Hutchison Port Holdings Trust (NS8U) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Conference Call of Hutchison Port Holdings Trust Annual Results announcement for the period ended 31 December, 2021. Now I will hand over to Mr. Ivor Chow, the CEO of Hutchison Port Holdings Trust. Mr. Chow, please begin.

Hi. Good evening, everybody. Welcome to another discussion of our full year results. As usual, I'll go through the -- kind of give you highlights of what happened in 2021 as well as share with you my views on what's likely going to happen in 2022. And then I'll hand over to our new CFO, Jimmy, to go through the numbers with you. Just as an introduction, Jimmy has joined us at Hutchison Port back in 2008. So he has had many years working within the group, especially in Southeast Asia, where he has been the Finance Director there. So he is quite experienced in the port business, and I'm sure he'll be able to share with you his insight in that business as well. In terms of 2021, as you all know, 2021 has been a fairly challenging year, notwithstanding the COVID impact as well as the -- I suppose the volatility that we have been seeing in the global supply chain. Overall, I would say I'm pretty happy with our overall results. If you heard when I spoke last quarter, figures really haven't changed in any significant way. If you look at our results, you see that even though throughput was up year-on-year, second half was actually weaker than first half. But we were like the previous quarters, helped by very strong storage income. And the storage income is really the result of the congestion we're seeing kind of globally around the world and boxes are kind of moving slowly and as a result, stocking for a much longer period of time than is usually the case. And so overall, we have been helped significantly by that. And as a result, our profitability remained very, very strong. The cash flow remains very, very strong. And we're happy to kind of report and agreed on the dividend, final dividend of HKD 0.08 per unit. Overall full year HKD 0.145 per unit, which is quite a bit higher than kind of when Diana gave you the guidance range last year of HKD 0.11 to HKD 0.13, almost 20% higher. So we've done well on that, and we have been able to continue kind of with our debt repayment kind of HKD 1 billion a year for the last couple of years, getting down gearing and saving interest costs as a result as well. Jimmy is going to talk a little bit more about that. But I think that the -- in terms of how I look at kind of DPU, which is the most important metric for the Trust going forward is that we very much want to kind of maintain the current trajectory and possibly kind of grow that DPU especially given the strong results that we have seen in 2021. So in terms of the guidance, which Jimmy kind of will go through later on, but for me, I'm targeting kind of not less than HKD 0.145 for 2022 as well. So if I look at the first month of 2022, where, as you've seen around the world, originally, when kind of COVID started, when delta was seen in the early 2020, 2021, even though it affected the supply chain, that affect the supply chain as deeply as the Omicron strain because the delta was, from my point of view, more lethal, but Omicron is more the strain that is spreading a lot this year. So the infection rate is a lot higher. And therefore, more people are affected, and it affected the workforce in the logistics industry. And as a result, a lot of ports have congestion, especially in U.S. West Coast, but we've also seen some of that in the EU as well. And therefore, volume is even moving slower than same period last year and slower than last quarter as well. So we're seeing volume kind of trending down. But again, the volume trending down, demand for goods is still there. Underlying demand hasn't weakened all that much. And as a result of a lot of the goods that were supposed to be moved and continue to be stuck at the yard. And now yard capacity is still hovering around 90% both in Yantian and Hong Kong. And as a result, I think overall we expect very much a similar trend that will be seen for 2021 in terms of kind of storage. It may tail off in the second half. We don't know yet. It depends on how fast relaxation measures will happen. But currently, the way we see it, especially in Hong Kong, I think another 6 months, it's probably going to be the case. So I'll kind of leave it there. I'm happy to go into kind of more thoughts into how I see 2022 when we come into the Q&A. But let's have Jimmy kind of take you through the numbers first.

