Good morning, everyone, thank you for joining us today as we present the 2022 full year and fourth quarter results and an outlook for 2023. My name is Vincent Clerc. I'm the CEO for A.P. Moller-Maersk, and I'm joined today by our CFO, Patrick Jany. We can move past those. As I take the helm from Søren Skou, I'm thrilled to deliver a record financial year in all aspects. Last February, Søren looked back on a record financial performance in 2021, and yet 2022 full year revenues of $81.5 billion and EBITDA of $36.8 billion topped the previous years by 32% and 53%, respectively. Each segment contributed to this record result right across the board.
We delivered precisely on the guidance that we set after Q2 2022, despite the fact that just after we gave that guidance, ocean freights and volumes tumbled as lower consumer demand and inventory corrections set in. We also generated record free cash flow of $27 billion, exceeding our guidance and enabling us to propose a dividend payout of 4,300 Danish krone per share. Together with our proposed share buyback of approximately $3 billion, this means that we intend to return approximately $14 billion of cash to our shareholders this year, an incremental $4.4 billion more than in 2022, or an increase of 46%.
After the many pandemic-related supply chain disruptions, we are not heading back into normal as we knew it from before, but into a more volatile and unpredictable world, one that will necessitate new capabilities to be successful. We have learned the lesson that there is a growing demand for supply chain resilience and significant value to capture by delivering it. Beyond the current inventory correction and volatility, that is what the integrator strategy is about, and that is what we will keep working on at a faster pace. With the broad operational control that we enjoy, the logistics capabilities we have acquired, and the resources we now have available, we know that we are the best position to take advantage of this opportunity and deliver sustained growth and more resilient earnings for A.P. Moller-Maersk.
Before we look in 2023, let's take a moment to review the highlights of 2022 on slide five. Aligned with our strategy, we decided early on in the pandemic to invest in the long-term potential of our customer relationships rather than maximize the short-term rate gains of the commoditized freight market. Our goal with this is to sustainably lower volatility in the ocean business, accelerate the commercial growth synergies in logistics, and move towards a higher service quality level. This paid off for us as our Net Promoter Score hit a new record of 33, an increase of 9 points year-on-year. This is an excellent result in an environment where customers still had to face historically high price and many hurdles. It is also a lead indicator of the continued growth potential we see in logistics and services as we head into 2023.
Moving to our employees, we won't be able to reach our full potential as a company without being able to recruit and retain the best talent. For this dimension, we measure and react to our company's engagement score. We have a goal to be in the 75th percentile as measured by Gallup, and in 2022, we made substantial progress, earning 8 percentage points year-on-year to be the to have the global organization in the 67th percentile. I am very pleased by this proof that Maersk is an employer of choice, and I know we couldn't have gotten where we are today without the tremendous energy and dedication that our people bring to their jobs every day. On behalf of everyone here, I want to thank all of them.
As we discussed many times in the past, our M&A strategy is focused on enabling us to build and scale logistics capabilities across the full supply chain rapidly. In 2022, we made significant strides closing on our three largest logistics acquisitions to date with Pilot, Senator, and LF Logistics, together worth approximately $6 billion. We are delighted to welcome our new colleagues from this organization. The integration of each of these three companies is progressing very well. Finally, our sustainability agenda is also part of how we differentiate. Here we made significant progress. We were able to accelerate our goal to net zero from 2050 to 2040. We ordered an additional six vessel that can run on green methanol. We work towards securing the green methanol supply for those ships.
In 2023, we look forward to the first delivery of a green methanol feeder vessel and achieving further milestones as the industry leader in decarbonization. Turning now to page six to review our segment highlight for the fourth quarter. While we had anticipated a steep normalization in the ocean market, in the ocean market freight rates for the second half of 2022, this was accompanied by a steeper than expected decline in volumes, with import volumes into North America and Europe from Asia falling in the mid-20s percentage due to inventory corrections at large retailer and lifestyle brands. The effect of this volume decline are visible across all our segments. In ocean, our average contract rate remained essentially in line with the levels expected earlier in the year.
Despite the tremendous drop in demand, customers continued to support us with their volumes. We maintain 70% of our long-haul volumes on contract for the full year. This is also what we expect for 2023 as customers continue to appreciate longer-term certainty and closer direct relationship. Naturally, the effect of the drop in the spot rate is having a profound effect across the industry during the annual contract negotiations, and we expect our average 2023 contract rates to eventually move towards prevailing spot rates. We are also seeing continued resilience of our multi-year contract portfolio, index rates contracts with approximately 1.9 million FFE by the end of 2022, despite the higher trailing rates. Logistics and services was not immune to the inventory correction affecting the global supply chain. In Q4, we saw a 2% decline in organic revenues as volumes dropped.
