Good morning, everybody, and thank you all for listening in to our earnings call for the Q3 and 1st 9 months of 2020. My name is Soren Skou, and I'm the CEO of Evinrude Maersk, and I'm joined today by Patrick Jany, our group CFO. So let me start by saying that we are satisfied with our 3rd quarter result, and we're also proud of the fact that we've been able to continue to improve our financial results and continue to transform the company into a global container logistics company under the very difficult circumstances of the COVID-nineteen pandemic, which has for us meant lower volumes, global work from home, plenty of contingencies in ports around the world. We believe we are demonstrating that we have set out on the right strategy at the end of 2016 and that the disciplined execution ever since is starting to really deliver results. The work we have done in our Oceans segment with the 2M Alliance and the tools we have developed there to be agile in capacity deployment the acquisition of Hamburg Sud, which has provided us with scale and competitiveness our continued focus on profitability over market share and disciplined approach to CapEx and the development of unique and differentiating digital products such as Maersk Spot is really paying off.
And all of that has meant that we are able to deliver better results even when the volumes are down as we expect them to be for the year and 3% to 5% for the full year. Also, we are starting to have material growth in our Logistics and Services business, and you can see it in our results now. And all the work we have done on costs in Terminals and Towers is enabling that we can deliver better results also here despite the fact that volumes are down. We believe it's an excellent quarter with not only solid results in Ocean but also good growth in Logistics and Services that further highlights our strategic transformation and that it has started to show in our financials. Due to supply chain disruptions of COVID-nineteen, our revenue declined 1.4% as volumes were down close to 4%, with organic volumes decreasing in most segments.
However, slightly better than what we initially expected for the Q3 being a mid single digit decline. Despite the negative development in turnover, our results continue to improve. The 3rd quarter was the 9th consecutive quarter with year on year improvements in operating earnings. EBITDA was up 45 percent at $2,400,000,000 before restructuring cost and 39% to USD 2,300,000,000 including restructuring cost of USD 105,000,000. The strategy is working, as I outlined, but we also enjoyed tailwinds after a very difficult Q2.
Despite this fact that we are still in the middle of the pandemic with continued high uncertainties, we have seen a strong recovery in demand within transportation and logistics, which has led to equipment shortages, both containers and vessels, at selected rates, which has been a supporting factor in the freight rates in the short term. At the same time, the oil price decline has had positive impact on our cost base, and these external factors have benefited our finances, although we have lower market share in geographical areas where the volumes and rates have performed the strongest in the 3rd quarter, such as the Pacific trade. The tailwinds from rates and volumes are accelerating into the 4th quarter. And when combined with the strong execution of the strategy, we now expect to deliver a Q4 which is stronger than Q3. And this is unusual and not our normal seasonality, but it has enabled us to upgrade our expectations for the full year to between SEK 8,000,000,000 EBITDA of between SEK 8,000,000,000 and SEK 8.5 1,000,000,000 as announced yesterday.
We are also making progress on our transformation. In September, we announced initiatives to close Damco Freight Forwarding and merge our Air Freight Forwarding and Less Than Container Load business into the Maersk brand to further improve the customer experience and end to end service delivery. We are closing down the Safmarine brand and integrating that into Maersk to enhance customer service. And we are further integrating the back offices of Maersk and Hamburg Sud, while we will continue to go to market as 2 separate brands with a differentiated service model. As a consequence of this, we unfortunately have had to say goodbye to 2,000 colleagues, and we have taken in the 3rd quarter a restructuring charge of $105,000,000 of which $40,000,000 is in Logistics and Services and the remaining in Ocean.
On the financial performance, we have continued to build on our foundation with improved profitability across all segments, which combined with our focus on capital discipline, has led to a free cash flow generation of SEK 1,500,000,000 in Q333 $3,000,000,000 for the 1st 9 months. This has continued allowed us to do three things in this quarter: continue to deliver the company, acquire KTH's custom services and to do share buybacks. It is worth noting to put this into context that when we acquired Hamburg Sud in 3 years ago in December of 2017, our net interest bearing debt topped at USD 24,600,000,000 which we have now reduced to USD 10,800,000,000 including lease liabilities. In light of the development, today, the Board of Directors of APM Autonomousk has decided to initiate a share buyback program of up to SEK 1,600,000,000 over a period of 15 up to 15 months starting on the 1st December. The first phase of the program of around SEK 500,000,000 will be executed under the authority already given to the at the AGM in 2019, and the rest will have to be authorized at the next AGM, which the board will propose.
The decision to initiate a new share by background is supported by both strong earnings and strong free cash flow into 2020. And this I also want to say that this is the last distribution from the proceeds from the sale of Maersk Oil or the shares in Maersk Hotel from the sale of Maersk Oil. In total, the share buyback program announced today, we will distribute close to SEK 3,400,000,000 or 75% of the initial value of the shares in Total S. A. Now on Slide 5, the strong trend of improving earnings continues.
