see their boxes loaded on the first available vessel and nobody would like to see significant delays on -- as we see them today on many of the services. All in all, though, I believe that we are on a good track there even if definitely still more can be done, but we'll talk about that also in the future. When we look at the online channel, we set ourselves a target in 2018 to grow our online channel to become about 15% of our overall business by 2023. If we look at where we are today, I think it has definitely surpassed all of our expectations. As today, we are close to 25% of our business that is going online. And there is certainly still more potential if we would go beyond the short-term segment, which is the main segment that's currently being serve through quick quotes. When you talk to our own people, but also when we would talk to experts a couple of years back when we started in 2018, I think many people were really skeptical about what 1 could achieve when -- in terms of selling online in shipping. And now to see that we are at, say, 25%, so a multibillion dollar business. I think that's pretty amazing in and of itself and just underlines also the importance of digitalization also in this industry. When we look at attractive markets, we've done quite a bit. I think in this one, in this chart, the emphasis is very much on new services and on the markets where we have been growing, certainly want to or 2 markets to point out there. Are India, where traditionally Hapag has had a strong position in Africa, where -- if you go 10 years back, we were really a small player. If you look at our position there today, we have a very decent position in most of the markets. We have also opened up quite a number of our own offices and will continue to do so. Also, the investment we did in Tangier will help us to serve those markets better. So all in all, particularly India and Africa, I think underline our attractive market strategy. And I think we've been pretty pleased with the progress that we've made there. And of course, that's also where the acquisition of NileDutch plays a role, which we concluded in the course of this year. What we don't -- what you don't see here on this chart, but which I think is also worthwhile mentioning is the growth that we have seen in some of the more profitable segments, such as reefer, where if you go back to 2018 and you look at situation today, we've steadily been growing with 10-plus percent each year. And I do believe that, that's a good thing. We have invested in that also significantly, and we will continue to do so as we believe that, that's a segment where there will also be above average margins in the long run and where we can still grow our share a bit more than what we have today. The other segment being the Specials yes, so project cargo, Breakbulk and also everything which is out of cage. yes, that segment was down a bit throughout the pandemic, but also there, we see certainly in the last couple of quarters, actually quite healthy growth. Then if we look at the last 2 years, I think the world has definitely changed, and I think that leads us also to think again about what should we do going forward. And we'll talk quite a little bit more about that later on. But maybe let me already give you a couple of pointers on what has happened. We've certainly seen spot rates sky rocket. We have seen a lot of bottlenecks in the supply chain. We've seen sustainability become a lot more important and the pace of digitization compared to a couple of years ago is -- I mean, the pace at which that moves forward is up very, very significantly. Also, when you look at a couple of data points, and look at what's happened in the last years, I mean we show you here 4 graphs that sort of show all the same type of picture. They show you that on the 1 hand, port rates have gone up very significantly here illustrated through the SCFI. Then we also see that on the cost front, quite a lot is happening. I mean if you look at the time charter index, you can see here that if you compare it with about a year ago, that the time charter rate index has gone from below 100 to 400 at this point in time, which, of course, means that for everyone that daily running costs are up very significantly. We also see bunker consumption price going up quite steeply. I mean we all read in the papers all the comments that are on the cost of energy in the last couple of months. We certainly see that also in our business. And if you look at the graph, you indeed see a spike as IMO 2020 came. But then, of course, there was a trough as the pandemic hit us, but now we see it steadily going up, which also, over time, will have an impact on unit cost. And that's also what you see when you look at unit cost for Hapag-Lloyd and even -- and this is even excluding the cost of bunker. So you can see that since 2019, the unit cost has actually gone up with about 20%, which is quite a lot over such a short period of time and certainly very different from what we have seen in the 10 years before. And yes, quite a significant chunk of that is congestion related, but there are clearly also a number of structural cost effects that will probably remain also in the longer run. Then if we look at what has caused all of that, I do think it's important to go back to the basics because in the end, demand is the 1 that probably has triggered this whole crisis that we are currently facing. And I still think that if you look at the graph on the left-hand side, which is around U.S. consumption expenditure that, that tells quite a significant chunk of the story. As we saw that when the pandemic started in Q1, Q2 2020, that, of course, the demand for services came down very significantly and even until today, it's not yet back at the level that it was pre-pandemic, but where has a lot of the money that has been put into the economy by many of the governments and through all kinds of stimulus measures, it has gone into consumption. And I think it's fair to say that when you look at the forecast and the predictions that were made by pretty much everybody in the beginning of the pandemic that there was -- there were very few that we're predicting that the demand for goods will go up as steeply as it has. And then, of course, you end up in some kind of perfect storm where demand is very strong. And on the other hand, there are all kinds of COVID-related measures that are being taken by many governments, which make it difficult to transport as many goods as we used to do. And that combined with lagging investment in the industry in the years pre-pandemic, then causes a squeeze, which is actually what we're seeing right now. And I remember that Mark and I were talking about this topic when the pandemic just hit, and we were speculating between us could this not result in an enormous boost of the demand for goods, which we then said, well, that's probably a low probability. So let's not take that our base case. But I think there were many people who looked at it like that. And now we are where we are. And in reality, we'll probably still face a fair amount of work before we get ourselves out of this congestion. And you can see that also when you look at global schedule liability across the industry, which has gone down from 70%, 80%, which I would say is average and still not great to below 40% these days. And unfortunately, when you look at 2021, the line is actually fairly flat. So wrapping that up and looking a little bit at our strategy, what is our conclusion. Our conclusion when we did the midterm strategy review was that the objectives that we've set ourselves for 2023 definitely remain valid. But there is still more that we need to do around quality and sustainability. On the financial front, we have achieved a number of our targets quicker than we thought. That also means we have more room to do things going forward. In terms of market share, we are roughly where we wanted to be and sustainability, certainly being a key topic going forward. And I believe that's also an area where the industry has a real responsibility and where we have to pick up our game. And I think that's also why we will talk more about this now. And there, I'll happily hand it over to Mark, who will take us through some of the things that we are planning there. Thank you, Mark.