The drop was less pronounced than in Ocean because of the high underlying commercial momentum we're having. Thanks to large wins illustrating this momentum, our top 200 customers, who are our main targets, fared better. They contributed 4% to our organic revenue growth, they're contributing to about half the revenue growth in the fourth quarter. Going forward, we aim to continue to grow our penetration across our top 200 customers, where our share of wallet is still low and has big potential, gradually expand the scope of target customers beyond those 200. In terminals, the story was similar. Remembering that the changes in shipped volumes are visible in the terminal volumes with a delay of about 30-45 days.
As we will see in the next slide, lower volumes have reduced port congestions, which also affected the extraordinary storage revenues and incomes which drove the outstanding performance in 2022. That said, once we factor out the impairment of our Russian activities, the resilient and attractive return profile of our terminal activities is clear at over 12.3%. Turning now to slide seven. Let's review where the market stands in terms of pandemic-related congestion, as we are hopefully putting the worst effects of that behind us. As you can see from the chart on the left, after successive waves of congestions over the past two years, the global port situation has returned to close to pre-pandemic levels, at least across most of the Western economies.
Moving to the middle of the page and right-hand charts, you can see that the sharp decline in import volumes I previously mentioned, with levels in North America and in Europe now trending below pre-pandemic averages. This decline appears to be caused by inventory correction, and therefore we expect demand to stabilize back up, but to stabilize at a lower level in H1. As we just saw, the effect of this normalization was visible across all Maersk segments in Q4, and we expect this to play out similarly in 2023 as well, with a reversion to the mean in H2 benefiting logistics and services and terminal in particular. Ocean volumes will benefit as well, but supply-side risks following the delivery of large tonnage order will bring new uncertainty during that period.
Predicting when we will see the last of the pandemic-related effects has been very challenging, has been a very challenging exercise, as we simply have never seen this kind of volatility before. Slowly, it seems that we're getting to a place where volatility is more moderate than what we saw, at least in the last two years. Moving to slide eight. Before I get to our 2023 guidance, let's touch on how we delivered our long-term transformation KPIs in 2022. As for most of the year, we are solidly in the full green range, except for logistics services and terminal EBIT margins. Here we do see the effect of the impairment, primarily of our Russian activities. Adjusting for those impairments, which Patrick will get to later, we would have been in the green on those KPIs as well for the year.
Although I have been with Maersk for over 25 years, I took over the wheel just shy of 40 days ago, and it is a tremendous privilege to lead Maersk. I am very excited to build on the foundation that we laid with Søren. I have seen the potential of the integrator strategy and believe in its ability to take us away from the commoditized and volatile aspect of the ocean shipping industry, even if some hard work still needs to get done before we are fully there. One of the first changes I have made is to bring an expanded executive leadership team. We have a wealth of experience in-house that I want to draw from as we head into the next phase of our transformation.
In challenging periods, such as the one we are facing now, it is important that all key decision makers are at the table together, which is why I have assembled this expanded team. Specifically, I want to capture the full breadth of experience and expertise that we have. All aspects of diversity play a role here, in particular diversity of thought and opinion. My team is made up of colleagues from around the world, some of whom are Maersk lifers and others who bring valuable external knowledge to the table. Our first concrete change has been one that many think was a long time coming: to integrate and unify our brand structure. We believe that this move allows us to make it easier for customers to get access to the full integrated integrator offering seamlessly and will create internal efficiencies.
Now, as we look into the challenge of the market in 2023 and beyond, as a team, we will have to relentlessly focus on operational excellence and productivity. Increase the scalability of our activities while maintaining a tight grip on cost. Turning to slide 10, as I mentioned earlier, our experience during the last couple of years has convinced us that our integrated strategy is the right response to the needs of our customers in rapidly changing and volatile environment. Now is the time to lean in and accelerate. The world of global logistics remain fragmented and inefficient. Every day, our customers struggle with difficulties related to visibility, reliability, and resilience. With the forces of climate change and geopolitical tension at play, the potential for systemic shocks and increased complexity will only rise.
Our response continues to be to integrate our logistics activities and take our platform, both digital and physical, to the next level so that we can better serve those customers' needs. Our by Maersk models are the ideal framework to do that and take accountability for the supply chain outcomes when it comes to transport, fulfillment, and visibility and flow management. Through external growth, we have acquired significant capabilities. Our next step is to focus on scaling those capabilities worldwide to improve productivity while keeping the pace of launching new products. A key proof points will be to deliver continued double-digit growth in logistics and services while maintaining profitability above 6% in the more difficult 2023 market environment. As I mentioned earlier, the foundational aspect of the integrated strategy is to disconnect from the commoditized aspects of the ocean shipping industry.
Therefore, we have made a clear decision not to renew the 2M Alliance with MSC. When we created 2M back in 2015, there was a significant value in pooling networks as we had to phase in a new generation of more than 20,000 TEU plus tonnage and needed to maintain flexibility on capacity management. Since then, we have grown our volume significantly, gained scale, and got better at capacity management. Much in fact that the synergies from the pooling have decreased significantly. At the same time, the dis-synergies from having divergent strategic goals have increased. Following our strategy, we are convinced that this is the time to move beyond the traditional ocean service model.