Thank you, Ivor. If we look at the 2021 figures, if I could refer you to the results presentation we uploaded, on Page 9, you will see our throughput volume for 2021, overall 4% increase compared with the previous year. In Hong Kong, our volume is about the same as in 2020. But for our China operations, YICT and HICT, our throughput increased by 6% last year. This is despite the temporary disruption that you might remember in Yantian back in the summer last year for about a month due to the COVID cases discovered there. Next if we could look at Page 11, that shows our revenue breakdown and year-on-year trend. On the left-hand side, you would see revenue in 2021 increased by 24% year-on-year. The increase in storage income, which Ivor mentioned, that has a very significant impact on the overall increase in revenue. And also, we handled more throughputs and the RMB appreciation last year also helped our revenue increase. In terms of segment, our contribution from the Mainland business now surpassed the 7% mark, now is at 72% in 2021 with our Hong Kong business contributing 28% of the revenue last year. On the next page, that shows our CapEx. Our CapEx, actual expense was lower last year. That was due to the delay of the circumstances when we had higher throughput, some yard congestion and also the COVID situation led to some deferral of CapEx. But you'll remember back in the first half of last year, we spent only HKD 44 million. So we did catch up something in the second half, but still fall short of the initial target or initial budget that we have planned for of about HKD 500 million. For next year, we plan to expand maintenance CapEx at about back to our more normal level of HKD 500 million. On next page, that shows -- Page 13, that shows our financial position. You would see our total consolidated debt now stands at HKD 29 billion, which is about HKD 400 million lower than last year. As you might remember, we communicated in February last year that our plan in 2021 was to reduce the total debt by HKD 1.4 billion. That includes our HKD 1 billion regular annual repayment program and on top of that, HKD 400 million additional loan repayment. But subsequent to that guidance, and we announced the East Port project in Yantian, where we would expect to inject about HKD 1 billion as the initial capital injection, which in turn is intended to be financed by external debt. So one way to look at it, as I have said before, is that we did repay the HKD 1.4 billion, but at the same time, we draw another HKD 1 billion to finance East Port project, taking the net reduction of total debt to HKD 400 million last year. If I could look at the next page that shows the distribution that we are proposing. The -- now in the first half, we already paid HKD 0.065. In the second half, we pay HKD 0.08. That would take our total full year payment to HKD 0.145, which you might remember is higher than the guidance that we have given before, in fact, 12% higher than the top end of the HKD 0.11 to HKD 0.13 guidance we gave last year. Now at HKD 0.145, that would imply a yield of 8.3% based on the closing price on the 31st of December 2021. Next, if I could spend some time to go through the P&L, which is on Page 15 of the results presentation. Now revenue, as I mentioned, increased by 24% last year. Cost of services rendered also increased by 25%. A major or a substantial part of it actually came from increase in Yantian, where we had to operate a closed-loop operation since the COVID cases occurred in our terminal back in May last year. Stock costs and depreciation is about the same as last year. Other operating income increased by 116%. That is helped by the subsidies that we received in Yantian for achieving certain volume threshold the year before and also on railway subsidies. The operating profit has increased by 53% in 2021. We did have some savings in interest and finance costs, benefiting from the overall interest rate environment last year and also we refinanced some of our bank loans into bonds issued last year. Overall, our profit after tax has improved by 76% and our profit after tax attributable to unitholders improved by 110%. Now that sums up the P&L picture for 2021. If -- looking into 2022, we are looking at another year of good profitability. And we -- in terms of the DPU, we are looking at HKD 0.145 to HKD 0.155 range for 2022. With that note, perhaps I stop, and we will take questions from the floor.

[Operator Instructions] So we have a first question from Simon Cheung, Goldman Sachs.

I just have 2 questions. One is, I can't help to compare the half-on-half figures on the revenue and see quite a significant jump on the storage income. Can you perhaps try to help us to quantify that number, both in Hong Kong and if anything, in China? And you mentioned that I think you're expecting similar trends in the first quarter. I'm not sure whether you can give us some sense looking into this year, how much of that would be recurred for maybe for -- even for the full year. That's the first question. I think the second question relating to that is also we see a correspondingly quite a big jump on the OpEx in the second half as well. So resulting in a squeeze on the EBITDA margin, I think, on a half-on-half basis. Just wondering what that is, if you can.