Yes. Thank you very much, Rolf. And now coming to our Sustainability Strategy part for today. Our Strategy 2023 has indeed proven right. But as explained, the world has changed over the last 2 years quite dramatically. And therefore, we need to focus even more on quality and sustainability. The Climate Conference in Glasgow has shown quite clearly how important it is to accelerate global efforts to address climate change. And we, as a global company, we also have to take our global responsibility for the environment in the countries where we operate for sure, for the ocean and, of course, for the global climate. And future challenges require a holistic sustainability strategy. That's what we are working on right now and ambitious greenhouse gas reduction targets. I think it's important to say that we are showing a status today, which is quite evolved and improved. But nevertheless, a sustainability strategy has to be flexible, and we have to work on that day by day. With our mission to become quality carrier number one, sustainability has to be the key focus of all what we do. In particular, our corporate value, we care is closely linked to our responsibility towards employees, the society and the environment. So coming to where we are coming from, sustainability for many years was in our DNA or Hapag-Lloyd's DNA and quality and the environment were the starting point for sustainability activities many years ago. Already in 1992, we implemented a quality management system. Several certifications according to ISO quality and environmental standards are binding environmental guidelines, and we, for sure, followed them. The first Hapag-Lloyd sustainability report has been published for the year 2017. And through this yearly sustainability report, we have already communicated our sustainability activities more widely to the public, which is important and needed. After preparing for the sulfur regulation in 2022, we have strengthened our emission reduction efforts by converting LNG ready vessel into a dual fuel ship also as a test as well as testing and using biofuels on a larger scale. And by setting a green financing framework in 2020, we have established a framework for our green financing program under which we issued debt instruments contributing to the decarbonization of Hapag-Lloyd with a green financing framework for 12 dual fuel ultra-large vessels, we have been breaking new grounds financing by concluding transaction according to the green loan principles of the Loan Market Association. Those have also been verified by an external party. So DNV has proven that by a second-party opinion. This year, we are also successfully and you might know that issued our sustainability and the first sustainability-linked bond in our industry, which is linked to the achievement of our clear sustainability target for CO2 intensity of our own fleet, and we will come to that in a minute. And today, we published our sustainability strategy to you, a broader orient and the public. So looking what we have achieved. We have already done a lot and consistently establishing measures and technological improvements over time and such as converting the first large container ship, our Brussels Express, as you know, to dual fuel propulsion ship with the aim to run the vessel on a green emission once available. That is important once available, and we would like to do that as fast as possible. We are using biofuels today on several vessels, we are lowering emissions, thanks to optimized bulbous boats and propellers. We have been achieving fuel savings of roughly 15% per vessel by removing the falling on the exterior. We are fitting a number of vessels with onshore power equipment, which helps, for sure, to significantly improve air quality and reduce emissions in the ports. And for sure, you know that we are using IMO-compliant fuels since January 2020 when IMO regularity kicked in, leading last year to a 7% reduction in sulfur oxide emissions of the fleet operated by Hapag-Lloyd, when we compare that to 2019. And we're also a founding member. We are a founding member of the ship recycling transparency initiative. And some of these and several other efficiency measures lead to significantly reduced consumption per slot of our close to 60% last decade. So it's a strong reduction per slot, but also to a 40% reduction of the CO2 intensity of our own fleet if we compare that to 2018. We all know we need to do more. And we have to set ourselves further targets, reaching far out to continue to sustainably serving all our shareholders. So regulatory requirements are increasing, such as the EU, Fit for 55, CII or EXI and other customers are increasingly looking for carbon reduced transport and products and more transparency within their supply chain. With initiatives such as the Poseidon Principles, sustainability is becoming increasingly important in ship financing in the capital markets, and that will strongly increase over time. And social responsibility and environmental protection have been a core issue in modern society and should be. So talking about Paris agreement, climate change is for sure the biggest challenge of modern age and many become -- may become a disruptor for economic growth and wealth in future. Ocean shipping is a primary conduit of world trade and a key element of international economic development. And 90% of all goods worldwide are currently transported by ship and container shipping is 1 of the world's most carbon-efficient mode of transport as it emerged much lower CO2 per unit transported when we compare that to rail or other forms of transport like road. Still, the industry is collectively responsible for around 3% of all CO2 emissions. On this basis, 1 of the expectations we place on ourselves is to further minimize the environmental impact of our actions because we have to decarbonize shipping. And with that, we will contribute to the decarbonization of other industry through the cargo we carry on their behalf and with the demand we are creating to producers. However, decarbonization of ocean shipping, as we know it today, is a complex project and will not be finalized tomorrow. That is why we, as a market leader, are strongly focusing on dialogue with all stakeholders, they work jointly towards our common goal and the decarbonized future. We can do a lot ourselves, but to reach targets these ambitious targets we are setting ourselves of the Paris agreements we have to join forces. So looking closer at our sustainability strategy with our comprehensive strategy we are showing today. We want to strengthen our sustainability contribution step-by-step and reduce our negative impact on the ecosystem at its core -- it's all about continuously strengthening our sustainability related efforts and achieving incremental improvements, you could say, day by day. We have defined goals and measures for 8 focus topics for the next 10 years, and that's what we are talking about today. So some of the goals have already been quantified. Others will be further specified in the upcoming couple of months and years, and they have to be, as I said, updated regularly. We have clustered the focus topics into 3 main areas: firstly, clean shipping and future-proof propulsion for the greenhouse gases, clean air and sustainable supply chain play quite a significant role. Our strategy focusing on greenhouse gas emissions we want to show a path to decarbonize even if it's not finally defined today because not all technology is at hand or is at hand the volume we would need. Second key area is diversity and society. We want to make progress in the area of diversity and benefit from having a quite diversified workforce. We will also continue to strengthen our role in the area of corporate citizenship and define very precisely where we would like to intensify our efforts related to social commitment. A third focus area is compliance and responsibility, which covers resource conversation, transport care and biodiversity. This includes, for example, the well-being of our cruise environment and the cargo as well as our impact on biodiversity of oceans and marine animals. So decarbonization is our core strategic goal. With more than 250 ships, we are operating owned and chartered, we have a lot to contribute. So if we change, it really cares. In terms of our reducing emissions, and advancing alternative propulsion. We want to reduce CO2 emission intensity for our entire fleet by 30% until the year 2030, compared to 2019. This is in line with our sustainability-linked bond target of CO2 intensity reduction of our own fleet by 60% by 2030 and that is in comparison to 2008. On the way, of decarbonization or 2 decarbonization, we want to operate our ships in a climate-neutral way using alternative fuels, it is our strategy and strategic goal to become net zero carbon by 2045. And 2045 sets for us a clear internal and external signal that it is time to speed up all initiatives to cooperate and to search for new solutions. So measures we are taking to achieve our greenhouse gas reduction targets will basically focus on fleet and fuel-related measures as well as further increase our operational efficiency because that can be done today and will work and contribute today. Regarding our fleet portfolio, we are concentrating both on new vessels, but also on our existing fleet, and this includes not only our own vessels, but for sure, also our chartered capacity. And with the order of 12 new dual-fuel ultra-large container ships with a capacity of more than 23,000 TEUs each, we have already made quite a big first step. At the same time, we have ordered 10 new fuel-efficient 13,000 TEU vessels that will drive efficiency of our fleet and reduce emissions. Zero emission technologies will be the key driver for our ordering decisions, although those are not yet or only limit vessel sizes available. So we have to look what we can push in that regard. Measures we are taking in regard to our fleet are the consequential phaseout of old and unefficient vessels, continuous technology improvements of our own and chartered fleet. And that was something we already mentioned, bulbous bow, hard-coating and for sure, engine improvements. We'll constantly review and update our charter vessels, which also have to fulfill the certain minimum standards and at the end, our greenhouse targets. And to the extent economically viable, we will retrofit further existing vessels to dual fuel propulsion technology. We will drive that transition from fossil fuels to advanced bio and e-fuels for our existing vessels on a larger scale. In addition, we will use biomethane for LNG dual-fuel newbuilds as of delivery in '23, '24. Once alternative fuels like bio e-fuels such as methanol, ammonia and others will be available at a larger scale, we will also consider using these viable. The third and very important focus area is the operational efficiency of our fleet and our network. So we constantly review our global network in order to optimize the use of our ship system in total. We optimized the port rotations, port stays and number of round voyages quite significantly because that contributes to the efficiency and fuel consumption of our fleet. And as I said, it kicks in immediately. And in addition, we are also constantly optimizing the speed profile of our vessels as well as the cargo utilization. So again, on that efficiency measures for our existing fleets are extremely important and effective as CO2 footprint reduction kicks in immediately. When we talk about the future of shipping, we are convinced that LNG is currently the cleanest option available today for operating large container ships at big scale, and it is able to reduce carbon by roughly 20% compared to marine fuel and the volume is there. The fuel industry is predominantly using that today. In addition, LNG reduces a lot of other emissions, such as NOX especially SOX and particles, which are reduced almost to 0. But we also know that LNG or fossil LNG is only a transition fuel. So the future of the shipping industry will be shaped by the transition from fossil fuel too low and zero carbon fuels. And over the next decade, we believe that we will see a transition period, which will be more by using more and more biofuels over time, but also as a transition besides methanol and methane we can produce or can be used and produced as biofuels. Those are all possible options although we don't know as of today, what will be the technology at the end, we will be sure that more than 1 fuel will be used over these transition decades. And I think it's important to say, nevertheless, scalability of fame like biodiesel or there might be questionable from today's perspective. But after 2030, the usage of electrode fuels need to be the predominant solution as it is the only truly CO2 alternate -- CO2 neutral alternative. Today, e-fuels are not available at real big scale, but it needs to be developed over time also as -- at reasonable costs. So to really achieve the net zero carbon target, we all want to achieve as an industry as demonstrated by the picture, synthetic fuels like ammonia or methanol but also synthetic gas like as LNG might be a solution for the future. But at the same time, we can't and should not rule out any new and promising new solution over time. We strongly believe as of today, that not only fuel -- only 1 fuel in the future might be the solution, but maybe a mix of different solutions for even different trades or occasions. So we strongly believe that the decarbonization of shipping can foster green developments across other industry, shipping is a very energy intense sector and demanding green fuels and propulsion technology on a large scale will also create supply and force other industry to develop these solutions and in that direction. To drive that development, we have joined various initiatives. For example, we are actively involved in the getting to zero coalition and have just signed its call to action. The getting to zero coalition is in the lines of more than 150 companies within the shipping industry infrastructure industry and the finance sector and it's supported by key governments and NGOs. The objective is to have commercial viable deep-sea zero emission vessels powered by zero emission fuels in operation by 2030. So for a Paris aligned shipping decarbonization, at least 5%, zero emission fuels in international shipping is needed by 2030. So the core to action was launched on the 22nd of September in conjunction with the UN General Assembly, the call to action demands that governments commit to decarbonization shipping by 2050, supported industrials K zero emission shipping project through national and regional actions and to deliver policies and policy measures that will makes the zero emission shipping the default choice by 2030. So talking about air pollutants. We have made quite progress in environmental and health protection since the beginning of 2020. And since the contain -- since then, the container ship industry have operating within the IMO compliant fuel framework with a maximum sulfur content of 0.5%. The entire fleet operated by Hapag-Lloyd produces around 70% less sulfur oxides compared to 2019 with that change. So for clean air, the legal requirements are already quite high reduction in greenhouse gas emissions is often and that is positive combined by reduction in other pollutants. And for sure, we would like to further reduce emissions of air pollutants such as sulfur and nitrogen oxides in line with international regulations and in the course of fuel savings. And beyond the regulatory requirements, minimize emissions of air pollutants from overland transport in the pre- and on carriage stage. We will achieve that by creating transparency in our shipping fleet and inland transport. To this end, we are setting up an emission database and support the shore-based power supply of ships in ports, both the 12 new dual fuel ships coming into our fleet 23, 24 and the use of biofuel in a larger scale from this year on will help to further reduce sulfur dioxide emissions. When we talk about the full transport chain, we will ensure social economic, environmental and quality standards in our supply chain and continuously improve transparency and reduction of greenhouse gas emissions. To be able to offer a completely green product, we need reliable information. And within the framework of sustainable supply chains, we want to purchase correspondingly sustainable services and ensure for sure, compliance with the German Supply Chain Act 2023 through full transparency. We will achieve that by adjusting our procurement strategy to strengthen the sustainability criteria impact, expanding our existing supplier database to include data on emissions and information on compliance with human rights standards and thereby fulfilling our due diligence obligation with our suppliers. And based on this, we use monitoring and reporting to measure the degree of target achievements and provide our stakeholders all the needed and reliable information about the sustainability progress. When it comes to diversity, Hapag-Lloyd's business model was always being based on international exchange and interaction following several mergers, our workforce and management is already quite diverse. And for sure, we welcome and promote diversity even more with a focus on gender and on cultural diversity. And in order to better exploit the potential related to diversity in our company, we have set ourselves clear goals. We want to promote cultural diversity, especially at our Hamburg location. We want to increase this on the management level from currently 40% to more than 25% until 2030. We want to strengthen our gender diversity in all management positions. And to this, we want to increase the proportion of female employees in management training programs to at least 50%. And that you could say from today. We want to significantly increase the proportion of female managers on the first 4 management levels by 2030. Talking about social responsibility we want to take. For sure, as a global company, we also have a strong global responsibility for the environment, for the society. And for decades, we have supported selected initiatives with donations and sponsoring. Today, we create a framework and strengthen our commitments, especially in the countries where we are represented with our own offices. Our goal in corporate citizenship is to raise our profile as a responsible company, both locally and globally. To this end, we have defined 3 focus areas that we want to support. It's for sure, education programs, humanitarian aid and marine conservation. And we implement this by supporting the UNICEF education initiative schools for Africa. We believe that education is key to self-determination development without poverty, especially for girls in these countries. Through a partnership with a marine mammal advocacy NGO, we aim to implement joint projects where we better protect the natural habitat of whales along all our shipping routes. And with Hapag-Lloyd Cares, we offer our country organization around the globe a framework to get specifically involved in local and regional initiatives both with budget and with a voluntary social environmental day, this gives every employee the opportunity to contribute and to really get involved in 1 of the initiatives selected by their areas and their country offices. And the program was already rolled out worldwide in August, and many employees have already actively participated in that. With regard to resource conservation, we have identified opportunities to optimize resource and -- resources and approaches for the circular economy. Hapag-Lloyd is a founding member of the ship recycling transparency initiative. Each of our newly built ships has an inventory of hazardous materials. And although the majority of our containers have wooden or hybrid floors today, we consider this a transitional solution, and we want to go to steel floors as they can be recycled much better and easier. Our resource conservation goals are -- we are committed to recycle 100% of our own ships in accordance with the environmental and social standards of the EU ship recycling regulation. We aim to progressively eliminate and increasingly recycle waste at our sites so that we can clearly achieve net zero waste as fast as possible. And we achieve -- we aim to achieve our goals by boosting the share of containers with the steel floors, as mentioned, through long-term asset management and by launching lighthouse projects on transparency of materials we are using as well as increasing the recyclability of vessels. So we are also working on the permanent improvement of our services to focus here is on transport safety. This means ensuring safety and protection of our crews, the environment and the cargo. We have set ourselves the goal to safely deliver 100% of the cargo entrusted to us. We want to achieve this by setting up a central monitoring system and thus increasing the transparency of lost containers, whether full for sure, or empty. And in addition, we advocate for equal industry standards, which should result in as few as possible containers lost. To this end, we participate in the world shipping council, working group and are actively involved in this tier -- top-tier project. In terms of biodiversity, we aim to reduce the impact of shipping of marine ecosystems. We are committed to help the oceans that's pretty clear and strong partnerships. So for example, Hapag-Lloyd does not transport controversial goods and support the artic bypass various rail protection programs and the IMO's low fueling project. Our goals for biodiversity are zero violation of ballast water regulations and regulations regarding released substances, equal standards and transparency for chartered and owned vessels by 2024. And we will achieve that by immediate and seamless analysis of environmental data of our total fleet. We will make sure that all of our vessels have ballast water treatment systems on board to meet the stringent and stringent U.S. Coast Guard requirements. And furthermore, we support projects that are protecting marine wild life. On top of that, we actively try to respond to feedback of external members from for sure, science, politics, UN organizations or NGO communities and to challenge ourselves and continuously question our measures and solutions we are having established a sustainability council. That is an expert panel that meets regularly to discuss the overall sustainability performance of Hapag-Lloyd. This council consists of 6 external and 4 internal members. The external members are well-known sustainability experts from research from the business media, politics and UN organizations. So wrapping up before we open the lines for your questions, I would like to summarize the key aspects of our sustainability strategy. For sure, climate change is 1 of the biggest challenges ahead of us. We have already done and achieved a lot, but there is much more to do. And we will do a lot more to find solutions to reach our targets and the most important one, reaching zero net emissions 2045. With today's strategy, we have ambitious and a comprehensive and clear sustainability strategy and clear guidelines. And we have elevated sustainability as an integral part of our journey to become the quality leader in our industry as an integral part in our strategy. Our focus is on greenhouse gases as set and decarbonization with concrete measures and ambitious target is focused. And in addition, a broad coverage of equal important sustainability topics completes our holistic sustainability strategy and there's very much to do. So let's care, move and deliver on that.