It is time to make ocean an integrated part of the end-to-end value proposition we bring to our customers to seize the opportunity I mentioned a few minutes ago. To do this, we need to regain and retain a strong level of control of the service levels we provide. That cannot be achieved in an alliance structure. Our customers require their service providers to step up, whether it is in providing sustainable transport solution or solving complex landside challenges. This will be the direction of travel for Maersk. We have the scale and competitive cost base to stand on our own and deliver on our customer expectations for the future and look forward to rolling out a new exciting products for our ocean customers.
For 2M, it will be business as usual over the next two years as the notice period is served, and our focus will be on the transformation of our ocean product as part of our global integrated strategy. Let's turn to the 2023 guidance on slide 12. I won't read out all the bullet points from this slide, but I want to highlight a few specific drivers to our guidance. As I mentioned previously, we expect that the first phase of 2023 will see a stabilization of the inventory correction, which marked the second part, the second half of 2022. That said, at this point in time, economic growth is expected to be muted or essentially flat for the full year.
Demand stabilization in the back half of the year should help the recovery of all segments, in particular in logistics and terminal business. As we note in the blue sidebar, given the ocean industry outlook, there could be supply-side risks for ocean in the second half of the year. Based on these assumptions, for the full year 2023, we expect an underlying EBITDA of $8 billion-$11 billion, an underlying EBIT of $2 billion-$5 billion, and a free cash flow of at least $2 billion. Our cumulative CapEx for 2022-2023 is unchanged at $9 billion-$10 billion. We introduce a new cumulative target for 2023-2024 of $10 billion-$11 billion. From a reported earnings perspective, we will take an impairment and restructuring charge primarily for the restructuring of our brands that I touched on earlier.
Of course, our annual guidance is on an underlying basis. With that, I would like to hand over to Patrick before I get myself too deep into the financial highlights. Patrick?
Thank you, Vincent. Also from my side, thank you to everyone for joining our conference call. As Vincent touched on previously, 2022 was a record year, with peak profitability reached during Q3 and the long-awaited normalization in ocean setting in Q4 as congestions disappeared. Despite the rapid drop in both spot rates and volumes, we delivered fully on the guidance set in August, even exceeding guidance when it comes to free cash flow. For the quarter, it meant an EBITDA of $6.5 billion and an EBIT of $5.1 billion, respectively down year-on-year by 18% and 25%. Free cash flow continued to climb, though, driven by operating cash flow up nearly 15% to $6.5 billion, which contributed to the record full year free cash flow of $27 billion, $3 billion ahead of our guidance.
We ended the year with a significant cash position of $28.6 billion when considering short-term deposits and securities. Our net debt position was effectively a net cash position of $12.6 billion in Q4. This supports our proposed dividend payment of DKK 4,300 per share, equivalent to a cash out of DKK 10.9 billion, which implies a total of DKK 13.9 billion returned to shareholders when considering the ongoing share buyback program of DKK 3 billion for 2023. Let us turn to the development of cash flow on slide 15. Starting with our operating cash flow on the left.
In Q4, we generated $8.2 billion, driven by our EBITDA of $6.5, as well as a favorable unwinding of net working capital of $1.7 billion, which led to a cash conversion of 125%. Our gross CapEx was $895 million, bringing us to a full year gross CapEx spend of $4.2 billion, in line with guidance. As a reminder, we guided back in 2021 for a total CapEx of for 2021 and 2022 of $7 billion, and we came in at $7.1 billion. We are on track with our investment plan.
As you've heard, we are maintaining our two-year cumulative gross CapEx guidance to be $9 billion-$10 billion for 2022 and 2023, and we are guiding for 2023 and 2024 to be between $10 billion and $11 billion. In those years, we will have reached the CapEx run rate of both investments in our integrated growth and also our green methanol fleet renewal program. Coming back to the quarter, our $6.5 billion of free cash flow was used to distribute $708 million in form of the share buyback, where the majority, nearly $3 billion, was placed in short-term deposits over three months, bringing us to a net cash flow of $1.8 billion by the end of the quarter. Turning to slide 16 and our balance sheet, which we introduced last quarter.
This table provides details on our cash position, reaching an all-time high as we continue to accumulate cash over the quarter with our cash balance of $28.6 billion, implying a $6 billion progression compared to in Q4 and $12 billion compared to the previous year. This leaves us with a tremendous balance sheet and the priority of shareholder returns. We propose a dividend of DKK 4,300 per share, a 72% increase on the dividend paid in 2022, and a reflection of our record financial results. This proposal represents 37.5% of our 2022 underlying net result and is in line with our dividend policy of a payout between 30%-50%.