Thank you, Simon. Two questions, and let me start off by talking about the storage first. That's a fairly difficult question to answer because typically storage and ancillary revenue, and it differs by shipping lines really depending on the routing, how they use our yard as a storage -- temporary storage location and each line will vary significantly depending on the strategy and where they put the boxes. So to give you any type of guidance is actually fairly difficult. Throughput we can do relatively easily because that's kind of a shipping line irrelevant, but storage unfortunately does. But to help you think about what would happen in the first half last year and the second half of last year, first half, if you look at kind of January to June, that's when government started relaxing their COVID measures. And suddenly, there was a large surge of demand because everybody just come out from 2020 and say, wow, I need to buy stuff. And the first 6 months was nonstop buying, and we have fairly good volume first half and things are moving quickly. And therefore, storage income wasn't a factor at all because boxes weren't stuck at the yard. And then kind of delta came and suddenly, the measures start reversing. And people were still buying stuff. And then as a result, goods was then pushed out into the pipeline, yet people are getting sick and the destination and they were unable to clear out those kind of like cargo that were kind of ordered between, I suppose, first and second quarter of last year. And hence the congestion really start picking up in the second half in June and particularly when Yantian were affected by the COVID cases, and we have to kind of close on the port for a little bit. That actually resulted in quite severe shock to the entire supply chain. And then things since June of last year has been backed up since -- and I was hoping things would kind of smooth out and recover and accelerate again by the fourth quarter. It has a little bit in the fourth quarter, but then come the end of December and January where kind of Omicron hit big time in Asia affecting Hong Kong and Yantian, the impact of the storage income is similar for Hong Kong and Yantian as well. So in terms of -- a little bit more Yantian than Hong Kong because Yantian is predominantly export cargo, whereas Hong Kong has export cargo as well, but some of them is transshipment as well. So most of that storage income are earned at Yantian and particularly Yantian is a bigger yard than Hong Kong as well. But in terms of kind of the 90% utilization -- or 95% utilization is similar across the board for Hong Kong and Yantian. And if I look at first couple of months, I would say -- from a volume standpoint year-on-year, it's definitely a lot weaker than last year. As I said earlier, things were moving very quickly in the first half of last year and then slowed down quite a bit in the second half. So I expect first half from a volume standpoint, we're going to be short quite a bit year-on-year. In fact, I think in January, you were seeing some of the numbers already out of China very soon and you see kind of decline. But I suppose our expectation is that as we look at it right now, storage income is still going to help us kind of offset that throughput decline. I would say profitability would definitely be under pressure versus last year as a whole, especially in the first half, less so in the second half. But overall, in terms of cash flow generation, I think the HKD 0.145 that Jimmy mentioned in terms of the guidance, we pretty safe on that at this point in time. We will know a little bit more come first and second quarter because unfortunately, I wish we can answer a little bit clear, but the world is in turmoil right now and it's not getting any better. In terms of the squeeze in margin as you say, actually all of that has to do with the closed-loop operation that we have to do in Yantian. In terms of COVID measures, China is definitely -- the measures that we have to put in, in Yantian is quite draconian, if you will, and upwards of 1,100 people are kind of working within a bubble that we have to create in Yantian. So they are in some way segregated from the general population. And therefore, we have to incur cost of maintaining that living bubble for that 1,100 people. And the run rate of that is roughly around RMB 20 million, RMB 30 million a month. And therefore, you would see that cost squeeze. And the current expectation is that the first half will still be incurring that cost. Whether China will start relaxing post the Olympics and then -- and if the vaccination rate is higher remains to be seen. But currently, for the first 6 months, I think that's here to stay. It hasn't affected Hong Kong as much. So most of that extra cost, if you will, is in Yantian.