Thank you very much, Mark. I think it's indeed a very good opportunity to open the floor for your questions before we move ahead to the second section after a short break. Just kindly remind you how to raise your question, please use the Zoom function -- Raise Handing Zoom function, so to say, you could also use the chat function to raise your question. But of course, we would very much like to see you here on the stage and to also hear you live here. Indeed, sustainability is a very important topic these days. Rolf, you have attended the 2021 Climate Change Conference last -- just a week ago or so in Glasgow, what have been your key topics or the key takeaways that you took with you?

I would say there are probably 3 key takeaways. I think the first 1 being that everybody has understood that this is serious and that we have to accept the targets that have been set in the Paris Convention and that we just need to work towards it rather than debate what the target should be. I think the second thing is that everybody also sees that there are no clear cut and easy solutions to achieve this. I mean, it is a huge challenge to get there. And that means that with some -- we will need some further technological development before we really going to get there. And I think the third takeaway was that when you look at the most promising pathways to further decarbonization, I think that beyond just efficiency, which is 1 that we should not forget. In the end, it is also about finding better fuels, where I think 3 of them seem viable at this point in time, LNG, which is already available today and which would give an immediate reduction of CO2, but also SOX and NOX and particles. The second 1 being methanol, which I think is definitely promising but only if it's produced green, but especially for retrofits could be very interesting, and then we have ammonia, which, of course, is a little toxic, or very toxic. But nevertheless, it could also give a good contribution to that. So I think to see alignment on, yes, we need to do more. It's about efficiency and greener fuels and we have 3 that look the most promising. I thought it was actually quite good to see that there was an emerging consensus in that across the industry, both in -- when you look at organizations but also when you looked at the liner companies themselves.

Very good. It sounds very promising. Mark, as you laid out in your presentation, decarbonization of shipping requires investments, not only new, but also in existing vessels. Are you able to provide an indication of how much this would cost, how much additional financial investments do we have to take, not only we, but maybe the industry in total?

Yes. As we have seen with our program to buy and invest into ultra large dual fuel vessels. We -- you know that we have invested into 12 new ones with round about an investment volume of EUR 2 billion. And in that, you can say that close to north of 10% is a premium for a dual fuel LNG propulsion. So with that, having invested more than EUR 200 million into that technology, you can see that there will be strong investments to do to reach that. Not investing into that could be even more expensive over time. So we have decided rightly so, from my point of view, to act now, invest now, and that is very important, get positive effects on our CO2 emission or footprint as soon as fast as possible as LNG is available today as a technology and as a fuel, we can use that right from the first day. And over time, when new fuels are evolving. We can -- yes, we think how to use them. So therefore, investments will be high. But investing now and moving now is important. And at the end, will turn out to be better to do it now and maybe even cheaper. So therefore, we all have to move. And last point from my -- and I think we also have to create demand to foster supply for these different technologies.

All right. Thank you very much. It's good to hear and good to listen that there is a clear strategy in mind and also the commitment that are here to do more and to even invest a little bit more into not to be too late because it's important to act now, as I understood you correctly. We have, in the meantime, already a couple of questions coming in. And the first 1 is Sathish Sivakumar from Citi. I hope we can bring him here on screen now. Sathish, I think your line is open.

Can you hear me? Thanks for your presentation, and good to see you virtually actually, hopefully, next year to be there in person. I've got a couple of questions actually. So 1 is on the -- your Quick Quote product. Could you tell us what do you expect it to normalize in terms of exposure of your total volume mix since it has seen such an acceleration on the growth and actually how the growth has trended in the last 12 months given the bottleneck that we are seeing? Point one. And then also, what is the exposure between the BCO and, say, freight forward as within that Quick Quote product? And then secondly, on the -- this decarbonization and so on. Can you give us a color on what does it mean in terms of retrofit? What are the unit cost economics that we should think about on the payback period say considering you're likely to at profit, say, 10-year old vessel out of those economics would work out? Those are my 2 questions.

Good. I think the Quick Quotes question is certainly something for you, Rolf.

Yes. I think when we look at Quick Quotes, I mean, that has also been developing well over the last 12 months. If you go 12 months back, we were hovering around 15%, 16% of our total volume. Right now, it's about 25%. I personally think it's going to stay there for a bit. But that's also because we have many other obligations to fulfill as well. If we would push it further, we could probably still push it up another 5 to 10 percentage points, but we make a liberate choice right now not to do that. When you look at the customers in that segment, it's predominantly NVOs but an increasing number of BCOs are also using the channel. So right now, well over half is NVOs because typically the guys that are looking for short-term space. But I would say that we've seen also an increasing number of BCOs using the channel as well. So we'll see how that develops over the upcoming months and quarters.

Very good. Would you also take the question on decarbonization?

Yes. I mean I'm happy to take that question as well. I mean, as we said, it's very much speculation at this point in time about what the type of measures are that we will need to take. I personally think that when you look at building new ships, it's important to be flexible in terms of technology. That's also why Mark explained that we opt in for new ships largely for -- or at least 1 of the options is to go for dual fuel because that gives some forward flexibility. When you look at retrofits, I mean, we retrofitted 1 of our ships on to LNG, which is the Brussels Express, which we did last year. I think we learned that, that retrofit is actually quite expensive and it was more expensive than we're planning for. In the end, that was well over $30 million that we had to invest on that, which means that economically, that's barely feasible. So unless we are able to bring that cost down significantly, converting to retrofitting to LNG is probably not the way to go. If we look at the other fuels that might become available in future methanol and ammonia and then especially methanol seems to be a little bit easier to handle. As you, for instance, can reduce the tank. So we would expect that retrofits to methanol are going to be materially less expensive. How much that remains to be seen? They will also depend on the vessel class and how many you do. But I think that, in my view, looks feasible. Of course, at the moment, the cost for green methanol is very, very high. But at some point in time, we'll get into a territory there where that will become economically feasible, whether that's in 5 years or in 10 years, I think that remains to be seen.

Probably I'll join back later on the queue for more Q&A. I'll let others do it now. Thank you.

Yes. Definitely. I hope to see you again soon. We have a second one in the line. It's coming from Anders Karlsen from Kepler Chevreux. As far as I have been informed, he is not with the video, but at least we can hear him. Anders, I think your line is open.

A couple of questions. I was thinking in terms of who do you see as the key drivers of the change towards more sustainable fuels. Are you seeing more push from the customers? Or is it international organizations? Who do you see as quickest drivers here? Who will be pushing you forward fast?

I mean, I think in the end, it's probably all of the above. I think it's -- first of all, I think ourselves. We need to push hard to get that done also because we believe it's the right thing to do. And then I think it's something that goes, comes very from the entire society. And I think that's also good. On the 1 hand, it comes from the young people. It comes also from all kinds of institutes, and it also comes from customers. But I'd say that Mark was talking a little bit about our sustainability council that we established. And we had a first session there a little bit over a week ago. And I think it's very good to bring in representatives from all those groups because you see that everybody voice is very similar things. And right now, I think it's -- we're getting to a stage where it's much less about debating what do we need to do it and how aggressive we need to be. Now it's all about how can we do it. And how can we also do it as fast as possible because we should all not forget that it's important to do things also today and not only in 10 years' time because all the CO2 we emit, we can avoid over the next 10 years will not be in the atmosphere also afterwards. And I think that's where I like the way the discussion is evolving because it becomes less about ideology and conviction, but it becomes more about what can we do. And it also starts to go a little bit away from -- it's all about only green fuels because it will take time because -- before those are available at scale. And that means we also need to look at other things whether that transition solutions like biofuel or LNG, but also just pushing efficiency. I mean Mark told about the -- spoke about the new ships that we are ordering. And we shouldn't forget that if you bring in a new more than 24,000 TEU ship, and you phase out 4 or 5 old Panamax vessels that you also reduce emissions with 50% or 60% simply because the new ships are so much more fuel efficient. And certainly, for the next 5 or 10 years, that efficiency lever will still have to have a very big contribution to reducing emissions as well because that takes emissions out immediately, and it also means we require less greener fuels after that.

Just adding 1 last point. I think we even should push to go for a global regulatory framework would be very helpful when standards and structures from that point of view are becoming clearer and clearer. So therefore, pushing for that from the different industries is also important.

Yes. I totally agree. And that brings me to the next question, and that goes on fuel availability. You touched a little bit on it, but -- it's a little bit of a chicken and egg situation. If you wanted to use methanol or ammonia or other fuels, you also need the infrastructure. Are you going to participate in bringing that infrastructure on? Or do you see that as someone else's game?

I mean, if I may kick that off. I mean, I certainly think we have a responsibility on that front as well, yes? And if there is -- if there are projects where it makes sense, then we will certainly look at that. Having said that, yes, we are not an energy producer. So we will only be able to do that together with others. But I think that's where it is all about joining forces where possible and doing things with larger coalitions. Mark talked about the getting to zero coalitions, for example. I mean we need to do this together. I think it's a mistake to think that on -- that when it is around decarbonization that this is a competitive issue. No, it's an issue that we need to address as an industry and where we need to do the right thing for the world. Whether in the end, we are going to decarbonize 5 months earlier or later than 1 of our competitors is not really important. What is important that we all do it as quickly as possible. And that means that we need to join forces because by doing that, you can do more in terms of investments and you can also aggregate demand that is going to be there because you're, of course, fully right. I mean, to build the infrastructure for new fuels and to be able to produce them, it's going to take time. And that's why I think you need this wider range of measures over the next 5, 10 and 20 years.