Returns and cash flow have improved steadily year over year over the last 9 quarters. Return on invested capital were 5.9% last 12 months and our ROIC in the 3rd quarter was 11.3 percent analyzed, up from 6.6% in the second quarter. Free cash flow before distributions to shareholders and acquisitions was $3,800,000,000 on a last 12 months basis. Along with the strong cash flow generation, we kept our capital discipline, which enabled our cash return on invested capital to reach almost 14% in the last 12 months. And given our guidance today, it's also clear that we expect to make it 10 quarters in a row where we continue this very strong trend.
And I think this is one of the things that we take particular pride in the fact that we are generating a lot of cash, and we will continue to do so. In the Q3, while we kept improving our financial results, we also continued our transformation strategy. Revenue in our infrastructure and logistics activities increased by more than 5% despite being negatively affected by COVID-nineteen. EBITDA in Logistics and Services grew by 71%. The improvement in profitability was mainly driven by the acquisition of Performance Team and higher earnings in Intermodal.
And if we compare our performance in Logistics and Services in this quarter, we have been able to grow both our top line and earnings significantly above the average of the industry, confirming the strategy, including the acquisitions we have made. We completed the acquisition of KGH in September, and the integration is progressing as planned and contributed with a minor positive U. S. Dollar amount to EBITDA already in September. With this, I will hand over the microphone to Patrick, who will take you through the financials and the segments.
Thank you, and good morning to all from my side as well. Turning to Slide 8, we can see that profitability improved significantly during Q3, with the net result rising from $520,000,000 to $947,000,000 a year ago. The improvement came from all segments despite the decline in revenues as a consequence of lower volumes and can be mainly attributed to a strict focus on costs. Overall, operational costs for the group decreased by almost $800,000,000 compared to last year. In absolute values, Ocean improved the most by more than $500,000,000 driven by better cost performance and freight rates.
Logistics and Services increased more than 40%, driven mainly by Intermodal and Performance Team, while the other segments, Terminal Storage and Manufacturing, proved their resilience and increased profits despite very adverse conditions. Overall, our EBITDA increased to 39%, leading to an EBITDA margin of 23.2 percent compared with 16.5% last year. Consequently, EBIT increased 75% to $1,300,000,000 compared to $737,000,000 in Q3 2019, leading to an EBIT margin of 13% compared to 7.3% last year. The EBIT in Q3 equaled the EBIT in the first half year. The other positions had a fairly small impact on profitability and mostly offset each other.
Taxes increased given the higher profit base and some adjustments of tax provisions and tax assets. When adjusting for restructuring costs, the underlying profitability was even more significant, with underlying net result more than doubling to $1,000,000,000 compared to $452,000,000 in the previous year. Now turning to Slide 9. We see the strong cash flow was the financial highlight of the quarter. Cash flow from operation was strong, improving 26% to €2,200,000,000 on the back of an increase in EBITDA of €641,000,000 despite of a small deterioration in net working capital of $108,000,000 Cash conversion was still high at 95% compared to 105% last year.
Free cash flow in the quarter was €1,500,000,000 after considering capital lease installments, gross CapEx, net financial expenses and received dividends. We absolutely maintain our strict capital discipline. And for the year 2020, we expect CapEx in the range of SEK 1,500,000,000 and our future contractually commitments of SEK 1,500,000,000 For the 2 years of 20 21, 2022, we expect the cumulative CapEx to be between CHF 4,500,000,000 CHF 5,500,000,000, which is below depreciation levels. It is therefore clear that we will maintain our strict approach to capital allocation in the years to come, focusing on generating a strong free cash flow, while maintaining our terminals and fleet and replacing some smaller older vessels and purchasing more than leasing containers given the economic advantage. We will expressively refrain from adding capacity.
Free cash flow generation after CapEx in these installments is and will continue to be the key priority. Now looking at the use of cash. We have, as mentioned, made the acquisition of KGH Custom Services, bought back shares to a total of $98,000,000 and chose to repay debt in the quarter of $810,000,000 due to the strong cash position. We thereby paid back some of the COVID-nineteen additional liquidity reserve we took in Q2. The improved free cash flow led to a decrease in net interest bearing debt of €800,000,000 in the quarter to €10,800,000,000 It is worth mentioning that excluding these liabilities, net interest bearing debt equals just $2,000,000,000 compared to $3,100,000,000 at year end 2019.
The strength of the cash flow over the last two quarters, combined with the reduction in debt, is also reflected by the upgrade in outlook by both S and P and Moody's. Let us now turn to the business development and start with Ocean on Slide 10. Revenue in Ocean declined 4.1% due to declining volumes of 3.6% as COVID-nineteen still had negative impact on demand. However, the volume decline was slightly lower than expected and the cost base continued to improve significantly due to the continued agile capacity deployment, leading to a record high utilization and lower bunker prices. This, combined with improved freight rates, led to a 39% increase in EBITDA and an EBITDA margin of 25.4%.