It also means a 27.5% yield based on our share price of the end of the year 2022. Following approval at the March 28th's AGM, the resulting payout of $10.9 billion is expected by March 31st. Including the anticipated share buyback of around $3 billion, the return to shareholders, as previously said, in 2023, will be at $14 billion or nearly 36% of our market cap. Looking forward, we remain committed to our approximately $3 billion annual share buyback until 2025, which implies an additional $6 billion to be returned in 2024 and 2025. We will not only return most of our cash position over time, but we anticipate a progressive releveraging of our balance sheet.
I'd like to remind you that our goal is to maintain our BBB rating. Therefore, our normalized leverage ratio should be in the range of 1.5 times net debt to EBITDA by the horizon of 2025. Moving to ocean on slide 17, the quarterly progression starts to show the effect of both lower rates coming off the peak levels in mid-2022 and lower volumes as lower consumer demand and inventory destocking hit simultaneously. Our Q4 volumes were 14% lower compared to previous year, which is actually a relatively good performance when seen in the context of the mid-20% declines in the major Asia-US and Asia-Europe head haul lanes, where we have a significant exposure.
Our fourth quarter average freight rates, on the other hand, were only 3.5% lower year-on-year, but the bigger drop came sequentially, where rates were down 23% quarter-on-quarter, almost entirely due to the fall in shipment rates. Very much in line with our forecasted rate erosion pattern we had been guiding for since early last year. We saw the benefit of our contract coverage in our EBITDA margin, which was lower than previous quarter and year, but still at a tremendous 45%, very close to the margin achieved for the whole year of 2021. The decline in EBIT was primarily due to a lower top line, of course, but with a smaller offset from lower operating cost ex bunker.
Moving to slide 18, we show the relative and respective elements of the change in EBITDA. Here we see that the principal driver was really the volume effect, for the first time since Q2 2020, we see a negative effect on freight rates. As in Q3, when freight rates began to decline, the release of revenue recognition is seen as a benefit under other revenue. As long as we continue to see shipment rates decline, this will continue, but to a lesser degree as the rate of change has slowed. On slide 19, we look into the details of rates and volumes, the retreat from the Q3 peak levels in average rates is clear, as I touched on previously.
When we think about the progression of 2023, we expect to have some continued benefit from our contract rates in the first part of the year, and particularly in the first quarter. Over the course of the year, that advantage will disappear as contracts are progressively negotiated at rates close to prevailing shipment rates. As mentioned earlier, Q4 loaded volumes fell by 14% year-over-year as inventory corrections led to shippers dramatically reducing the volumes, which led to blankings and a lower capacity utilization of 83% when compared to 90% in the previous quarter. This volume decline showed up quite evenly between shipment and contract volumes. Close observers will know that we finished the year at 70% of our long-haul volumes on contract, compared to 71% where we were after the first nine months.
Yes, there were substantially somewhat lower volumes on contract, but the vast majority of them held up, and we expect a similar contract to shipment split for the long-haul volumes in 2023. Moving to slide 20. As in previous quarters of 2022, bunker remains the primary cost driver. Lower port congestions drove slightly lower container handling costs, but as anticipated, the inflationary pressure meant that bunker was also going up. Without the bunker, costs were actually down by 5% when compared to previous year. The cost of bunker actually came down sequentially, it was still up 17.3% in the fourth quarter, driven by a 29% average price increase, partially offset by lower consumption due to lower volume shipped.
On slide 21, we turn to logistics and services, where revenue growth of 28% this quarter was driven primarily by our acquisitions, LF in particular, which contributed just over $270 million. As we touched on earlier, the destocking is being felt across all segments and volume-driven aspects of our product offering in LNS. For example, in supply chain management or warehousing volumes, which were particularly affected. We saw a 2% decline in organic revenue in Q4 2022. If we look a little deeper, the picture is a bit more positive as our top 200 customers contributed 4% to the organic growth. In terms of profitability, the lower volumes clearly weighted on margins as of the organic business, as did an impairment for partnership assets of $21 million.
Excluding impairments, the full year underlying EBIT margin would have been in line with our full year target of over 6% with a figure of 6.1%. Moving into 2023, we expect the early part of the year to be similarly affected, that demand will stabilize when the current destocking in multiple verticals ends, and volumes at our customers improve. From a profitability perspective, we expect to be in line with our long-term targets for the full year, the recovery will be loaded towards the second half of the year. Taking a look at the details of logistics and services on slide 21. In Managed by Maersk, we see the effect of inventory correction in lower supply chain management volumes. The custom services volumes continued to grow year-on-year, though, were sequentially lower.