Very good. Thank you Anders for your question. There was indeed a question coming into the chat from Deepak Maurya, which was pretty much related to the question that you just raised. So from that perspective, we are not taking that up again. There is another question coming from Amant Pereira from ING. Amant, I think your line is open now.

Yes. Can you hear me?

We can hear you well.

Well, first of all, compliments to Rolf and Mark for the presentation of the sustainable strategy, which is all encompassing, I mean not only focusing on environmental parts, but also the social parts like diversity in broad sense. So very good to hear that. One of my questions was just answered actually. So that was the concern about not only waiting for the future fuel to be there at the supply and infrastructure, et cetera. But proactively as a company also not only joining but setting up these kind of coalitions to look for solutions. So good to hear that Hapag-Lloyd is open for that and taking action. The second question I have is about hydrogen, which has not been mentioned, LNG, of course, is a transition fuel is still fossil fuel. So even if it's mixed with biofuel, it's not the future, 2 decades from now. Indeed, ammonia and methanol will be there, but the availability is not there yet. So what's your view on that also considering hydrogen if available green hydrogen, would that be a solution also for your ships?

Well, maybe first 1 point on LNG because I agree with you that as long as we -- as it's a fossil fuel, it's probably a transition fuel, but also liquid gas can be produced through hydrogen. So I still wouldn't rule out that later on, also liquid gas produced in a green way, remains an alternative also because the energy density of it is actually quite good. That also brings me to the difficulty with hydrogen because the problem with hydrogen is simply that the energy density is too low. And as a consequence of that, the tanks you would, for example, need and the amount of hydrogen that you would need is probably going to be prohibitive for large ships. It might still play a role in feeders and things that are mainly focused on short sea, I wouldn't rule that out. I would say though that the most feasible e-fuels going forward are probably going to produce via hydrogen and then it's going to be either some kind of liquid gas. It's going to be a methanol type or an ammonia type thing. That was also very much, I think, the -- that's the sort of consensus that seems to be coming out of what we discussed in Glasgow. Can something new come up? Of course, yes. But I think right now, those seem to be the 3 most feasible pathways. And of that, yes, fossil and LNG is something that's available today, yes? And I think what we undersell a little bit on LNG is that we talk a lot about CO2, but we shouldn't forget SOX and NOX, and particles. And that's, of course, where it would take out 99-plus percent of the emissions. And I think that's not unimportant either when we look at what's the total environmental footprint of -- or environmental effect of the fuels that we actually use.

I see your point, and I agree with it, and I think we will meet all 3 of those solutions by the way. So if I may ask a small follow-up question, what's your view? Because it's not only shipping looking for these fuels. It's all road transport. It's even aviation, of course. And with the pace that we are working on renewable energy currently with wind turbines, et cetera, we will not get there in the next decade. So what's your view on that? Is it something that will be reachable? Or what would need to happen for that? If you have to particularly answer?

I mean I share your concern because the production capacity to produce those green fuels is today simply not there. I know that when you go to conferences and when you hear people talking everybody says, it's not a problem, yes. And there's lots of people with very ambitious targets. But also when you look back in history, we tend to see that these type of objectives get reached quite a lot later than people originally think. And I think that's what we're going to see here as well. In the end, it's all about making choices because if we want to produce considerably more green energy, then in the end, it's all about how can you generate enough electricity to produce them. Okay. And then you have to say, okay, what are the alternatives that we have. You have wind, you have solar, but you may also have nuclear. Yes? And once you start thinking also about those things and take conscious decisions, do you want to do that, yes or no. I think you can actually widen still the playing field a little bit. I mean, in Glasgow, there was also some discussion on nuclear, for example, because that would help us to accelerate the production of energy quite a bit. And of course, there's quite some hesitation there from politically. But having said that, I would not rule out that, that discussion also moves forward over the next 3, 4, 5 years, when people see that simply looking at the sheer amount of energy that we need to produce sufficient green fuels by 2035, 2040 or 2045, that just using wind and solar may not be enough.

Thank you, Amant. Next question is coming from the line of Andy Chu.

Thanks very much for the presentation. Two questions from me, please. The first 1 is around shipyard availability. Obviously, we're not far away from, say, 2030, 2035 and obviously, there'll probably be a huge surge in terms of shareholders and retrofitting requirements. So do you think it actually bottleneck exposition could derail sort of time lines that you're talking about for yourselves and the industry? And secondly, around sort of ESG, and we've heard about doing the right things and around environmental issues driving sustainability. But can I just ask around situations and your view on tax, clearly, the industry has been paid very low amounts of tax. Is that something that should be debated a little bit more hotly for the industry?

Well, I can take the first question quite quickly and Mark will probably give a couple of comments on the tax point you raised. I mean in terms of shipyard capacity, whether that will be a real bottleneck in the long run? I think my question to that is very simple because it's no. I think there will be some quarters or years where shipbuilding or retrofitting capacity could be a little bit tight. But if I look at what needs to be done between now and 2045, I don't think that will be the limiting factor, and that should not prevent us from achieving our objectives.

Mark, would you comment on the tax question?

Sure. Commenting on your tax question. I think it's important to take on the 1 hand side, a little bit longer-term view because you know Andy that we are -- that we came until the pandemic out of the phase of low profits of the whole industry for years and the necessity to support the overall shipping industry we should not fully get carried away by the extraordinary situation we are in right now, which is, for sure, both from a service perspective, but also from an overall perspective, not a sustainable situation. So therefore, I think it's needed to take a long-term perspective on that. And if you would take the years before, I think tax rate and support, which was needed quite a good balance overall when you take it globally. For sure, the situation right now which is the momentum we are looking at right now is in a sense, different. But I think also here, supporting industry globally is needed to take also a longer-term development.

All right. Andy, thank you very much for your questions. Hope to see you in a bit after the second session. We have another question coming in from the line of Deepak Maurya from HSBC. Deepak, your line should be open now.

I hope you are able to hear me.

We hear you well.

So thanks for addressing the question on the supply chain with respect to the fuels, alternative fuels. I had a couple of follow-up questions with the decarbonization agenda. First was about what's -- what are your thoughts on carbon taxes? You've been hearing some of your peers and other industry participants, speaking about carbon taxes as a way of disincentivizing fossil fuels and incentivizing alternative fuels of bridging the gap of the cost spread between these 2. The second question is about, would there be a different approach to decarbonization, when it comes to smaller vessels versus bigger vessels. But a significant chunk of the existing fleet, not just for yourself but for the industry, comprises of these smaller vessels of Panamax vessels or sub 10,000 TEU vessels. So with respect to the fuels and with respect to the technology, should we expect a different approach for the sub-10,000 and the above 10,000 categories. These are my questions.

Well, maybe -- If I start, first of all, on CO2 tax, I think we've always said that we are in favor of market-based measures, yes? So I think the old industry supports market-based measures. We also believe that a part of that -- at least a part of that should then flow back to the industry into R&D or support for alternative fuels. The way to do that, you can debate about that. I'm a big fan of keeping it simple because the more complex you make it, the more difficult it will be to implement. So in and of itself to have a tax on fuels is probably not necessarily a bad idea. We just need to think a little bit about the incentive because if you use today, for example, methanol, which is today, emits more or less the same amount of CO2 as the traditional fuel. It only starts making a difference when it's produced in a green way. And today, the production cost of that are a lot higher. So how much it will help in that context to drive that transition? I think that to some extent, remains to be seen. But all in all, I think we are full market-based measures because over time, that drives behavior. And if anything, it drives also people to become more efficient, which is going to be a key lever, as I mentioned earlier, for the next 5 to 10 years. In terms of what kind of technology will be used for different ship types. I also think that there will be different solutions for smaller ships than there will be for bigger ships. I think though that the breaking point that you indicated 10,000 or so is going to like materially lower because it is going to be about ships that have a much shorter transit times, and that have -- that operate in essence in short sea. So that's going to be really about smaller feeder ships initially, and then we have to see how big those ships can get over time. But I don't think that it will get to the 6,000, 7,000, 8,000, 9,000, 10,000 TEU ships for those who will need to have 1 of the 3 pathways that we discussed earlier.

And maybe just adding on that, Rolf, I think we should see a clear tendency to bigger ships, so to use the ship system efficiently and drive down CO2, and you mentioned the investment into big ships and maybe pushing out older unefficient smaller ships. So also here, there will be a trend in that direction.

Thanks, Deepak, for your question. I hope also to see you again soon in a couple of minutes. We have another question coming in via the chat from Christian Cohrs, Warburg Bank, and I'd like to read that out here on stage. The glide bank declaration issued at the most recent COP26 and backed by 20 countries, including Germany, strives for green shipping corridors already by the middle of the decade. What is your stance on this initiatives? Do you think this is at all achievable growth?

We talk about the mid of this decade.

Mid of this decade.

I think it's a good ambition. But I'm trying to be -- I try to be a little bit realistic with these things. I mean theoretically, it would be possible if you look at very small and short stretches that can run on alternative fuels these days. If you look at longer stretches the technology and the fuels are simply not there. And so I personally think that rather than trying to put everything now to try and create 1 very small green corridor, if you want, that it's probably better to push even harder on efficiency over the next 5 or 10 years because that can reduce the absolute emissions a lot more. And then in parallel, try to benefit from further technological development rather than forcing something based on a fairly immature technology as we have at this point in time for some very small corridors. But of course, that's just my opinion. I appreciate that people come up with those types of statements and they help us all push in the right direction. I do think that when you look at 2025, for example, as an objective, that means that the ships need to be ordered today.

All right. Very good. I think this was the last question for the first session. I think it's a good time to have a short break, about 10 minutes, I would say we'll see you all 10 pass 11 German time, and then we'll talk you through the initiatives that we have taken and the review that we have taken on the strategy, and we'll finish that off with also with our targets, what does that mean for our financials and nonfinancial targets. And then you also have the opportunity to raise your questions again. So thank you very much for now, and see you in a bit. [Break]

Welcome back, everyone. After we heard a lot about our new Sustainability Strategy. Rolf Jansen will now elaborate about the outcome of our strategy review, the conclusions that we have drawn and how we exactly going to prepare for tomorrow. Finally, both Rolf and Mark will present what it actually means for financial and nonfinancial targets. Before handing it over to Rolf, I would kindly remind you how to raise questions, please use the Hand Raise function in Zoom. There's also the opportunity to use the chat. But again, of course, we would like to see you here on screen. Rolf, the floor is yours.