Can I maybe perhaps follow up? So you gave the guidance of HKD 0.145 basically flattish year-on-year. And that's, again, I guess there's several potential one-off here. One is the storage income, hard to tell. Can you remind us the subsidies from the government last year? And also your volume guidance, if you can give us some light, I remember last time you mentioned something around flattish kind of volume guidance this year. If so then are you generally anticipating quite a big increase on the price to make up for maybe some of the sort one-off item that we mentioned earlier, be it subsidy, be it storage income so that you can maintain your HKD 0.145 guidance?

Yes, sure. For the one-off item, maybe I'll start with the subsidy first. In 2021, the amount of subsidies that we received from particularly Yantian -- Yantian government subsidies is in the range of about HKD 300 million. And that's including of meeting this volume threshold back in 2020 and also another one-off subsidy on our railway business. So that's on the one-off other operating income side.

In terms of kind of what the throughput guidance in terms of flattish, hard to tell as usual, especially this year, 2020 -- first half, I would imagine it may actually decline year-on-year. Second half, we will look to make back some of that ground. Remember that Yantian also had kind of like a last month as well. So that came in the second half of last year. So I would imagine overall flattish, probably year-on-year decline first half, but we should be able to offset that in the second half. So that's my view in terms of the throughput. In terms of revenue, you are correct. I would expect the revenue to be made up mostly by storage. We have had some success in terms of raising tariff, but those are nominal, I mean, around 2% to 3% tariff increase. But most of the shortfall will probably be made up by storage revenue for 2021 -- for 2022, anyway over 2021.

The next question was HSBC.

This is Parash from HSBC. Could you hear me clearly?

Okay.

And I have a few questions, which I appreciate your guidance as well. So the first question is, could you remind us of your debt repayment schedule in 2022 as well? This is my first question.

Yes. In 2022, we target to repay HKD 1 billion. That's continuing our HKD 1 billion debt repayment program that we have been running for some time.

So I think overall, the focus is also on debt level with interest rate rising, obviously, paying non-debt would be sensible. So we have been embarking on that HKD 1 billion payment per annum. We've been honoring that. Now whether we want to have debt repayment in excess of HKD 1 billion will really depend on ultimately what's our profitability for next year, whether we can meet our distribution guidance, if we can meet the guidance, we have the ability to pay down more. I think it comes down to kind of balancing between kind of maintaining a steady and hopefully growing DPU while trying to kind of debt reduce over the long term. So that remains our core strategy over the next few years.

Okay. And also has mentioned about the debt rate hike. So we have seen from your presentation that about 80% of the debt is on fixed rate. So do you have any target to maintain this kind of fixed to floating ratio, or how is your expectation for the effective interest rate in 2022 as well?

Yes. We -- our ratio of fixed-rate debt is about 80%. And we aim to maintain the same percentage when we come to the refinancing exercise this year. We'll have 2 debts coming due in September, and we would endeavor to maintain this ratio of fixed to floating interest rate split. In terms of interest rate outlook, I think we are in line with a lot of -- I think a lot of your colleagues in the financial markets are projecting there would be an increase in interest rates. So we're well-prepared for that, especially given our 80% fixed rate ratio in our debt profile.

Yes. That's very clear. And maybe the last question is also on the storage revenues. Could you give us more color or figures on how much storage revenue as a percentage of your total revenue in 2021 and compared to 2020? And how much is the growth rate investment?

Well, typically, ancillary revenue only accounts for about 4% to 5% of our total revenue. This year, storage revenue is in excess of 10%.

Next question is [ Leow ] from JPMorgan.

I have 2 questions. So the first one is I would like to clarify, so you mentioned earlier that you plan to increase tariff by 2% to 3%. And you also mentioned that because you have to run a closed-loop operation in Yantian that you're incurring extra RMB 20 million to RMB 30 million per month. So my question is the 2% to 3% tariff increase, does that include the extra costs that you have to run in Yantian, given that you have to do that closed-loop operation?