This volume and the new contract signed, particularly in lead logistics, were the main drivers of the strong EBITDA margin. In Fulfilled by Maersk, we see the effect of the consolidation of LF Logistics in terms of revenue growth. Lower organic volumes were affected by contract logistics and e-commerce, and the latter is where we particularly see the effect of lower consumer demand, and this is where the impairment took place this quarter. In Transported by Maersk, we continue to benefit from the integration of Senator, but lower volumes, especially in NCL and Intermodal, made themselves felt. In all, it was not an easy quarter for LNS, but looking at the full year, we are encouraged by our 21% organic revenue growth and look forward to improved profitability in 2023 when the current destocking ends.
As we progressively roll out new digital visibility products and improve our ability to scale our integrated logistics offering globally, we will be able to gain an even greater share of our customer logistics spend. On slide 23, we turn to terminals, where once again, the effect of lower volumes is visible. As we have been anticipating, the extraordinary storage revenue and income driven by port congestions has started to recede as the flow of goods improves. In addition, the lower volume shipped in the Q4 in absolute terms also had an effect which was observed specifically in our ports on the West Coast of the U.S. and in Spain. The lower revenues and profitability in the segments are very much expected.
Terminals remains an extremely resilient business with strong pricing and good cost control, which made it possible to offset the inflationary cost increase in 2022. The segment ROIC of 7.6% is still affected by the impairment of our Russian activities, and adjusted for that, we continue to have an excellent ROIC of 12.3%. As we look towards a full normalization of the extraordinary storage income, we are confident that the segment ROIC will remain above the targeted 9%. Moving to slide 24 for the terminals EBIT average. Here we see the effects of lower volumes quite graphically. Compared to Q3 2022, we notice a much smaller revenue per move effect as lower storage revenue offsets the higher revenue based on tariff increases.
Rising inflation and energy prices are seen in the cost element. Changes in provision are also a significant element this quarter. As is typical for this industry, most of our customer pricing is CPI linked, with price increases occurring primarily at the beginning of the year, which implies an eroding positive effect as the year progresses. To finish up on the slide 25, we turn to Towage and Maritime Services. While each of the businesses here has quite individual drivers, the segment itself showed quite a balanced picture. Maersk Supply Service has benefited from this year's activity in the oil and gas industry. Towage also enjoyed a strong quarter, while Maersk Container Industry is affected by a very weak market demand, another late effect of the pandemic volume-driven demand normalization.
Profitability in Q4 was driven by swings in impairments, specifically in this case as regards our holding in Höegh Autoliners, which impacted results positively, while previous year was impacted by an impairment in Maersk Supply Service. This concludes our segment review, and I would like to hand over to the operator for the Q&A session.
Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. Please limit yourself to one question only. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. Again, please limit yourself to one question only. One moment for the first question, please. The first question is from the line of Robert Joynson, BNP Paribas. Your question, please.
Good morning, everybody. I have a question for Vincent on strategy, if I may. Vincent, you've been the CEO of Ocean Logistics since 2019. You've been, I think it's fair to say, instrumental in the development of the global integrator strategy. You've also, I think, been pretty clear since taking over as group CEO that you don't anticipate any significant changes with respect to the group strategy with Søren over store. Equally, no two people are exactly the same. Perhaps could you provide some color on areas where you do see things differently than Søren previously or any areas where the strategy may evolve going forward? Thank you.
Hey, Rob. I think what we have seen is that this strategy has really worked for us. If you look at the growth that we have been able to generate on the logistics side for the past two years now consistently, it's something that for me is a strong proof point. What we will see now in 2023 is that we can bring those proof point even when the container markets are in a completely different place. We strongly believe that we can, because fundamentally, even though the congestion that we have seen in the last couple of years has abated, the fundamental supply chain problems that our customers have about visibility, about reliability, about resilience, these problems are still there.
The opportunity for Maersk to actually solve these problems has so much value potential for customers and for us that this is worth pursuing. The strategy will largely continue as it is. My own preference or my own philosophy to it is more of an organic first, because what we're trying to do is very differentiated and very different from what customers are otherwise getting. We will only do acquisition in very, very specific cases, and otherwise we'll continue to focus on the organic growth engine that we have. We will otherwise continue to integrate also Ocean much further into what we do in logistics so that it is really one business towards the customer.
Okay. Thanks for the color. Thank you.
The next question is from the line of Sam Bland with JP Morgan. Your question, please.
Hi. Thank you. Thanks for taking the question. It's basically if I look at the $8 billion-$11 billion EBITDA guidance, could you give us a feeling for how much b enefit there is there from the sort of higher contracted rates you had through 2022 flowing into the first few months of 2023. Basically, trying to get a sense of approximately what the exit rate of profitability looks like, or maybe the profitability of the group in the second half of the year once those higher contracts are out. Thank you.
Yeah, all right. Indeed, we will enter the year with still a quite a high level of contract rates, as you've seen in the Q4. We have had an erosion of the shipment rates, but we are still living with a high contract rates we have been able to secure with our customers. These are now being renegotiated progressively, therefore, you'll see still our Q1 and Q2 being fairly strong, in terms of EBITDA contribution and EBIT contribution from Ocean. That will level out in the second half of the year, where progressively you are seeing the major contributions in terms of EBIT particularly, but then also in terms of EBITDA will come from the other businesses as we move on.