Thank you very much, Heiko, and thanks, everybody, again for joining us also for Part 2. Well, we would like to talk to you a little bit about the conclusions of our interim strategy review, which we indeed labeled to prepare for tomorrow. As we do believe that this 5-year strategy consists in a way out of 2 sprints, one was the first 3 years where, as we said, in the first part of the presentation, we already achieved quite a number of our targets. Now we just need to double down on some of these things and also start preparing for probably what's going to be the next strategy, which is going to be more towards 2030. Maybe following on what we said in the first section. Initially, we had 3 targets which was to be profitable across the cycle, maintain that global market share of around 10%, become #1 for quality. We added 1 thing to it, which is this thing on sustainability where Mark alluded on to what our strategy is and what we intend to do. We do believe that when we look ahead not only for our Strategy 2023, so for the next roughly 2 years, but also for the time beyond that, that sustainability will remain a very core component of our strategy going forward. Having said that, as I mentioned also in the introduction, in the last 2 years, the world has changed. We have been facing the pandemic, which had significant effects on consumer spend and also on the supply chains, which definitely have been disrupted. And even if -- when you take a step back, I think shipping has remained fairly pretty resilient because also in the crisis year 2020, we were able to transport the same amount of goods as we did in '19 and in '21, we have been able to lift quite a lot more containers than we did the year before, even if we have not been able to deliver all of them just yet here. Digitization and innovation, I don't want to think about how we would have been able to -- how we would have managed through the COVID-19 pandemic, 20 or 25 years ago, I think we just see how much digitization helps us and we certainly still need to do more. Mark talked about sustainability and decarbonization. It is on top of our agenda today, and it will remain there. And I think the other thing which we shouldn't forget, if we look at the last couple of years is that we did not only achieve a lot of things that we set out to do when we sketched out our strategy, but also that our investment capacity and also that of our competitors is today very different from what it was some years ago simply because the industry goes through an up cycle. If you look at how we intend to prepare for tomorrow, I think we've refined our priorities along 3 main pillars, and we communicate them to you, I think, in pretty much the same way as we do towards our own organization. And for us, it's very much around 3 main themes. The first 1 is simplify. I think what we've seen is that over the last years, our business has become increasingly complex. And we just need to do an additional effort to simplify again, our business model. If we look back at what we did on the last 10 years, I think we've been very successful twice in doing that on the back of the mergers with CSAV and with UASC. Now we are several years beyond the last merger, and now we need to look ahead again and need to sort of reinvent ourselves building on similar principles, though the only difference being that at this time, we wouldn't merge with somebody else, but we would rather merge with ourselves and with the order book that we have. But we should still keep those same type of principles in mind and reinvent ourselves a little bit, if you want. The second thing is we need to strengthen a couple of things. When we look back on what we did well and not so well and what we have achieved in our Strategy 2023. Then there are some things where we've been very good. There are also some which we have started, but where we need to double down over the upcoming 2 years to make sure that we push them across the finish line. And then finally, we have the ability and must also make sure that we do those investments that really makes sense to also ensure that we remain competitive in the long run. So let me talk a little bit about all of those 3 levers that we are going to pursue. First and foremost, simplify. In our case, this is all about simplifying and improving the customer experience and make sure that it becomes easier for us to do business but also take out internal complexity and improve our cost position. In the end, this is about 4 main themes. The first 1 being around the segments that we serve and the end-to-end customer experience. I'll go into depth in a minute. The second 1 is about network and fleet. The third 1 is around our network structure, which is both about the hubs that we have in our network, but also about the way that we do transshipment. And then the last 1 is more around the, let's say, the unnecessary empty malls, but also about the depot structure. And we do believe that there's quite a few things that we can still do in each and every 1 of those fields. And let me talk you through that in a little bit more detail for each 1 of these levers. Maybe starting with the customer experience. A couple of things to be mentioned there and quite a bit of that we've also learned over the last years. Maybe starting on the right-hand side of the slide, if you look at our service delivery model, then over the last years, we've done a lot of work to standardize and streamline processes and also leverage our global service centers, but also create quality service centers, which are much closer to the market, but where we still create bigger units with larger teams because that gives more stable and more consistent quality, which is also what we have seen when we look today at how we deliver on our quality promises. We will continue to pursue that strategy as we do believe that will help us to become better. Then we talk about automation. Automation is incredibly important. We've done a lot of that. We talked about Quick Quotes in the first section, but certainly also when it is around the way we produce documents, the way we interact with our customers, the number of transactions that goes in an automated manner, that can still be pushed up further. We have a number of projects running on that area. We are also delivering innovations every month or every couple of months, and we need to just do even more of that as a vision must be that the share of our online business continues to increase, but also that a very significant chunk of the services that we provide can be done by the customers themselves or can be automated. Same goes for customer journeys. Not every customer is the same, and we need to be more tailor-made to make sure that we fit the needs of various customer groups, which then also brings us to the point about customer segmentation. I think we have refined our customer segmentation quite a bit over the last years and which is around how we serve our large NVOs, how we serve our large BCOs, how we develop some specialization in certain industry segments and how we also make sure that we have specialized teams working on things like dangerous goods, like refer, like special cargo. I think what we've seen in that process is that we can probably simplify that even further. And right now, we are working on that segmentation, and I do believe that when we meet the next time, we'll be able to explain that also to you in detail. But in the end, we will probably be serving fewer segments, but we'll try to do that in a more targeted way and try to avoid those channels that are fairly inefficient that today cause a lot of workload, especially for our customer service teams. When we look at network and fleet, this is all about complexity. Today, we operate about 120 -- between 125 and 130 services around the globe. We do that with about 250 ships on a daily basis. And when you look at what is required when we -- in the future, then we believe -- and that ties into the logic that we also explained -- that I also mentioned when talking about the mergers that we did in the past. We need to look for ways to simplify that service network. And in essence, that means offer maybe slightly fewer services but deploy bigger ships. The 2 big benefits that, that -- or the 3 big benefits that, that has is, first of all, it will help us to reduce slot costs significantly. And I would say that on a 5-year horizon, we're still looking at a double-digit percentage there. The second thing is that it will improve quality because it drives out complexity from the network, which means that it's going to be easier to manage. And in the end, that will improve things like schedule liability and on-time delivery of the boxes that we agree -- that we carry for our customers. And the third 1 being, of course, emissions because as we replace older tonnage with newer, bigger tonnage, we will see a pretty significant reduction in the amount of fuel that we need and thus also in the emissions that we cause. And as we said also in the section on sustainability, becoming more sustainable is in the long run about fuels, but in the short run, it is certainly also about efficiency. A bit tied to that, the point on hubs and transshipment. If we look at our network today, we transship cargo in quite a few places. I think in reality, transshipment, which is about more than 40% of the boxes that we move is being transshipped at least once. Today, we handle those transshipments in quite a few hub ports, probably around about 25. We also see that when you have to transship a box, that basically increases the complexity. And if you can reduce that complexity that will improve the quality of the service that we provide to our customers. Our vision that -- is that when you look 3 or 5 years out, that maybe roughly 90% of our transshipment is being carried out in, say, 12 or maybe 15 hubs around the globe. That will allow us to offer better quality because those hubs will be better connected. The feeder connections will be more frequent and that will lead to better quality and lower cost. If we look at the transhipment share in and of itself, today, it's, as I said, above 40%. Personally, I believe that we should be able to bring debt down to hopefully low 30s or something like that because between the services that we have and whether in the end, that's going to be 125 or 95 in some years or somewhere around 100. We will still have so many direct port connections that it must be possible to attract 70% of the cargo directly between an origin and destination port. The other point to mention here before I get to strengthen is imbalances and depots. And this is very much around our depot network. I think it's fair to say that during the 2 mergers that we did, we focused a lot on process organization, IT network, container fleets, we probably didn't focus all that much on our depot network. And as a consequence of that, we today have a very dense depot network. If you look at that, that also causes quite a lot of moves between depots and it also causes some fixed cost and also means that we have slightly higher inventory of boxes than we would probably like. We think that right now, the time is right to have a look at that depot network and see how we can reduce the number of depots with probably somewhere between 30% or 50%. That will drive our fixed costs will allow us to work with lower inventory and it will reduce complexity as well. We did a first pilot here in Central Europe and actually there, it turned out that coming to that reduction of 30% to 50% is possible, and it does actually lead to lower cost. We probably also believe that there's also going to be some hidden benefits that are going to come out of that, but those are not very tangible just yet. If we come to strengthen, what are the things where we still have to do more. I think the first 1 is the way we interact and the way we work with our customers here, it's called revenue management, but it's also about making sure that our customers have access to all the products that we can offer. And it's very much tied to renewing the way we do our quotations, the way we do our booking processes and make them more seamless. Then it is about delivering operational quality. We have a large project, which we call DOQ, where I believe we have identified those measures that we need to take to consistently improve schedule reliability that has admittedly become a little bit less in focus over the last year, 1.5 years as we were battling the operational crisis, but we need to pick that work up again and make sure that it gets completed. We need to accelerate digitization and innovation. That also means we need to invest more in IT, and we need to find ways to double down on IT and be it through partnerships or through other means, further boost our innovation capacity, which we probably have doubled over the last couple of years, but we may need to do that again over the upcoming 3, 4, 5 years. We'll continue to grow in attractive markets. I think that, that strategy has served us well. I think inland, we've not been that successful. We have been growing a bit. But if anything, I would say that's probably the area in our Strategy 2023, where we have not really cracked the code just yet. Yes, we have seen some growth there, but not in the order of magnitude that we were looking at. And then sustainability was already covered before. Let me talk a little bit about some of these things that we need to do towards the customer. One -- the first 1 I already mentioned, which is all about improve the quality towards the customer and the user experience, especially around the quotation, booking, tracking, payment process. Key there in our case is what we call the quotation and booking engine, which is being developed as we speak and where we also follow much more modern way of developing that than we would have done in the past where we might have defined a project that would then be delivered in 3 to 5 years. Now we define it in 90-day heart beats, where every quarter, we try to bring tangible improvements and also -- that also add value to the customer. When we look at operational quality, I think our objective that we've set ourselves in 2018 was to consistently stay within the top third of the industry when it's around schedule reliability. Even if you can't see it today because the overall schedule liability has gone down so much, we have actually made some headway in that because when you look at the see and tell statistics, for example, then today, we are in the top 3. And we have been there over the last 7, 8 months, whereas if you go 3 years back, we were in the bottom third. So some of the measures that we've taken are definitely working, but we also believe that we can still do more. Then when we look at IT, I already mentioned it. This is about completing the transition from our Phase 2 platform to Phase 3, but it's also about just creating more innovation capacity, working more with partners and making sure that, that digital experience of the customer becomes better and better. Then when I jump to 2 attractive markets, I think that's an area where we're quite pleased with the progress that we've made over the last year. It's not mentioned that much in this presentation, but I would still point out the reefer segment 1 more time. We've invested in that to renew and grow our fleet of reefer boxes. But I'd also say that, that's an area where we have consistently been growing in low double-digit percentages since 2018. And when we look at that market, we believe that, that market will continue to grow. And that also means that we will continue to have an opportunity to take a little bit of share there or at least benefit from the growth that's in that market. When we look at India, that's a market where Hapag-Lloyd has traditionally been strong, particularly on the western side of India. And of course, that market is growing very fast. And our expectation is that when you look in the next 5 or even 10 years, that these are markets that, that market will continue to grow both towards Europe, but also towards the U.S., which are both important markets. In addition to that, we do build out also our position in markets where we have traditionally been strong, be that the market like Italy or be it Germany or be it Canada or Mexico. And there, we just need to maintain our position. Africa was mentioned already several times, good progress there. If we look at the size that we have there today and you compare that with 5 years ago, I think we are roughly 4x the size that we were 5 years ago. We probably won't be 4x the size that we are today in 5 years from today. But I do believe that the target that we set ourselves at the time is to carry around 1 million TEUs in 2023 or 2024 is probably within reach, which I would consider to be quite a good achievement. I mentioned to you the point on inland a little bit earlier. I think we need to step up our efforts there. Somehow it's not that easy for an ocean carrier to be a really good door-to-door carrier. We do it quite well in some trades. I mean if we look at the Atlantic trade, for example, the share of our door-to-door business is really high. Also on the transpacific, we do a fair bit of it and also in places like Canada and Mexico, we are strong. Rolling that out to other markets is not uncomplicated. And I do believe that there we have to still look a little bit in the mirror and in a couple of cases, probably take a little step back because in the end, it's not about trying to force a customer to do also the inland with you. No, it's about offering him or her a good service, which they are willing to buy and for which they are willing to pay a premium. And I think that's where we still have a little bit of work to do. We have real good products in some segments and in some markets, but not yet consistently everywhere around the globe. And that will also mean that we may have to do some investments here or there to strengthen our capabilities in that field. And I mean, some of that you see here, drawn on the picture, okay? Our ability to currently do live tracking and do easy issue resolution is probably not as good as it could be. Also, when we look at some of the value-added services that people are looking for, we probably can extend the services that we offer still a bit, especially on the digital channel. That brings me to the last point. Apart from simplifying our business, strengthening certain things and double down -- doubling down on some of the things that we have already been working on. We also have the ability today and I think also the obligation to safeguard our long-term competitiveness by doing investments in those areas where it is needed. And I would say that for us, those are 4 main categories. First and foremost, our people and also their capabilities. Also for our people, the way they have to work and the market in which we operate has changed dramatically over the last couple of years, not only because of COVID and not only because of working more mobile and from home and using different tools. But also because the whole industry has simply changed. And if you look at the tools we have today and the amount of cargo that for instance, goes via the online channel, that's very different from what it was before. And that means that we need to help our people adopt to those new ways of working, but also to new jobs because the jobs that we have today and the jobs that we'll have tomorrow will not necessarily be exactly the same ones that we had yesterday and that we have today. And that's a key area where we need to invest and need to make sure that everybody understands that this is actually quite an interesting industry to work in. I think we -- shipping today suffers a little bit from a not so good image, whereas there are many things that are actually quite attractive. There's a lot of innovation going on. It's a very global, very international business where you have exposure to many people and many cultures. It's also 1 that on the sustainability side can really make a difference going forward. And that's, I think, for us, probably 1 of the most critical aspects even if in absolute terms, the amount that we have to fully is probably manageable. But it's 1 where we have to do more. It's about ships, not only more efficient ones, but certainly also more eco-friendly ones. It's about equipment. And then in terms of M&A, there's probably some that we will do, but we will not be very aggressive there, also because right now, some of the prices that are being asked for companies are simply pretty crazy. A little bit more detail on some of that before we wrap it up on people. We've already said invest in large-scale capability building, whether that, in the end, will be around Hapag-Lloyd, a Canape or something like that. We'll still need to work that out. But it's also about redoing our offices and making sure that our people get the new tools and get adjusted to a different way of working than they were pre-pandemic. And we summarize that by bricks, which means redoing some of the offices. It's about bites, making sure everybody has the right tools, but it's also about behavior because you will -- our people will need to lead in a different way, post-pandemic as they have done pre-pandemic. We talked about ships in the end if we want to become more efficient, we will need newer and more modern ships. They also will need to be more eco-friendly. That means looking at dual fuel options, I mean as the 12 that Mark referred to earlier, which are dual fuel LNG 1 could also imagine dual-fuel ammonia or dual fuel methanol type of ships going forward. We will probably do some retrofits. But again, as we said before, over the next 5 to 10 years, we also need to simply work on efficiency and make sure that the absolute amount of fuel that we need becomes less. And that the average size of the ships that we deploy goes up because that ties into what I told earlier around the network. Then when we look at equipment, I think the container was very important and impressive invention 50 years ago. But if you look today at a container compared to what it was 50 years ago, it really hasn't changed all that much. I don't think that the size of the containers will change. But I would also -- I would still say that if I fast forward 3 or 5 years, I would still expect that not only our reefer boxes, but also our dry boxes will be equipped with some kind of IoT device. And I'd also say that coming back to the sustainability angle that 1 really has to ask the question whether over time, we need to use as much wood as we do today to operate the containers or whether we should go more and more as we have already also been piloting to steel floor containers, which is certainly quite a bit more sustainable. Then a bit about M&A, that question we get a lot. I think when we look at M&A, we've always said we'd only do selective M&A in the end to try and strengthen our core business. And that's still, I think, our focus today. When you look today at where are we willing to invest apart from things like IT, apart from things like maybe a Hapag-Lloyd Academy, we would still be looking predominantly on the lineup front, where there may still be 1 or the other smaller opportunity out there. I think NileDutch is really a good example there, which helps us address a market which we were not covering yet. And I don't -- there may not be that much in the short run. But if I look out 3, 4 or 5 years, I'm sure that 1 or the other opportunity will still come up as the consolidation in this industry is maybe largely behind us but when the markets return back to normal we will still see that there's going to be a material difference in operating costs between the large carriers and the smaller regional ones and also with digitization moving ahead and as such, the ability to differentiate based on other factors will be less. I do think we'll see a little bit of further consolidation. And then when it's around terminals and infrastructure, I told you -- I said earlier, I spoke earlier about the hubs and the importance of access to what we would call core markets. And I would say that, that's an area where we would certainly be looking at that, that if and when that fits into our overall portfolio and network, we would not hesitate to consider equity investments in infrastructure, but again, to serve our core business. So if you would see some of that, you'd probably see it around some of the places where we have hubs or around some of the markets that we consider our core markets or strongholds going forward. Then there is always this point on complementary services where we certainly won't rule out that, that we will do 1 or the other thing. I would say, though, that, that contrary to what some of our competitors do, you should not expect us to make a big move into forwarding or warehousing as we still believe that it's a different type of -- a different type of market. And if we look at what our business model is and what has served us well over time, then we'd like to stay relatively slow -- close to the core. I mean that's also illustrated by, I think, the recent things which we have done. You will all have seen the investment that we made in the others port, where we took on 30% in the only real deep sea port that there is in the North range in Germany, we believe that over time, that will serve us well and will be an important -- will be an important terminal in our overall network. We did an investment in Tangier, as many of you will know, where we invested and took a share in DC3 for us Tangier, a very important hub for everything that comes out of Asia. And in a way, is our West Med hub from where you can go to the U.S., you can go to Africa, or you can go into the met or you can go to North con. So I think it's a good example of 1 of those hubs in our network where we will probably do quite a lot of transshipment even more than we do today and where we try to make sure that all the boxes indeed meet their connections. And if they miss the first ship that they then can be carried on a second ship that maybe cups only 1 or 2 days later. NileDutch, I already mentioned, for me, a great example of a niche acquisition that we can do. If more of that pops up, we will certainly look at that. So let me try and wrap it up and come closer to the Q&A session, as I'm sure there will still be some questions. Wrapping it up very briefly. If we look at the next 2 years, for us, the key words will be simplify our business model, strengthen and double down on some of the initiatives where we haven't achieved yet what we've set ourselves out to do until 2023 and then make sure that we complement that we're doing those investments that are needed to also ensure our mid- and long-term competitiveness as we prepare to write our next vision towards 2030. Our targets have not changed, yes. We need to be profitable across the cycle, not only in an up cycle as we know it today, but also when the markets are a bit more difficult, we want to maintain our global market share of around 10%. We want to become the #1 for quality and we need to accelerate our efforts on sustainability, which then brings me to our financial targets, and I think Mark would be great if you can talk a little bit to that.