No, the 2% to 3% is just general -- kind of cover our general costs. We have not passed through any of these kind of closed-loop cost because these are kind of requests of government that we have to do. We have not passed on that directly through the cost to the shippers in that regard. And as far as I know, none of the ports in China has been passing those COVID costs to the shippers or the shipping lines.

Okay. So I guess the likelihood of you guys passing these costs to the customers is not that likely at this point?

No, not likely. Also, tariff in China is also subject to the pricing bureau. So unfortunately, that's something that we won't be able to pass through. But given that we have been kind of having good profit as a result of the storage income and offset a lot of that cost, I think our ability to kind of pass additional costs would be fairly limited at this time.

Okay. Got it. And my second question is, I would like to clarify also, you mentioned about the HKD 1 billion debt reduction on an annual basis. So for this year, you plan to do it, but this will be subject to annual deliberation. And also your objective is, first, to cover the DPU. And then if you have sufficient cash flow, then you would pay down the debt? Is that how we should understand this?

In a way, yes. However, if you look at our cash flow, I think the HKD 0.145 DPU as well as the HKD 1 billion, our cash flow from last year kind of more than covered as well. So we certainly believe that in terms of cash flow generation, we should be able to cover both of those for 2022. Now how do we balance the rest in terms of kind of CapEx, working capital, something needs and further debt repayment is what I'm talking about, ultimately, depending on how actual results of 2022 will come to be.

Okay. Sorry, maybe I have one follow-up question is in terms of the extra cost in -- so we discussed about Yantian, but if you have to run extra costs in Hong Kong, would you be able to pass on that cost to the customers? So you have to run something similar to what you have to run in Yantian, something like cost good.

Understood. In Hong Kong, we have actually spoken to the government and the government agrees that Hong Kong would not be able to run something like in China. I mean in terms of the space in Hong Kong, the lack of space as well as the density of Hong Kong just would not be able to do it. So in terms of overall costs on the Hong Kong, we're not that significantly affected by COVID. The cost incurred so far in terms of testing has all been borne by the government. So when Jimmy talked about the cost increase only applies to Yantian, not to Hong Kong.

Your next question from [ Ms. Isa Liba ] from CGS-CIMB.

Just wondering, I have 2 questions. Will your land in Hong Kong be developed?

Okay. In terms of the land, put it down, where the land will be developed, we develop or not, is up to us and management or even a company. In some way, it's up to the Hong Kong government. And in some ways, if I look at COVID in the last 12 months, I think in terms of the important -- because Hong Kong is basically closed for the last 15 months. And really, if you look at the airport, that's pretty much closed, the border is pretty much closed. So the only lifeline feed in the city is actually the port. So I think the government realizes that as well. And therefore, given the current situation, the port has to continue to run. It's what feeds the city. And therefore, I don't think that the development is on their mind. And the last I've heard the chief executive of Hong Kong is still considering other locations outside of it. However, longer term, whether they will consider, that's something remains unknown. But in my mind, not for the next few years, for sure.

Another question is that we've heard that more manufacturing has moved out of China to other countries. What's the impact on your part or your customers? And how will you respond to this?