The next question is from the line of Dan Togo Jensen with Carnegie Investment Bank. Your question please.
Thank you for taking my question here. Maybe can you share some color on how you see costs development? You have previously stated that cost base will be pretty sticky when it comes to network handling, et cetera. How should we see that developing in the course of 2023? Are we starting to see some relief in the cost base? Thanks.
Yeah, Dan. We, on one hand, as you can see also when we talk about our terminal segments, we're still seeing some inflationary pressure in our cost base from some of our vendors. We're also seeing relief in different areas. One of it is as the market normalizes, time charter rates will also normalize. The other thing that is really, really important is the fact that throughout 2022 we've been sailing basically at max speed because we were always trying to catch up on the delays that there was. This is something that we have stopped doing now with the current level of normalization.
We're able to actually re-implement slow steaming across most of our network, which will also help us actually abate some of the pressure. The goal for us on cost is that we can roll back the inflationary pressure and try to maintain our current cost level about equal on a unit cost basis. That is true for across the Ocean and Logistics.
The next question is from the line of Sathish Sivakumar with Citi. Your question please.
Yeah. Thanks again for the presentation. I've got a question around the demand. Can you clarify what is your current visibility on bookings across Ocean and Logistics? Last year, you like had about three months of visibility on bookings. Any color on that? How does that have actually started off the year would be helpful. Thank you.
Yeah. Thank you, Sathish. Our visibility is usually about three months out, and that's pretty common because of all the aggregate level of purchase orders that we handle from our customers through our Managed by Maersk activities in the logistics. That continues to be the case. That's why we see the importance of the inventory reduction here in the fourth quarter. We expect that this will continue in the first quarter and then a gradual recovery in the second, and then a more normal environment in line with the consumptions. Assuming that the macro stands to where it is today, that's how we should see the year pan out.
The next question is from the line of Patrick Creuset with Goldman Sachs. Your question please.
Good morning, Vincent and Patrick. Just looking at your logistics print in Q4, there seems to be quite a slowdown in the pace of organic revenue performance and also profitability. It does seem to coincide with the easing of capacity constraints on the Ocean side. I know you've pushed back on the idea that logistics benefited from the tightness in Ocean that is seen in 2021, 2022. Is this still your view, or should we prepare for a bit of market share loss perhaps in 2023, 2024 in the division? Secondly, are you confident in the cost and integration measures you've put in place to protect profitability?
Yes. Let me just take that quickly. I mean, basically what has happened is quite simple. When you have that inventory correction, it doesn't only affect ocean volumes, it basically works itself through the entire supply chain. What that means is you have fewer POs to process, fewer containers to consolidate, fewer containers to move, fewer containers to deconsolidate, distribute, and so on and so forth. You have the warehousing footprint that you have. You have the organizational footprint that you have. We're not gonna start, you know, reducing the size of the organization while we still expect the growth to come back on the other side of this.
What you're seeing with the performance on Logistics and Services is as we see a sharp adjustment of volumes, this on top of the cost base that we have, will mean that the margin will suffer a little bit for a couple of quarters, and then it will come back. What is actually reasonable is that volumes have dropped overall by more than 10%, and our volumes have dropped only by 2% in our revenues have dropped only by 2% in Logistics and Services. What that means is underlying, we still have a lot of growth. That growth comes from the implementation of new customer wins that we're having, and there our pipeline continues to be strong.
I think for us, the goal on Logistics and Services is very simple. We made the commitment that we were gonna have a growth above 10% on an organic basis. We intend to deliver that. That we can deliver every year a margin above 6%, which shows that it's a profitable growth and we don't just buy it, and we're gonna deliver that. That's, that's really what the proof point of the strategy is going to be this year.
The next question is from the line of Lars Heindorff with Nordea. Your question, please.
Thank you for taking my question and the presentation. Question regarding the ocean volumes. You've been growing. I know that ocean global growth has been down by around about 4%, and I think also in the presentation that you compare your growth more with what goes on on the big East-West trade lanes. Still on a global basis, you've probably been underperforming a little bit. Given the indications of that you will keep your capacity flat and what we see of inflow from some of your competitors, want to hear your thoughts about your comments that you expect to grow in line with the market in 23?
As you rightfully say, in Q1 to Q3, we took the conscious decision that we were not going to grow our fleet at a time where the price of tonnage was at historic high. We knew that this the circumstances would abate soon and so we would be stuck with the cost for a long time. We let go of some volumes there.