As a further step in our strategy of improving customer experience and improve efficiency, we initiated step to simplify the organizational structure even further by integrating Safmarine into the Maersk brand and by bringing the back offices of Hamburg Sud and Maersk closer together. As a result, we recognized a restructuring cost of €65,000,000 in Q3. Further progress was made in offering digital solution to our customers like Twil and Maersk Spot. Maersk Spot, in particular, gained further traction. On Slide 11, we have illustrated in a waterfall bridge the movements in EBITDA compared to previous year.
As you can see on the graph, the decline of volumes of 3.6 percent had a negative impact of EUR 155,000,000, which compared to the last quarter, where the impact was negative EUR 634,000,000 is less than expected. The impact was more than compensated on the one hand by the freight rates, benefiting from a strong short term environment offsetting downward price adjustment on contract rates for a net impact of CHF 284,000,000 and on the other hand, by a lower bunker price, which amounted to $312,000,000 Through agile deployment of vessels, sailings increased by 8.6% in Q2, matching the demand fluctuation, while also improving network utilization against last year in Q2 2020. Looking ahead, we will continue to pursue an agile capacity deployment strategy to ensure we support our customers and at the same time are able to protect earnings and cash flow in case we see changes in demand patterns or strong fruit creations of demand. The Agility led to a decline in container handling cost of DKK90 1,000,000 and a decline in network cost and bunker consumption of DKK98 1,000,000 SG and A cost increased mainly as a result restructuring cost of €65,000,000 The combination of controlled costs, fast and flexible capacity deployment, higher freight rates and recovering volumes ensured the significant improvement of profitability in Q3.
We currently see this good earnings momentum continuing into Q4 as also reflected in our revised full year guidance. Turning to Slide 12. Our average freight rates increased by 4.4% in the quarter, driven by higher short term freight rates, driven by volatility in demand and vessel and equipment shortage. When we talk about freight rates, you need to remember that we recognize revenue as the container being transported, so based on voyage days on the water. This means that if the voyage is 30 days long and only a few of those days are in 1 quarter, the rest is in the following quarter, we will recognize a smaller part of the loaded freight.
That means that the strong rate development we saw by the end of Q3 will only impact our revenue and P and L in Q4. Our contract rates decreased as we continue to lower the bath element to the contract rates as a consequence of the lower bunker price and maintain our focus on facilitating our customers' supply chain and helping our long term customers meet their requirements through offering additional flexibility in those difficult times in line with our strategy. Total volumes decreased by 3.6%, as especially backhaul trades contracted, which was partly offset by strong volumes on the Pacific. Latin America, an important region for us, continued to be very negatively impacted by COVID-nineteen, with volumes declining 13%. For October, we continue to see a recovery in demand with volumes being at or slightly above previous year, particularly driven by the Pacific and some recovery in Latin America.
Going into the 3rd quarter, where we saw volumes recovering, we have carefully matched capacity deployment and demand to the best of our ability. This has meant that our operational cost declined by 13%, supported by lower bunker cost. Unit cost of fixed bunker declined by 2.9% as a result of tight capacity management and higher utilization. It is key that we keep focusing on our cost base by using an active deployment strategy, and we are quite satisfied with the development of our overall cost performance. The increased demand compared to the 2nd quarter meant that a very few vessels were idle by the end of the quarter and that we managed to increase the utilization to a record level close to 96%.
Bunker cost also took a significant drop and declined by 34%, driven by bunker price decreasing 29% to $2.90 per tonne and higher utilization. The bunker efficiency worsened by 0.8%, which was mainly driven by a marginal increase in network speed. It's also worth to mention that our reliability was negatively impacted in the quarter as a result of the volatility in demand. In many ways, COVID-nineteen has changed the way we operate and our customers' need, especially in the digital space, where all e commerce and digital products have seen an acceleration. And one example is our product Merck Spot, as shown on Slide 14.
Maersk Spot continued to gain momentum and accounted for more than 53% of the Maersk brand short term volume, up from 24% pre COVID-nineteen. Maersk's spot provides space and equipment guaranteed at the time of booking to our customers, And this allows us to better optimize our network and utilization of our assets. More than 80% of the volume is booked by forwarders, which is largely the same share as our volumes as before we introduced Maersk Spot. We have, therefore, not lost any material forwarder volumes while introducing Maersk spot. On Slide 15, we turn our attention to logistics and services, which despite the negative impacts from COVID-nineteen, reported an increase in revenue of 11%, driven by Supply Chain Management and the acquisition of Performance Team.