Right. I've actually been asked this particular question almost 10 years ago. And in some way, you are correct, a lot of the factories have moved out of China since maybe 2013, 2014, that's when the wages and salary of China rapidly rise. And what moved out of China during the last 5, 6 years, if you will, is all the low-cost manufacturing. If you look at a lot of toys, a lot of the footwear, especially on the [ preluding ] side of the manufacturing, all those have moved up to places like Bangladesh, Thailand, Vietnam and whatnot. And if you look at some of the major retailers, they used to buy almost about 90% of their purchases from China and they have actively kind of reduced that percentage from 90% to maybe about 75%. And if you look at that, we lost market share of 15%, that actually represents a fairly significant amount of manufacturing to places like Bangladesh, Laos, Vietnam and whatnot. And that's actually already filled them up. If you look at the pandemic impact and to the logistics costs, a lot of the increased logistics cost as a result of the congestion right now, in fact, offset a low salary increases of China in some ways. So from my perspective, and speaking to a lot of the retailers and the factories, I think that they're finding increasingly difficult to move more manufacturing out of China, just because if they continue to do so, 75% remaining, the costs will continue to increase, and the cost of those other locations is also increasing because they are also at full capacity as well. So I do -- finally, over the last couple of years, the manufacturing movement is actually less now. If anything, if I look at last year, the U.S. export has actually grown quite strongly despite whatever U.S. tension that you have mentioned, otherwise, we wouldn't be seeing the congestion. So exports from U.S. continue to be strong. It hasn't really been affected by factories moving out at all. And if people -- follow on your question, a lot of people ask me about kind of near sourcing, am I worried about that kind of U.S. manufacturing kind of move some of them, not just to Vietnam, but back to the U.S. locally or even to Mexico. Possibly, in terms of a lot of the high-end manufacturing, some of the final assembly are being moved back into -- Japan is doing the final assembly of some of the high-end TVs and cameras back locally. U.S. may be doing the same. But what I'm seeing is that they're not moving the entire supply chain on entire manufacturing back onshore. What they're doing is the only moving part of final assembly, final manufacturing back home. And a lot of the raw material, semi-finished good, semi-finished products are still manufacturing in China. In fact, the breaking up the supply chain even more now, so you've got more movement of goods in and out, semi-finished goods moving out around. So that really hasn't affected the underlying throughput as much as what I worried back in 2015. I don't know whether that answers your question, but it's not a factor that worries me right now.

We have next question from [ Paul ], OCBC.

Yes. I just have one question on the throughput volume for Hong Kong. The volume was marginally lower year-over-year. So I just want to understand what was the main reason for that?

Right. So the reason is after the Yantian closure in May last year, a lot of the volume was diverted to Hong Kong in June. However, as a result, it resulted in fairly significant congestion in Hong Kong in June. And basically, our job was cramped to over 100%, 110%. And result things were moving very slowly. Call it a case of indigestion. When you kind of eat too much, there is a kind of knock-on effect for the next couple of months how to try to digest that. And that impacted us. So that's one impact that we saw in the second half of last year. But the other impact that's affecting us in December and January is a thing what we call [ water gel ]. Because of COVID measures, Hong Kong rely a lot on barge traffic coming up from the Pearl River Delta. And because of COVID measures, a lot of these barges cannot operate between December and January because a lot of the crewmen has to go back to Chinese New Year. And because of the COVID measure, they need to be quarantined for upwards of 21 days. So they needed to leave the vessel 21 days earlier. And so basically, the barge traffic has practically stopped in December, January, and to a certain extent, launched in February as well. So barge volume dropped around 40%, 50% during that interim due to COVID. So again, when I talk about COVID, the impact is many-fold. So [ it impact ] Yantian and Hong Kong differently. But suffice to say that last year, the first 6 months was very robust because COVID didn't really hit us until the second half. And therefore, I would imagine volume to be fairly muted in the first half, especially in the first quarter, affected by Chinese New Year deeply. But I do expect storage revenue to be able to largely offset that impact, hopefully answering your question there.

Okay. I understand.

Next question is Paul Yong from DBS.

Congratulations on the good set of results. I just want [indiscernible] financial position. I think this year, if we look at the total consolidated cash just over HKD 11 billion, which is kind of like a record high for -- I think we've never gone over HKD 8 billion before. Could you tell us the reason why we are -- why this is quite a high level? Are we being sort of cautious because, as you said, there's a lot of uncertainty in markets right now, is that one? And I'm just trying to understand what will it take for the Trust to perhaps get more dividends given the strong set of results or a stronger outlook beyond the HKD 0.145 to HKD 0.155 you guided. That's my first question.