In Q4, there is no doubt that with the market going, dropping 10%, or we think about 10%-11% and us dropping 14%, we have underperformed a little bit because of the exposure that we had to this East-West trade and specifically to the verticals in retail, lifestyle and technology, which have been the ones where we have grown a lot and that have actually felt the normalization, you could say, and/or the inventory correction the most. Going forward, I mean, our ambition is that since the market is going to be flattish, our ambition is actually to deliver also flattish volumes. We will make a few adjustments possibly to the size of our fleet, which has actually grown. Going into the pandemic, we were at 4.1 million TEU.
We worked ourself up to 4.3. We will probably decrease it a little bit in order to move the volumes that are similar to this year, but on a smaller fleet, right?
The next question is from the line of Anders Redigh Karlsen with Kepler Cheuvreux. Your question please.
Yes, good morning. My question relates a little bit to the working capital. Since rates are coming down, are you also expecting to release part of your working capital here?
Yeah, thanks Anders for the question. Indeed, as you actually have seen in Q4, we have already quite a positive impact on our cash flow in the difference between the EBITDA and the operating cash of working capital being released. We are progressively unwinding the capital which, working capital, which has been increasing over the last two years with the higher rates, right? As we collect the receivables and volumes came down, we are unwinding that.
We would still expect an impact here, probably also skewed towards the first half of the year, more in Q1 and Q2, of probably more or less the same magnitude as we reversed in Q4 will be the amount probably for the whole year of 2023, and that would bring us back to levels where we were pre-pandemic in terms of working capital.
The next question is from the line of Ulrich Wack with SEB. Your question please.
Yes. Hello. Thank you for taking my question. Just on your CapEx investments for 2023 and 2024 of $10 billion-$11 billion, can you perhaps just a broad breakdown of those costs and also clarify if potential M&A is also included in that guidance, please?
No. On the CapEx, we are basically just having the. We are arriving as we said in the speech now, as well at the run rate, right? We had guided for 9-10 now for 2021 and 2022 or 2022 and 2023, which means we have 4.2 in 2022, which means that for 2023, you can expect anything with a five in front. If you continue that as a run rate, you're probably between the 10 and 11 that we have, we are guiding for the next two years, right?
We are coming at a level which is close to the run rate, where we replenish our fleet with a green methanol replacement, and we have also enough to invest in new terminals for the growth of terminals and obviously the main component here, the growth in the NS. That is therefore pure organic growth, and CapEx expense has no M&A. The acquired company of the past have their own CapEx needs, which is included in that number.
The next question is from the line of Alexia Dogani with Barclays. Your question please.
Good morning. I just wanted to go back to your statement that obviously contract rates are correcting close to spot, and we have a bit of a timing lag in the first quarter until those contracts are repriced. Clearly, you know, spot is going close to pre-pandemic levels, if not hitting them. You've just said that your unit cost is going to stay flat at best case of current levels, which are 45% above pre-pandemic. Is it fair for us to expect post Q1 that we will likely see losses in the following quarters that may potentially carry forward into 2024, as clearly oversupply is coming in both years? Thanks.
No, thanks for your question. Indeed, the mechanism is absolutely correct, right? You will see in Q1, Q2 an erosion of the contract rates as we renew new contracts closer to shipment levels or spot levels that will imply a reduced profitability of ocean in the second half of the year.
As we highlighted as well, there is obviously the risk of this additional capacity coming to the market in the second half of 2023 and 2024, which will have to be tackled by the industry in terms of blankings and slow steaming and we'll see the reaction here of the industry. As far as we are concerned, we'll remain disciplined. We are blanking, we are slow steaming, and we are not increasing our capacity. In terms of our cost, it will remain as we just said, fairly flat, always component, considering the bunker component, right? We expect bunker to come down, which in absolute terms is also then an absolute cost reduction when you look at the second half of the year.
It certainly means a lower profitability, a very low profitability for ocean, in the second half of the year.
The next question is from the line of Parash Jain with HSBC. Your question please.
Thank you. Hi, Vincent. My question is more on your demand outlook and speaking to perhaps your team or different verticals data that you see. Do we have a sense of if the U.S. retailers have managed to address excess inventory situation in the past peak season? It's more of a matter of improvement in business and consumer confidence that will bring them back to the market, or you think that excess inventory situation may persist well into the first half of 2023, and that is backed into your guidance?
Our understanding of this, Parash, is that the industry, the inventory, sorry, are in the process of correcting. Different companies are at different stage. Some have had more, some have had less, some have had earlier, some have it later. It's still a process that is unwinding right now. What we understand is that the pace of sale is more sustained than the pace of shipments because that's how they work it down.
That's why we expect that in the second half, we will see, assuming that the level of consumption holds, which so far that's the indication, we will see the volumes that move through the supply chain converge back up to trend where consumption actually is rather than to be lower than that because of the inventory correction.
The next question is from the line of Muneeba Kayani with BofA. Your question, please.
Vincent, congrats on your new role. Just if you could give some color on contract negotiations so far. Like, how much of Asia, Europe have you signed so far? Are you also kind of signing new contracts on Transpacific? Kind of just a bit more color on the contract season this year. Thank you.