Yes. Thank you. Thank you, Rolf. And I think on our financial targets, it's clear. Our long-term financial targets remain valid. So throughout the cycle, we want to earn our cost of capital for sure. The leverage, we would keep on or below 3, and we want to constantly strengthen our resilience. Liquidity should be enough all the time so a sustainable liquidity reserve is important and also on the basis of a strong balance sheet, have an equity ratio above 45%. And keeping our shareholders in the game for sure and contributing to that. And yes, let them participate on the development and on the profits we are making. So having a dividend policy and paying out at least above 30% of EAT and doing and important for the topics of today, securing sustainable investments into our fleet, into our assets, it's quite important. We are above all of these targets right now for sure, but longer term, through the whole cycle, they absolutely remain valid.

Yes. I'd agree to that, Mark. But I would say though that -- and of course, it's good to be conservative also from your role. But I would say though that if we look ahead over the upcoming couple of years that on some of these, we definitely could be a little bit more ambitious.

We're also afraid of that, but ambition is higher.

Ambition is higher. I think short term, our ambition will also be -- well and have to be also higher. I would also say though that I agree that when you look at it in the long run, if we are able to achieve a profitability which is always ahead of our weighted average cost of capital, that's actually quite good because the industry has not been able to do that for a very long time. I also believe a leverage, as we've said, maybe a little lower than what we have in here, in the long run is good. Liquidity remains important and so are the other ones. So I think, yes, they remain valid. I just think that for ourselves, but I know we do that also. We are a bit more ambitious, of course, short term. If we look at the nonfinancial targets for a minute just before we get to the -- just before we get to Q&A. I'd say that there, we have probably opt our objectives a little bit. I think, first of all, when it's around quality, we measure that very much around what is our Net Promoter Score. And even if it's difficult to measure ourselves there against other shipping lines because those data are not public. I think our ambition must be to be best-in-class, and we are also taking additional measures to stimulate also our organization and reward our people if we indeed achieve that. Schedule reliability, I think, very clear, we need to remain in that top third. The CO2 reduction, Mark, you already talked about it until the AER needs to come down with the 30% that we indicated until 2030. On the land side, we are not here today but our ambition remains to get to that 40%. I personally don't think we'll be able to achieve that by 2023, but we will certainly then carry that over into our next planning cycle. And then finally, when we look at attractive markets, there, we'd like to have in those markets that we target over time, a market -- a market share that is at least equal, if not a little bit higher than what we have on a global basis. So that brings us, I guess, to our way forward and then I'll hand it back over to Heiko. It's about refining those initiatives that we already have and cluster them around this simplify, strengthen and invest. And with that, we continue to implement our Strategy 2023. But as I alluded to a little bit earlier, we also slowly start thinking beyond that as we need to start building a vision towards 2030, which realistically we will complete somewhere in the course of the first half of 2023. So with that, Heiko, I guess we come again to Q&A, and happily hand it over back to you.