Gross profit increased 35%, with gross profit margin improving 4.4 percent to almost 25 percent and EBITDA increased 44% to $131,000,000 The increase in profitability is led by intermodal, airfreight forwarding and warehousing and distribution. As part of our strategy to improve customer offerings and improve competitiveness, we also recognized a restructuring cost of $40,000,000 as we have closed down the Damco brand and integrated the airfreight and less than container load business into Maersk Logistics and Services. The acquisition of KGH Custom Services closed in September, and the integration is progressing as planned with KGH contributing positively to EBITDA already in September. Slide 16 shows the development of gross profit and EBIT conversion in our Logistics and Services segment, which has shown a clear improvement in the last year, supported by margin optimization in intermodal, a spike in airfreight forwarding and significant progress in warehousing and distribution, the latter led by the acquisition of Performance Team. Our EBIT conversion improved in the Q3 to 21.3%.
As you can see on the graph on the right, we now have a nice constant progression of our gross profit and EBIT conversion, and we continue to work on improving this through growth and cost efficiency, including implementation of new IT platforms. Performance team contributed with $58,000,000 to gross profit and $24,000,000 to EBITDA in the 3rd quarter, a significant uplift from Q2 2020. The integration is progressing well as we are already now seeing commercial synergies towards our ocean customers because of our expand offering of warehousing and distribution services in North America. We continue to broaden our customer offerings, particularly in the digital space. And in July, we introduced Maersk Flow for the small and midsized customers and partners to take control of their supply chain from factory to end customer.
On Page 17, we turn to Terminals and Towage, where EBITDA increased by 4.1% despite revenue declining by 2.3%. The improvement was driven by both businesses. EBITDA in gateway terminals increased to 2.70 4,000,000 and the EBITDA margin increased by 2 percentage points to 34%, while EBITDA in Torridge increased close to 4%, mainly due to lower cost. Turning to the next slide, we have visualized the effects from volumes, revenue and costs on EBITDA of Gaterin Terminals. Volumes declined significantly on a like for like basis given the impact of COVID-nineteen as a consequence of a large exposure to Latin America, which has been strongly impacted by the pandemic.
The volume impact varied across regions, with Latin America impacted the most with 11% reduction and Europe significantly down as well by 9.2%. North America decreased slightly, while volumes in Asia and Africa and the Middle East increased by 6.6% and 3.1%, respectively. As in our Ocean business, we also saw bottlenecks in our Terminals business, especially in the U. S. And we are also exposed to a larger degree to the North South grades, which have not experienced the same spikes as on the Pacific.
As a result of the decrease in volumes, utilization declined by 13% to 71%, which had a negative impact of EBITDA of €36,000,000 However, this was more than offset by firstly, an improvement mix, which means that our volumes declined the least in the most profitable ports. Secondly, because of the challenges to the global supply chains, the quarter saw more storage income with positive contribution to EBITDA. And thirdly, we have managed to work on the cost base, for example, on SG and A, which had a $28,000,000 positive impact. Lastly, the consolidation of Pipapav contributed significantly to the EBITDA as well. On Slide 19, we show the equity weighted EBITDA for our gateway terminals, both consolidated and GBs and associates, which was largely on par with last year.
This further underlines the stability of earnings of this business. The cash contribution through dividends in the last 12 months has been €189,000,000 or 34% of the EBITDA with a payout ratio of 95% of net result. Turning to Manufacturing and Others. We reported a 2% increase in revenue in Maersk Container Industry and a 21% increase in EBITDA. This is partly due to the high demand in reefer containers and cost reductions.
Merge Supply Services has suffered due to a tough environment in the oil industry, however, has done a great job improving the EBITDA to CHF 13,000,000 from SEK 4,000,000 in Q3 2019. With that, I will pass the word to Soren for the full year guidance.
Thank you, Patrick. And as already stated, yesterday, we upgraded our guidance to 2020 from $7,500,000,000 to $8,000,000,000 EBITDA to $8,000,000,000 to $8,500,000,000 driven by the very strong momentum we have right now into Q4. Nevertheless, we still expect global demand growth to contract for the year of 4% to 5 percent. And we expect our own organic volume growth in Ocean to be below the market growth. We saw further improvement of volumes in October, and we expect the Q4 that we will be roughly flat compared to this Q4 of 2019 in terms of volumes.
Now in terms of capital expenditures, as Patrick has already been discussing, for 2020, we expect to be in the range of SEK 1,500,000,000 with the expectation of a very high cash conversion from EBITDA to cash flow. We expect to stay within well within the original guidance we gave for 202020 21 of SEK 3,000,000,000 to SEK 4,000,000,000 when all is said and done in 2021. For the years 2022 2021 to 2022, the accumulated guidance on CapEx is expected to be $4,500,000,000 to $5,500,000,000 again with the expectation of a high cash conversion. When comparing the CapEx guidance for 2021 to 2022, it's important to highlight that we have postponed some CapEx from 2020 into 2021, and we will continue to be capital disciplined. Our CapEx level is still below depreciation levels, and it includes investments in containers and vessel replacement and automation in our container terminals.