Right. So to answer that question, the HKD 11 billion is largely held at the operating level at Yantian. So almost a large part of that is NCI. And so they're not attributable cash, if you will. So if you try to discount that out, you would have a much lower number. And basically, that number then represents kind of final dividend, CapEx need that Jimmy mentioned about, a lot of the expectation in terms of the East Port investment that we have to do upcoming as well as refinancing that we have to do in terms of leaving some buffer for that. But largely, if you look at it, it's just because the NCI owns a large portion of that cash even though unconsolidated.

Got it. And just on that thought, could you give us a color of the consolidated as well? I mean how much of that is at the operating entity level and the company level?

The debt is at 100% -- almost all 100% Trust level. There's very little debt at the Yantian level. And largely because the interest cost onshore in Yantian is a lot more expensive than offshore.

And I guess just a sort of a follow-up question is, you mentioned that most of that cash is actually at the NCI as you mentioned. Is there a reason why [indiscernible] cash? Obviously, there are very strong cash generated. Yes.

Yes. Again, largely, partially due to the fact that we have the East Port expansion coming. And second is just timing of dividend coming up.

The next question from [ Nan ] from [ Keyrole ].

I only have one question. Can you give us a update of the current congestion level of Yantian? It's just -- we have noted, just want to hear your view of how long would it take? And is this a worst scenario now? Or you think it could be worse in coming months? Just want to get some observations on the ground.

Good question. I wish I know the answer to that one. The reason I say that is a lot of them is dependent on -- because if you look at the supply chain as a whole, right, it's a cycle, it's a turn. So goods leaving China has to go to unload in the U.S. and Europe. So the rate of them have discharge -- the rate of them taking those goods off the boat into the Mainland and then return the empty boxes as well as the vessels back to Asia is the key. Right now, most of the issue is not so much on the origin side, is on the destination side, meaning that ships are stuck in the U.S. and Europe, and they aren't coming back. They aren't coming back either empty or coming back with anti-containers or coming back with imports. And because the velocity -- as I explained last quarter, the velocity of the supply chain has, in my view, anyway, slowed down by close to 30%. And that is increasing. The slowing down is increasing. So when I last look, it's probably about 30%. Now it could be 40%. It means a slowdown. So if things are slowing down, it means that ships are not coming back on time to pick up the boxes. And then as a result, the box has to stay at the yard for a lot longer. The analogy is almost like the airport. If the fight -- the planes are not there, you're going to wait 20 hours, 30 hours before your main flight, then the whole airport is going to be filled with people kind of waiting to get on to the flight. And the worst part is because of freight rates are so high, shipping lines are enticing shippers to ship early, put the boxes in and wait for the ships to come back. So everybody is jostling to position to get onto the ship. And therefore, they move the boxes as early as they could into the yard with the hopes of getting on the vessel. And then that's what's created the congestion. And for me, if the ship doesn't come back -- if the backlog in the U.S., Europe doesn't clear and the ship doesn't come back on time for us to load on it, the congestion will continue. And right now, even with Chinese New Year, typically, when Chinese New Year comes, the yard will empty out and a lot of empty boxes will come back in. That's a typical year. This year, though, is not so much the case. We're not emptying out. Some of the boxes are still not getting on vessels, they're stuck at the yard. And that 90% number continues to hold. I certainly wish that 90% figure or that congestion to go away. And when that go away, I would expect throughput to pick up a bit. So in some sense, the storage revenue and the throughput goes hand in hand. If throughput is not there, assuming underlying demand is there, okay? So I'm assuming this year underlying demand is pretty much the same as last year. That's my basic assumption. So if that basic assumption hold, then it's a matter of trading between storage and throughput revenue.

Ladies and gentlemen, as there are no further questions, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Thank you.