We do. Thank you very much, Rolf. Thank you very much, Mark. Again, in case you want to raise your question, please use the Hain Raise or chat function. And before I hand it over to your question, I just have a question myself, Rolf, you mentioned throughout your presentation a couple of times that the pandemic has even accelerated the pace of digitization in our industry but certainly also in other industries as well. Some others are far advanced, I have to admit. Some other industries still continue to rely on personal interaction. From your perspective, how do you think where stands shipping as of today in terms of digitalization? And how may the interaction we have with our customers change over the upcoming, let's say, 10 years or so?

I think the shipping industry has made quite some progress over the last years. I think we tend to sell ourselves a little bit short on it, as I said earlier, I mean, the fact that we have been able to continue producing roughly the same amount of cargo and transporting the same amount of cargo throughout the pandemic year as we were before that with all the limitations that were there and with pretty much everybody having to work from home most of the time, I think that's pretty impressive. The way that we were able to shift from in the office to work from home, without too many glitches in a very short period of time, illustrates that we can do a lot. The fact that we sell 25% of our business online today compared to pretty much nothing in 2018 tells the story as well. I think that this will continue at a very fast pace. And yes, there are some industries that are probably a little bit more advanced. On the other hand, if I also see how we do also things like we do this today and how we do our AGM and how we do town halls and all those type of things. These things have developed a lot, and -- if I look at the pace at which we are developing new IT tools today compared to what it was, say, 5 years ago, I think -- I don't think we should -- I don't think we have to shy away from other industries. And I think we're selling sometimes ourselves short. And that comes to the point that I made earlier. If you look at the people that work in shipping, and I think sometimes our ability to attract new talent is not yet as good as it should be. But that's also because we are not so good in really painting that picture that shipping is actually a very interesting industry. Innovation is going fast, a lot faster than it has over quite a few decades. It remains a very international and global industry. And if you look at where can you really give a contribution to making a better environment and making the world a better place. I think shipping is also 1 way you can make a difference.

I agree. Thank you very much. Mark, not only Rolf, but you also mentioned earlier today that the pandemic and the related supply chain disruptions clearly resulted in rising unit costs after many years of cost reductions and so on. While some of those cost inflation might stay, others might disappear. From your perspective, do you think we will come back to a cost situation that we have seen before the pandemic? Or do you think that some of the costs will remain and might be irreversible?

Yes, due to these operational challenges, we are seeing right now, we have strong cost increases, which is closely tied to that. And if these operational challenges, as we all hope, are reducing or will reduce over time over the course of '22 and '23. A big part of that with these costs will fade away and go away because if you don't need as much storage and handling and haulage initiatives or actions cost will go down. I think we have to acknowledge that maybe up to a quarter of the cost increases entail the risk of getting stuck in the system. And they have to be addressed, and that's what we have done with our strategic cost program, where we address these costs that we are able to reduce them after that phase we are in right now. And on top of that, address costs we would like to reduce over time. And as we said it, we want to invest in that cost base. So investing into new systems, new structures to become more efficient, more competitive and working from a better cost base. So that's a little bit the perspective we are having on that.

Pretty clear. Thank you very much, Mark. Right. We have already a couple of questions coming in. The first ones are coming from the line of Carolina Dores, Morgan Stanley. Carolina, please go ahead.

I guess I understand that the broad range long-term targets, but given that you started having more long-term contracts, I would imagine that you have some here of 2022 and 2023. So if you could give us an idea of the split of CapEx versus dividends to shareholders, you're aiming to distribute or at least a range? That will be quite helpful because you're very, very far. If I look at consensus as is not even in which are very similar as well, you're very far from any sort of leverage for the next few years.

Yes. Maybe I kick it off. You are right. The situation we are in right now has the potential to do a couple of things in parallel. First of all, I think we addressed it today, both on sustainability, but also and as important, invest into our operations and the potential is absolutely there. That's 1 hand. Secondly, yes, for sure, let shareholders participate on that excellent development is also very true and we will, for sure, do that in a sense. So therefore, balancing that is possible even keeping our financial targets as we said. And therefore, we will, in parallel, do that and invest into our assets, invest into sustainability, into competitiveness, but also let shareholders participate in that to keep our targets. But on top of that and even be more resilient and more competitive, but even, yes, doing more as we speak.

Mark, if you want to be a little bit less cryptic, yes. I think what we will do is that we will make -- we will firm up our plans also in terms of CapEx over the upcoming quarter or so I mean we are going through that process as we speak. We know that there are quite a few things that we need to do on the fleet. We know that there's a considerable amount of money that's needed in sustainability and other parts. But I also agree with you that, that will still mean that we will not immediately go back to leverage levels that we have seen before. And for that reason, I think you should -- it's not unlikely that you will see a somewhat higher than usual payout of dividend in the upcoming 1 or 2 years. And that would also be fair, in my view, because if you look back on the last 10 years, there have been many years where we didn't pay anything to our shareholders. And then in the last couple of years, we've been able to pay some, yes. But our shareholders have supported us very well throughout the crisis. They've participated in many capital increases in from when that was needed to either strengthen our balance sheet or to make mergers possible. So I do think that right now, looking at where we are, we will certainly take that into account.

All right. Thank you, Carolina. And we have a couple of additional questions. There is a question also coming via the chat. How does your inland and that's, I think, certainly something for you Rolf. How does your inland capability strategy compares to Maersk integrator strategy. Are you trying to follow that suite? Or where do you differ actually in terms of that inland piece?

I think our strategy is different from Maersk. So I mean Maersk is really saying, we want to be that integrator and I think if I look at the investments that they have done, they've done quite a lot of investments in fulfillment in warehousing. I just read this morning that they said they're going to double down on the investments in warehousing in Europe. I think that's a category where we do not intend to go into. Having said that, we have traditionally probably even more than Maersk, being very much a door, door carrier, especially on trades like the Pacific and the Atlantic. And we will continue to offer that services. That doesn't mean that we necessarily want to become an integrator, but we want to be a carrier that is able to offer you a seamless service from the moment you book until you get your box delivered at your door.

Yes. All right. Clear. We have another question coming in from the line of Sam Bland from JPMorgan. Sam, please go ahead.

I hope you can hear and see me? I have 1 question with 2 parts. Where you're aiming for ROIC above WACC. Is that a sort of through cycle average? Or should we expect that even in the kind of trough year, the profitability ROIC should exceed WACC. And the sort of the second part of that is, I guess, there's a container shipping operator somewhat reliant on the rationality of competitors. How do you feel about kind of setting that sort of financial target given that where have you not all of your future profitability is in your control.

Yes. Well, I think for sure, I think in principle, we've always said it's through cycle, yes, return on invested capital. Of course, you would somehow need to correct that for the extraordinary returns that we see this year, because otherwise, you would already be there for the next 5 years, which also doesn't make any sense. I think that's why we said in the short -- on the short end, we need to be a little bit more aggressive. I'd like to think, though, that we can also build a business model that does not allow us that won't lead us to drop back to 0 or very close to that when there is a down cycle. That's, I think, 1 of the things where also if you look back over the last 10 years, you will have seen that especially since we merged with CSAV and later on UASC, that our margins have been more stable than that of some of our competitors who are much more floating with where freight rates are on some of the dominant trades. As you see, for example, right now, a number of the Asians being very, very profitable on the back of a very strong transpacific trade. So that's, I guess, the point on ROIC, where I think, in fairness across the cycle and must be the objective. In terms of the influence of our competitors on that, yes, you operate in a market where there is competition. We also know that our business is cyclical that will not change. I think just that our objective is very much to try and work in such a way, that's why we say we need to be competitive in 3 to 5 years' time. We need to make sure that we then have the right cost base because we do believe that the market will normalize at some point. And then we won't be in a -- won't like to be in a situation where all of a sudden, we drop back into negative territory or an extremely low return on invested capital. So across the cycle, above the WACC, which is also something that the industry has not done for the last 15 years, if you look at pre-2020. So that's certainly ambitious and then make sure that when due to cyclical developments or due to actions from our competitors. If we get into a trough, we should still be significantly positive.

All right. Thank you very much Sam. Any follow-up question?

No. No. Thank you.

All right. Thanks a lot. There is -- there are a couple of other questions coming in. I've just heard that the line of Neil Glynn from Credit Suisse is not open yet. Could you just confirm that for me? All right. All right. We have Sathish from Citi again. Sathish as I hope that your line is open, now. Yes, we can see you, and hopefully, we can hear you.

Yes, I can hear you clearly. I actually have 3 questions. So firstly, on the consolidation, right? You made it very clear that you're not looking for big opportunities in the near term. So -- and do you want to focus more on the core of shipping. So where do you see yourself in terms of volume exposures split between contract and spot normalize? That's mainly for Hapag-Lloyd at the group level. Do you see -- like, say, Maersk has gone towards more like 67%, 70% on some trade plans. So do you expect similar uplift? Or given the focus on core on shipping, you still want to keep some more on spot? And then the second 1 around the digitalization actually. Given the technology investments have gone into the industry in the last say, I would say in the last 4 years, actually, where do you see potential in terms of, say, how quickly you can react to a demand slowdown or a shock? That's point one. And also, the other 1 is the blank sailing has actually gone up significantly in the last 12 to 18 months. It's like now 6%. If you compare on the previous cycle, it's more like 1% to 2%. I believe this is partly also has to do with the better data that you have assuming that you are able to optimize your capacity according to the schedule reliability and so on. So if you could actually give some color on that. Again, that will be helpful. Third 1 is specific to the cost. Given the cash that you're going to generate and the CapEx program, would you see there's a benefit path if you are increasing your own say, exposure of owned versus lease split on both on equipment and vessel? And would you see potential to drive down the unit cost by increasing that exposure to unit owned assets?