We remain committed to operating a network of around 4,000,000 TEU. I also want to emphasize, we have all the EEE ships that we need for the foreseeable future. Even though we expect volume growth in the coming years, we will only be back to 2019 levels probably in terms of volumes in 2021. So we do not see a huge need for growth growing the capacity. We have replacement needs because our ships do get older every day, but that will be in the 10000 to 15000 TEU size, where it's not cost effective to charter vessels.
And then one final thing on ships. There's a not it's not an untrivial technology risk that we are facing right now. We are working hard to find solutions to the decarbonization issue. And buying ships today that you get delivered 2 years from now and that lasts for 25 years is a risk when we do not know exactly what fuels that we'll be using from 2,000 and 30. So for all of those reasons, we are not anywhere near a huge ship order.
We need to replace. We need to invest in automation in the terminals. And also, we need to probably own more of the containers than we do because it's simply much cheaper for us. So with that, we will open up for questions.
Thank you. We will now begin the question and answer session. And the session will end no later than at 12. Our first question comes from the line of Dan Togo from Carnegie. Please go ahead.
Yes, hello. A question on growth potential in 2021 because as you mentioned, sir, you're almost sailing at full capacity right now and you will not expand the fleet. How should we view your growth and potential to grow next year? Will that come from just execution in the network and improving efficiencies?
Well, we had enough capacity in 2019 to carry the volumes. And if we assume that we will get into the same level of volumes next year, that would be a very nice growth from this year, up 4%, 5%. But within our 4,000,000 TEU of capacity give and take, then we will also have space to support our customers. We continue to work with network design on top of that to with the objective, of course, of squeezing more sellable slots out of our 4,000,000 TEU of capacity by designing the network better and getting even better at utilization also.
Okay. Then a question on how we should view rates then. I know it's a bit premature maybe to guide, so you shouldn't probably do that. But maybe just to get a feeling of contract rates. I guess clients have been extremely happy for their contracts this year, and they probably will pay for maintaining or even expand the contracts, the volume on the contracts in 2021.
But looking back historically or in history, what is the volatility around these contracts? Can they go up 10%, 20%, 30%? What is, sort of, say, the frame here? That's one thing. And then how should we view spot rates that are now historic high throughout 'twenty one.
I guess the current rates at these levels are probably not sustainable. We are now hearing both governments, Chinese and also client organizations starting to complain.
So I'm not then going to go into a 2021 guidance discussion. We will do that when we get to February. All I can say at this point is that we do indeed expect freight rates in the contracts to go up when we go through the contracting season over the next couple of months.
Okay. And then just finally, a question on Latin America. I hear you saying they are improving a bit here in October. So what are but is that the rates or volumes? And I guess capacity has been taken out of the LatAm trades into the more attractive trades in 'twenty.
But are you also seeing volumes starting to improve in LatAm now?
Yes, it's Patrick here. Yes, indeed, we are indicating that we see some progress in Latin America. It started late in Q3 and is confirmed now in October. That is a a sliding increase. We are still in negative territory compared to previous year, but it's slightly to improve.
As clearly, in Q3, we reallocated traffic to where the bottlenecks were, but I think we are able to also dedicate capacity to catch up on our strong hold of Latin America. And we look forward to this region progressively restoring its volumes, but we are not yet there.
Thanks a lot.
And the next question comes from the line of Patrick Cusette from Goldman Sachs. Please go ahead.
Hi, good morning, Soren and Patrick, and congrats on yet another strong set of numbers. And lastly, I'd like to ask 3 questions, please, and we'll give them 1 by 1. Just to come back on the Asia Europe contract points, I understand you don't want to guide for next year, but perhaps if you just draw on your historic experience, is there a reason to think there would be a disconnect between the current or the sort of the spot rates around the turn of the year and where the Asia Europe contracts are being reset? Or is the relationship typically quite close?
I don't think I can say much more, Patrick, than we do expect increase in rates also in the Asia Europe trade. The market, of course, always is the contract market is always impacted by whatever the spot market is at the time of negotiation. It goes without saying. And you can also see, of course, that the CCFI index has gone up quite a lot. So we expect to see that flow into higher contract rates also in Asia Europe.
Okay. Clear. And second question is just on the balance sheet. I mean, if I look at probably €7,000,000,000 or so of cash at year end, SEK 8,000,000,000 of financial debt against that. What's the scope to make the balance sheet a bit more efficient into next year and therefore the kind of magnitude of reduction in net financial charges next year?
If on the other hand, we want to keep most of the growth that then what would keep you from returning significantly more cash through buybacks in the course of 2021? Thank you.
Yes. I think as you rightly mentioned, I mean, the focus is on cash flow generation, right? So we'll continue to focus on free cash. We have an improved situation here. You have seen the rating upgrade by S&P and Moody's.
We're not yet totally where we want to be from that point of view. So I think there's still some way to improve to be a sub BBB, particularly in the case of Moody's. In terms of use of cash, we have indicated now a 1st share buyback. So that is a clear sign that we also always think of returning cash to shareholders. You should also consider our dividend policy clearly, which has been installed.