Yeah. Thank you, Muneeba. We've signed about half of our contract, or we have half of our volumes for contracted volumes for 2023 signed up. Some of them are through the long-term contracts that we have signed off already in 2021, 2022, and that continue into 2023. The other part is some of the contracts that we have that are calendar year-based or, and that we have negotiated. That gives us about half. That's why I think we have a pretty good foundation for for the guidance. A lot of the contracts that we have negotiated so far are contracts of customers that are housed in Asia and in Europe.
Because as you know or as you may know, U.S. contracts usually are based on fiscal year started from May first. Those contract negotiations for, with our U.S. customers are mostly negotiations that take place in the second half of March and beginning of April.
The next question is from the line of Andy Chu with Deutsche Bank. Your question, please.
Morning. Quick question on freight rates. Do you think that freight rates troughed, or is there further downside risk? Thank you.
It depends on whether you consider this on the short-term freight rate, which would be kind of the lead indicator of where this is going or the average. The short-term freight rates, if you look at the CFI and so on, seems to have stabilized. That's that would be one indication. Of course, as Patrick mentioned, the contracts are being renewed slower. The average freight rate will continue to decrease as those contracts get renewed and implemented with lower lower tariff levels. You know, expect the average to continue to decrease into up into Q3. You know, what we should see is a stabilization at least through the next couple of quarters of the short-term rates.
The next question is from the line of Petter Haugen with ABG Sundal Collier. Your question, please.
Good morning. My question relates to the alliances. You are now stepping out of the 2M Alliance, as a natural step you say. I guess two-part questions. To what extent do you expect that to still hold you back for the next two years being in that alliance? Secondly, how do you expect the concept of alliances to develop in the container industry going further from here? Thank you.
Yeah. Thank you. So, you know, if I start with the latter part of your questions, I think that the situation that 2M was in is quite unique because it's an alliance of the two largest carriers and both of us had reached a size where actually we could stand alone if we wanted to. I don't think any of the other carriers today would be able to have the comprehensiveness of coverage that is required to be competitive or the cost base to say, "I can stand alone." Therefore, I think the way to think about what is happening with 2M is today there are three major networks on the East, West. In the future, there will be four. There will continue to be probably a couple of alliances.
I know Ocean Alliance is going into 2027, so that's at least the next four years of stability there. It's hard to see how the alliance would make a significant change given that both MSC and Maersk intend to have a mostly standalone network. So I would expect simply a transition from three to four networks, and that is really meant to. I think it's not as much of a change as what has been made today. At least I don't expect this role of musical chairs that has been talked about with everybody trying to find new partners. With respect to how is it going to hold us back.
Well, there's no doubt that as we, as I mentioned, what is the future for us is not to have ocean as a separate business from logistics, but is to have our ocean business fully integrated into our logistics business. In order to do that, we need to have a much higher level of operational control of our service that we deliver to customers. The quicker we get there, you know, the more it allows us to accelerate the integration of ocean and moving away from this commodity game that we're in that doesn't really that we can see very clearly now doesn't lead anywhere, and move to in a more differentiated offering. You know, it's gonna slow us down a little bit to implement this.
You know, we'll have to see also with MSC, what are some of the measures that we could implement within the alliances for during the next two years that will allow us to test and progress, what we're trying to do here.
The next question is from the line of Sathish Sivakumar from Citi. Your question please.
Yeah. just following up on the cost comment actually, if I look at your fuel consumption, it's actually down 9% quarter- on- quarter. Just to understand, on the slow steaming, are you like already in that process of then implementing slow steaming in Q4? Or is it more like an addition to see more reduced off-?
Yeah. in Q-
Decline in consumption?
Sorry. In Q4 we already saw as the, as basically terminals decongested, we already saw that ships no longer had to basically sail at full speed. Actually, even the ships that were delayed because we were blanking sailings, they could simply slide into the next position, and we could slide everything. What we're doing is we're actually institutionalizing it in the schedules. That is something that is being implemented right now.
Ladies and gentlemen, in the interest of time, we have to stop the Q&A session, and I hand back to Vincent Clerc. Please go ahead.
Okay. Thank you, all of it. In closing, I would like to leave you with the following final remarks. Our record 2022 results leave us in the extraordinary position of proposing a dividend of DKK 4,300 per share, which in combination with our existing share buyback program, means that we intend to return approximately $14 billion to our shareholder over the course of the coming year. Despite this tremendous payout, we keep a strong balance sheet as we head into what is clearly a more challenging economic period. We believe that we have a window of opportunity now to accelerate our investor strategy.
Together with my new executive leadership team and all my Maersk colleagues, we will lead the way in increasing visibility, reliability, and resilience to the global supply chain, living up to our corporate purpose statement of improving lives for all by integrating the world. And with that, I would now like to hand back to our operator, close the call, sorry. Thank you. Bye-bye.