Well, let me try and wrap them up from the back, and hopefully, I won't forget any. As you put a couple of A, B, C questions in between. I think when it's first about the -- our vessels, I mean, our fleet is -- we are 70 -- 65 plus percent owned fleet today. We think that's a healthy number. And over time, you don't want to have only own capacity because that also reduces your flexibility. And also over the last 18 months, we've seen that you certainly need some of that. Having said that, we certainly don't want to drive it down a lot because I agree with you that certainly in today's charter market, that does not make -- I would almost say that does not make any sense, yes. So that, I think, to unit cost and own fleet, it also will still come from modernizing the fleet. Then I think you posed a question on contracts and where do we think that -- what's the share of contract rates, yes, our contract -- the share of contract cargo in our overall portfolio is definitely also going up a bit. We're probably not reaching the levels that Maersk has indicated. But I would say that also in our case, contract cargo is probably going to be above 50% next year. And also a fair percentage of that will be multiyear contracts. And then you asked a question on blank sailings. I'd say though that I genuinely believe that the notion of blank sailings is a little bit misleading at this stage because what we, in essence, see is that we don't blank sensor signal that you do it on purpose. We don't take out any sailing on purpose today. So we don't blank anything. What we see is that sailings slide because we have -- we faced so much congestion in many ports around the world that the ships simply don't get back on time. And that means that if you want to have a weekly service from Asia to Europe, for example, you wouldn't need 12 ships in a loop, but to do the same service, you would need 14 or 15. And sometimes we simply don't have those ships. And that means that you get stuck with open positions because instead of 12, we can maybe deploy 14. But if we would have needed 15, we still have an open position. I don't think that, that's really a blank sailing in the traditional sense, if you want. It's more of a slided sailing because the ships don't get back on time. I think those are probably the key questions that you post.

Can I actually ask a couple of follow-up. First on the cost side. So what is your split on the equipment side in terms of owned versus leased? Is it still around 65 on...

Yes. We are about 65% on the ships, and we're a little bit below 60% on the equipment.

And so in terms of -- sorry, go ahead.

Yes. So -- but in terms of -- there's a big difference in the way you look at box and the way you look at ships because when you look at ships, then your own vessels tend to be the ones that you commit for a long time, and then the charter fleet tends to be short term because that's where you want to have few flexibility. Now that's a little bit different because you have to make longer commitment. But normally, that's how it works on the ship side, whereas on the container side, also many of the leasing obligations that we have tend to be long term. And because you only replace boxes every 15 or 16 years, the effect that you have actually on your daily operating cost is not so huge as it is actually on the ship side. So there, the share is significantly less relevant than it is on the ship side.

So then if I have to think of what the unit cost potential to reduce going forward, right? What is it going to come from, actually, if you look at, say, terminal vessel and bunker probably accounts about 50% to 55% of your cost. And the other elements that are left are equipment and intermodal.

I mean the biggest saving needs to come from -- I mean there's something on productivity for sure and automation. That will be something I think that when we simplify our network, we will also be able to reduce some of the, what we would call other terminal cost, transshipment costs empty inland moves, those type of things. But of course, a big chunk needs to come from the ship system, where as we said, we intend to grow roughly with the market. But if I would fast forward 5 years, then our capacity could be 20% bigger than what it is today, but we probably still operate around 250 ships. So by doing that, you simply deploy ships that are on average 20% or 25% bigger than where they are today, and they're probably also younger, and that will result in lower cost, because that's also the segment where you will be less exposed to the short-term charter market and to the point that Mark made earlier, we will probably deploy fewer small ships and somewhat bigger ships on average, and that's in the end, what's going to make the difference.

Very good. Thank you, Sathish. Next questions are coming from the line of Andy Chu, Deutsche Bank. Andy, please go ahead.

Three questions from me. One around strategy and the strategy and the execution has been excellent. Just around the sort of following comments, not wanted to explore many different modes just that what makes your competitors have. Just wondered why we didn't want to sort of potentially offer a bit more sort of flexibility having some even small amount of potential there and volume. And secondly, in terms of the inland components, the target of 40%, and apologies if I missed this. And where are you today on that against that target. And then the last question is around sort of global supply chains. And I guess the sort of just-in-time stock in model has kind of fallen over with COVID. And I just wondered whether you think, Rolf, that sort of just-in-time stocking role is kind of maybe not quite bad, but it kind of needs to be seriously reevaluate to go forward?

Maybe rolling them up from the back. I agree with you that I think certainly in some commodities, people will hold a bit more inventory going forward. I would anyway, recommend that to people, but that's been a discussion that it's a little bit older. Certainly, with today is also a very low cost of capital. I really don't think that should be such a huge problem. That will also support demand over the upcoming 1 or 2 years, I'm sure because inventory levels today are very, very low. And then your question was on inland. If I -- the second one, today, we are a little bit north of 30%. And the target is to get to 40%, which is actually quite a steep increase. And I have to admit that I did not fully understand your first question acoustically well, but I believe that you asked why we are not doing a little bit more in extra type of services beyond let's say, the core liner business. And I would still say that for me, as I said, I won't rule out that we'll do a little bit more. And certainly, when you look at our online channels, we already today offer stuff like customs clearance, and we offer stuff like in insurance, we offer inland. So we offer a fairly broad range of services already today. And we'd like to see those growing. And then if we look at what comes out of those extra services in terms of revenue, that is a lot more today than it was some years ago. I was more focusing on stuff like CMA and Maersk are doing, saying, do we want to go into airfreight. Personally, I don't think so, yes. Do we want to go into warehousing? I think that's a very different type of activity. And you really -- if you want to do that, that requires also very significant investment in terms of infrastructure, systems, management capabilities. I think that's very different. I mean I was responsible for contract logistics at DHL and Danzas 15 years ago. That's a very different business than shipping. So if you want to run that, you need to be prepared to also make the organizational investments that are needed to do that. And then the last point where we've said we're probably not going to do that is going to forwarding. I think 1 of the essential value propositions are forwarders remains that they can offer services from multiple shipping lines. And if we would be a forwarder as Hapag-Lloyd, I still believe that that's not that easy. And that's also, I believe, why Maersk and CMA take very different strategies on that because CMA does all of that through more of a portfolio investment in CEVA, which I can certainly see from portfolio management perspective to make sense. When you look at work, they try to become an integrator, but they also have then consciously made a decision to get rid of their forwarding activity, which, at least on the ocean side, which somehow makes sense. So I don't think that their strategies are inconsistent with what our thinking is, it's just that they made different choices in terms of where to allocate their money.

Yes, I was just more thinking about the air side and whether you would just test the market and just say that just gives your customers a little bit more flexibility. I mean, hopefully, we don't have these situations that we've faced over the last 18 months, is it a little bit of a good idea.

Yes. I mean I'm not so sure that, that's -- I'm not so sure that's a good idea. On the other hand, you could also do that by making sure that you make -- just making the work with our customers a little bit more partnership like. And let's not forget that more than half of our business is being generated through forwarders. And they tend to have that if they are to face to the customer, they would be the ones who would, in my view, be the most logical ones to offer both ocean and airfreight.

All right. I hope that answers your questions, Andy. Thanks for that. [Operator Instructions] We have also a couple of written questions received. There is actually a follow-up from Marc Zeck from Stifel. With regards to the inland business. And he's asking actually for -- if a higher share in the inland business, does that also mean that you want to increase your BCO business in the inland and thus a higher share of BCO business imply also a larger share of long-term contracts, long term means 1 year or maybe even above that?

Not necessarily. I think we -- I mean, the hypothesis also when we started looking into it was that we would do much more inland for both for NVOs. In reality, the difference is actually not that big. The thing though, where it does make sense and where I actually agree is that sometimes it helps to close some longer-term contracts than usually with BCOs to build up certain lanes. And then you can, in essence, sell into that business. And by doing that, you create more scale and you also create a cost position that's not so easy to beat. So I think -- and that's also what we see that -- when we build strong inland corridors, there is usually a backbone there with BCO cargo. But if you look at the overall scheme of things, then the split or the merchant or the carrier haulage share, for example, between NVOs and BCOs is not that different.

All right. Very good. There's another question coming from Christian Cohrs, Warburg, and he's actually asking about the targets they are nonfinancial and sustainability targets. And are they meaningfully embedded into the variable management remuneration?

I would say that the answer to that is probably hind. It's to some extent included in the schemes at this point, but I agree that we will do -- we'll have to do more there also going forward. And I think that will come. The question there is a little bit how much influence everyone can have on that because there are certainly groups and people in our organization that have a huge impact on that. I would also say, though, that if you are producing bill of ladings in our service center in India, your impact on that is actually somewhat modest, yes. And that's why we'll probably take a more differentiated approach on that as we get lower down in the hierarchy. But I mean, it's like with all of these things, if you have a certain ambition and if you have certain targets, then in the end, you need to make sure that you cascade those targets into the organization. It's just that on this one, we probably take a somewhat more focused approach where we say, for those people that can really influence it -- it's important for others, it's less important. And of course, also for people like Mark and myself, yes, sustainability as will also be part of our incentive schemes.

All right. Thank you very much. There's another question coming from Christian Cohrs from Warburg and he is asking about -- or I read it out because it's quite a long one. Given the importance of the Port of Hamburg, and prospectively also that JadeWeserPort in Wilhelmshaven for your network. What are your thoughts on the potential cooperation of merger of the Eurogate's and HHLA's German terminal operations? Do you think this is going to happen and does it have any implications on Hapag-Lloyd.

-- The question when it's going to happen? You should not ask me. Yes. I mean that's -- I'm the wrong person to ask. I mean I've been quite vocal in public that I think it would be a good thing if they work together, mainly because I believe that Bremen, Bremerhaven, Wilhelmshaven and Hamburg each have their own strength, but they are not the same. And if they would be working together, they can play to -- they can leverage their strength, which are complementary and not the same versus the ports in the west range, yes, so Rotterdam, Antwerp. And so I think I would generally welcome that. Whether it's going to happen? I don't know. I mean if I have to believe the latest reports in the press and some progress is being made. And I would be happy with that, yes. But again, whether that's going to happen or not, and I'm not the right person to ask that question.

All right. Very good. And then we have a follow-up from Sam Bland this time written and not on the screen. He's asking what is your current view on whether the global fleet will need to slow steam more over the next, let's say, 5 to 10 years to meet the current or future environmental regulations. And could this have also meaningful impact on supply demand?

I think the impact of the new EXE and CII rules that are going to kick in less from 2023 and then gradually will be tightened is not yet fully clear because the final formulas have not been set and some of the correction factors that are going to be agreed within the next couple of months are going to have a material impact on how serious those -- the impact will be from those rules. Having said that, I do believe that particularly when it's around smaller and older vessels, it will have an impact. And it will mean that we have to derate engines and sometimes need to sell slower, whether that will have a material effect on supply. We don't know for sure I think, though, that we should not underestimate it because -- especially because the rules on CII are going to be progressive. So every year, it's going to be a couple of percentage points title. I think the effect of it could actually be more significant than is the consensus at this point in time.

All right. Very good. Thank you very much to both of you. I think this was the last question that we have received. That's why we would like to finish it off here. Thank you also very much to all of you for your interest in Hapag-Lloyd and for your participation. Next time, we hope to see you in person again and hope to have you here in Hamburg. Until then, we wish you all the best. Take care, and goodbye.