And if you look at the net result evolution, that will certainly imply as well quite a significant dividend cash out for 2021. So that takes care, in our view, of the return to shareholder at this stage. And then obviously, we'll have, as we mentioned, the normal CapEx. We'll also repay some debt still in 2021. So there will be plenty of uses of cash, and we'll continue with smaller other acquisitions in Logistics and Services to grow that business as well.
Got it. And last one, just looking at the logistics results. On an underlying basis in the Q3, they look very strong. And if you extrapolate them on a full year basis, they become quite a meaningful contributor. If you think about the EBITDA split in the coming years, I mean, what's sort of your ambition in terms of how big a contributor logistics should become?
And how much of that would you look to drive through external growth?
Yes. First of all, Patrick, thanks for noticing the growth in our logistics earnings. We are quite pleased with it. It's up, I believe, 88% when we adjust for the restructuring charge driven both by higher margins, meaning that we now have margins which are comparable with many of the best better players in the industry but also with a little bit of top line growth. So we continue we will focus on growing that part of the business.
We do believe that we have an opportunity for growing significantly faster than, if you will, organic. Then the market is growing by simply by selling more services to our customers. And then we will add to that with bolt on acquisitions like we have done this year. It's too early to for us to actually articulate a target. We hope to be able to do that next year, where we will be more confident to do that.
But this part of our business in our strategy is designed to become our growth engine.
Thanks very much.
And the next question comes from the line of Lars Heindorff from SEB. Please go ahead.
Thank you. Also a few questions from my side. The first is regarding the Ocean Pass and the capacity plans. You had around about 100,000 TEU idle during the Q3. And it sounds like that you, along most of the other competitors, are activating as much as you can given the demand that is out there in the market.
So can you give us an indication about the capacity and how much idle you expect to have going to the Q4 and maybe also into the early parts of next year? That will be super helpful. I mean it sounds like you will still be at least fairly cautious in your capacity plans.
Yes. Thanks for your question. I think as we highlight in the report, we basically have very, very low idle capacity. I think it was less than 2.6%, I think, in Q3. Given the pattern of demand, we expect it to be very, very low looking forward.
We are basically just looking at optimizing the network and being able to cope to the volumes, probably which will be covered to a 'nineteen level in 2021. As Asens mentioned before, we have no plan to increase capacity from the 4,000,000 TEUs that we have today, and that remains like this.
Okay. And then on the speed of the vessels, you indicated that you have increased the speed, which makes sense, given demand and lower bunker prices. Can you indicate how much? And is this something which you expect that will continue?
Yes. The impact is really marginal, right? So it's just a matter of having high capacity utilization and trying to improve a little bit the reliability, which has suffered as well in this high volatility of demand, we try to accommodate here and to satisfy the demand of our customers, but it's a marginal effect overall.
Okay. And then the last one is on the CapEx. I hear what you say about the need to invest both in containers and also at some point new vessels since it's after all quite a while since you've been doing that. But how much of that, if can you give an indication, will be spent on buying containers roughly?
Yes. I think we have indicated a range, right, for 2021, 2022, and that indicates that we will take those decisions as they come. It depends on the market price. Currently, it looks like and that's our assumption for this guidance that we will effectively be purchasing much more containers than leasing and therefore, reversing what we have done the last few years. The exact proportion will come as we go along in 2021 2022.
But it explains quite a bigger part of the increase in the of the guidance.
Maybe I can just add here maybe I can just ask. I think I really encourage you to look at our free cash flow more than the CapEx. I We're saying again and again, we're going to be disciplined on CapEx. But there are two parts to it. There's the CapEx that we spent and then there's the leases.
And we could have lower our CapEx a lot by leasing everything, ships and containers. And but it's just not the economically best things to do because if we're getting assets that we are going to use for the full life, then it's much cheaper for us actually to own it. So what is really important is how much free cash flow we generate, not what the specific CapEx number is because that is an optimization between leasing and owning.
That's very clear. Maybe just to follow-up. The share spot, you mentioned that is up to now 53% of the short term volumes. Maybe I'm not fully up to speed, but I'm not sure just how big a proportion of your total volumes, which is short term. Can you indicate how big spud is out of your total volumes?
So for the Maersk brand, which is then excluding Hamburg Sud and Sealand, our total spot volumes are about half of the total volumes. And so for the Maersk brand, we are looking at, right now, at 25% of our total volumes that are moving on spot. That's a very, very significant that's 25% of what 200,000 plus FFE per week. So it's in that order of magnitude. We are not equally advanced in the other brands, but we are getting there.
Okay. Thank you very much.
And the next question comes from the line of Neil Glynn from Credit Suisse. Please go ahead.
Just following on from the CapEx question. Just to check, the in the 9 month period, the lease payments were higher than CapEx. As you make the decisions you've touched on, should we see any change in that as we move into 2021 in terms of the actual lease payment through the cash flow statement falling or at least not growing? I'm just interested if you could also provide some clarity on the flexibility within CapEx should EBITDA disappoint from current levels. Then a second question on the Logistics and Services business.
You've obviously bolted on 3 businesses or you will do at least with it when you acquire KGH and you will do more as you touched on. But I assume that ultimately produces a collection of IT platforms that might be somewhat complicated and in need of simplification. So I'd love to understand what your long term thinking is on how to effectively wire that division properly. Will there be a big IT project eventually? Or how do you think about it?
Yes, thanks. Neil, I'll be happy to take your questions. As on the lease, you see that the actually the quarterly expense is actually fairly stable at around $400,000,000 every quarter, dollars 3.97,000,000 I think in Q3. That is stable compared to previous year. As we go and improve or increase a little bit the proportion of CapEx versus lease, you will see this amount decrease slightly over the years to come.
And I'll keep it at that. I think we can come back to a more detailed guidance when we come up with 2021. But that's the tendency clearly that you will see. In terms of our reaction, should EBITDA deteriorate on CapEx, I think clearly, the focus, as Soren was saying and we mentioned as well in the call earlier, the focus is free cash flow, right? So if free cash flow comes down, we'll have to have measures to increase free cash flow.
And that will imply reduced CapEx and further measures to improve EBITDA.
Yes. Maybe I can just add to that what Patrick already said. We only have $1,500,000,000 of committed CapEx, forward committed CapEx. So by that, we have a huge flexibility. I mean, none of this none of the almost none of what we have in plans we already committed to.
So we can decide not to do it if things change materially.
And coming to your second question on L and S, you're absolutely right. It's a key vector of growth and increases profitability at good levels. So the contribution is really becoming noticeable and important for the group. It implies, however, very different lines of business, which come with different IT systems. And as we purchase additional add on acquisitions, they all come with the legacy systems, which is why we have a major initiative already ongoing, to your point, of building new IT platforms, which is terribly important to enable and integrate the services we offer to our customers.
The whole point is here to build the integrator, which is really creating transparency on demand and cost and service delivery levels throughout the whole group. That implies new IT system, which are currently being built. So it is not something which will come on top. It is currently already a major effort in the group and will continue to be for the next few years, but it's already a part in our cost base to that aspect of your question.
Thank you. And then just to confirm on that, is there more of that through CapEx or OpEx at the moment, the IT spend?
Vaz, vast majority is OpEx.
Great. Thank you.
And the next question comes from the line of Satish Sivakumar from Citigroup. Please go ahead.
Hi. Thanks for taking my questions. I have two questions. So firstly on M and A, do you see any opportunity in the Ocean segment, especially the cash strap liners currently out in the market? And secondly, on the CapEx, in terms of your new orders for replacement vessels.
So what is your preference in terms of vessel type like LNG versus dual fuel or go with the scrubber fitted vessels?
So first of all, on M and A, if your question is whether we are going to acquire in the Ocean space, then I think I can say that we have absolutely no plans off. With the acquisition of Hamburg Sud, we believe we achieved the scale and competitiveness that we needed to be successful in Ocean for quite a while, if you will. So we do not have any plans to participate further in consolidation in Ocean. In terms of vessel types, we as I said, we are very much aware of the technology risks for ordering ships at this point. We would ideally like to figure out, and that's what we're working very hard on, what the future fuel should be and then start building ships that will fit that type of fuel when we need them.
We are not we don't believe that LNG is going to play a big role for us as a transition fuel because it is still a fossil fuel and we would rather go from what we do today straight to a CO2 neutral type of fuel. But that would be years out in the future, I suspect.
Yes. And just sort of follow-up on that, right? So but in the near term, there is no other alternative that is available right now. So the options are it must be one of those 3 vessel type, right? And do you have any preference?
You said LNG you're not keen on. So is it fair to assume that it will be more of a dual field type vessels?
Since we're not really planning to order any ships anytime soon, frankly, we haven't really made up our minds on that question.
Okay. Yes, thanks for the clarification. Thank you.
And the next question comes from the line of Markus Belinda from Nordea. Please go ahead.
Yes, thank you. A question on volumes. You're underperforming the market quite substantially when it comes to volume growth, and then there is, of course, a strong mix effect. And I'm wondering if there is anything else that explains that underperformance. You did mention that you haven't lost market share with freight forwarders, but we've seen some news articles about how Schenker has left Maersk, for example.
So I'm just wondering if you can elaborate a little bit on that dynamic. Thank you.
Well, we have our relative share of freight forwarding business has been constant for the last 5 years. And when I look at our freight forwarder customers, the net promoter score, so our customer satisfaction is on par with the rest of our business. When I look at the spot product, it's a forwarder product. More than 80% of the customers are forwarders, and we've seen fantastic uptake. So I think all we can say is that as any other business, you win a customer every now and then and you lose a customer every now and then.
And so we are very comfortable with our position with our freight forwarder customers. So I ascribe the slight market share loss in Q3, mainly to mix where obviously, the carriers that are mainly exposed to the have had a fantastic quarter, where we are underweight in the U. S. Now. Now it looks like, if you will, the party is coming to where we are overweight or equal weight in Asia Europe and Latin America and so on.
So we will probably, relatively speaking, benefit from that in Q4.
Understood. And one more question, if I may. I think I heard you say that you wanted to own more of the containers you use, But I was under the impression that you already own a fairly large share of your containers. If you could just indicate how many containers you or what share of the containers you already own and what kind of CapEx we should expect from buying more containers?
Yes. No, clearly, I think we own quite a lot of our own containers, particularly in the reefer segment. But what we are indicating here is the orders for new containers, where in the last few years, we have focused on going more for leasing, and we are coming back to what is actually the standard case to own the containers because economically, it just makes much more sense to own
Okay. Okay. Thanks for that clarification. That was all for me.
And the next question comes from the line of Muneeba Kayani from Bank of America. Please go ahead.
Yes, good morning. On Maersk's spot, what are you targeting in terms of the percent of volumes would be done on Spark?
Could it be 100%? And can you talk about what's the progress on the other brands? And my second question is around vaccine transport. And is that something that Maersk would be involved in?
Yes. If I take the latter first, we expect to be involved. We already have one contract for transportation of 1,000,000,000 doses of vaccine. And we will be involved in it because we think we should we that we're all that work in logistics should do everything they possibly can to help distribute the vaccine in the most efficient manner. I don't think it's going to be a huge business for us in that sense and not something that will impact our financials as such.
But we want to do whatever we can to help. On spot, we actually do believe that we can get to very, very high percentage as far as our spot business is concerned. At some point, of course, we have to take into consideration that it is actually a two way commitment product. So meaning that we are committed to load and our customers are committed to show up. And therefore, at some point, we will run out of inventory of slots because we also have our customers to take care of.
But at the end of the day, we expect to come very, very high up in percentage points. And then maybe we will develop some other digital products with more flexibility and so on. So that's where we are. On the Hamburg Sud brand and so on, it's still quite early days for spot, but we're seeing very good take up in line with what we saw on the
Maersk plant. And the next question comes from the line of Sam Bland from JPMorgan. Please go ahead.
Hi, there. I have two questions, please. I guess the first is on this CapEx point. You mentioned it's more sort of moving from leasing to owning rather than adding capacity. I guess interested in what's changed there?
Is it Maersk's capacity to own these things outright has increased? Or is it more that the cost of leasing them has gone up over the last few months or quarters? And the second question is on obviously we look at the STFI and CCFI and see that's very strong, but that doesn't capture every region. I'd just be interested in some comments on what you're seeing in other regions. Have they also increased or improved quite strongly in recent months?
Thank you. [SPEAKER JEAN FRANCOIS VAN BOXMEER:]
Yes, coming back to your CapEx question. I think it's a choice of how do you spend your money. And the cost of leasing, because it has been low now for quite a few years, but just if you compare our financing and cash flow possibilities today, it is just reverting to the normal fact that it is economically viable to actually own the containers, particularly you always have a good resale value as well, and that is actually quite a nice component. So it is just a very good business case too on your own containers. Now looking at the rates.
Yes, clearly, I mean, the public side rates are clearly the more Asian rates. But as you have probably noted as well, in the last few weeks months, rates have started to come up, particularly in Europe as well. And that's what we indicated in the call as well, that this is not yet totally in our P and L given the way that we do revenue recognition. And that will be one element that contributes to our high guidance for Q4 because we have this latest increase in rates on the short term more to Europe, for instance, not yet in our P and L.
Okay, understood. Thank you.
I will now hand back to the speakers for closing remarks.
Yes, and thank you. I would like to leave you with the following remarks. Profitability in Ocean continued to improve, supported by our strategy but also supported by market momentum in the Q4. It's very important for us to say that we are honoring our long term contracts, and we believe we have the right geographical mix to stand very resilient in the coming quarters. We saw very positive impacts to profitability in Logistics and Services, supported by acquisitions.
And while our Terminals and Towage business continue to be report very resilient performance despite the lower volumes. We have emphasized many times on the call here, and I'll do it again, that we continue our strong free cash flow performance. And I really encourage that you focus on CapEx and do not get hung up on CapEx versus lease liabilities because that's really what matters. Our full year guidance was further upgraded yesterday, and we now expect an EBITDA between SEK 8,500,000,000 driven by the strong momentum. And then finally, of course, as we already all know, we have started further distributions to shareholders, and we will also, as Patrick alluded to, be paying a very nice dividend next year.
So with that, thank you for listening in, and have a good day, everybody.