That was very loud in this room. Good morning. Welcome to the Q4 presentation of Wallenius Wilhelmsen, and I'm very happy to see so many in the audience and a lot of people on the stream. This is a very good day for Wallenius Wilhelmsen. We are delivering record results. We are delivering extremely strong commercially in terms of book of business. We are improving our operations, and we still think that there is more to come, and 2024 will be somewhat better than 2023. This is a very positive report from us, and I'll take you through some of the headlines.
We deliver an EBITDA in Q4 of $454 million. We have strong EBITDA in all our segments, with shipping being the strongest on $392 million. We have logistics delivering $43 million, and we have government delivering $32 million US dollars. In the quarter, we have concluded several multi-year contracts. We have announced some of them. There are more to come. Altogether, these constitute a significant renewal of our book of business, and these are, of course, done at current market rates. For the full year, we're delivering an EBITDA of $1.8 billion, a record result for us. We have a net profit of $967 million for the year.
That leads us to a record dividend of $1.14 for 2023, and this represents a maximum payout within our dividend policy of 50% of net profits. In addition, we propose to change our dividend policy to move to pay-as-you-go and will, as of 2024, have a dividend policy with a pay-as-you-go every half year, meaning that there will be likely an additional dividend paid following the first half in 2024, together with the second tranche of the dividend. Torbjørn will come back more to this. We are still optimistic for 2024. The Panama Canal and the Red Sea constitute significant challenges to us, but despite this, we are optimistic that 2024 will be somewhat better than 2023.
So let's take you through some more details and why we believe it will be better in 2024 and why 2023 came in so strong. Looking at the full year, starting with the numbers, we are up 12% year-on-year on EBITDA for shipping and significantly up in the other segments. Both shipping and government services are up more than 60% in terms of EBITDA for the year. For logistics, this is primarily driven by increased volumes. I'll come back to that in our processing, and in particular in autos. In government, this is very much caused by the security situation in Europe.
We are an integrated part of all moves happening in the Atlantic related to government movements for the US. We're also very proud that we're delivering on our goal towards net zero. We improved our emission profile and the emissions per unit transport by 9% during the year. We started to introduce biofuels. That will come with a much stronger volume in 2024. I'm very happy to see that in more or less all the contracts we've done with customers, there is an element to pay for decarbonization. We expect in 2024 to have more than 10% of our consumption being biofuel.
We're also very happy in 2023 that we delivered a significant improvement in our book of business. 25% of our contracts were renewed. Some of them have been announced. Some are to be announced. In general, these are delivered on market rates, and I'll come back to a little bit more details on that. And then also, very important for us, we started our journey towards Net Zero with a new generation of vessels, the Shaper Class, which is also a class of vessels that are purposely built for our trade, where we have big vessels, big flexibility, and a big opportunity also to do high and heavy and break bulk, which is a specialty for Wallenius Wilhelmsen.
So we are very happy with what we have delivered in 2023, despite quite some significant challenges, both related to geopolitics in the Red Sea, drought following climate change in Panama Canal, and also a lot of congestion all over the world. So I'm very proud of our team and how we've been able to adapt to a constantly changing market. Torbjørn will take you through all the detailed numbers, but we just need to show you the highlights. We are continuing to deliver a very strong EBITDA, and this is the last 12 months' average. And as you also can see, we're continuing to have a very high cash conversion.
So our cash conversion is pretty close to our EBITDA. And we're still delivering a strong return on capital employed, more than 16%, and up two and a half percentage points since last year. Then I'll take you through some of the more details on each segment, starting with shipping. Shipping has, again, had a quarter that has been sold out. And the reason why there is somewhat reduction in the EBITDA are different factors, but one of them is certainly the situation in the Red Sea. And for those who can remember, that situation changed dramatically in December, and we decided, as the first RoRo operator, to start avoiding the Red Sea and go around the Cape of Good Hope.
And I'll come back to a little bit more what that means for us, but that's a big challenge. When it comes to the Panama Canal, I'm very happy with how our team has performed on that. We were early out. We secured preference slots to transit the Panama Canal, and so far, we have not had a big impact of the Panama Canal in our operations. Getting into some more of the details, you can see on the left-hand side that we have somewhat lower volumes transported in Q4, and this is partly due to effects of longer trades around the Cape of Good Hope and some of it is seasonality.
There's also an element of one less vessel in operation as we redelivered a vessel back to the owners, a chartered vessel. The net TCE earnings, we have been doing a little bit of cleanup on the net rates. Previously, there were some double countings, so now we have restated all historical numbers so they are on the same basis, and we delivered an improved net rate in the quarter, despite the fact that we saw a negative trade mix. And what is a negative trade mix? That means that we, relatively speaking, had less volumes ex-Asia, which is our highest paying, and relatively speaking, more volumes out of Europe, which is lower paying.
So this shows that there is an underlying improvement in rates coming into our numbers. We have also restated the time charter equivalents, so there is no effect of fuel in them. These are net time charter equivalents. As you can see, there's also a somewhat downtick in that in Q4. We believe that is more seasonal than a new trend. The reason why we are so busy is that the demand for services in shipping is increasing and increasing fast. Year-over-year, we expect quite significant growth in the transported seaborne volumes, and this is very much caused by China.
We have illustrated that. On the left-hand side, you can see China in the orange columns. China continues to grow, and it's mostly replacing locally produced volume. Moving to the middle segment, you can see where the growth is coming. China had very low exports in 2019 and now growing up to significant seaborne volumes in 2024, expected. The biggest growth comes into Europe, and these are, to a large extent, transported on RoRo carriers. In some of the other more marginal segments, you can see other modes of transportation, but on the big volume trades, RoRo carriers and Wallenius Wilhelmsen are the ones carrying the main volume.
So in general, we expect the Chinese export to continue, the export growth to continue, and their very successful introduction of EVs, in particular in Europe, to continue. So in general, we believe that there will be more than enough demand for car transportation in 2024. The other segment we have, which is now a little bit short of 30%, is high and heavy: big excavators and tractors and whatever you have, agricultural machines. In this segment, we see that it's flattening out, and in volumes globally, it may be a little bit down in 2024 as compared to 2023. But then we have to remember that 2023 was a record year.
When we meet with our customers, they say that these are enormous volumes, and even though they expect somewhat slower volumes in 2024, it's still the second highest on record for them. We see that there is still strong demand for good backlogs in mining and construction. So where you see a small weakening now is in the agriculture sector, where we see that the actors are expecting 5%-10% down in volumes in 2024 versus 2023. But all in all, there are still very high volumes on high and heavy, but we expect that we will probably see a little bit of a shift from cars to high and heavy in our cargo mix in 2024. One big factor in the shipping segment is, of course, the order book and the size of the order book.
There's no doubt that there is a significant order book set up. Right now, it's, I need to double-check, now 36% at the end of Q4, and we have seen some announcements also in Q1 we expect. So this will probably continue to grow. We have previously said that we believe that the RoRo industry towards 2030 needs these vessels. There's been no growth for 10 years. There's a significant renewal needed in the fleet. There are new environmental requirements coming in that will both phase out vessels and slow down vessels. So these vessels are needed.
However, a lot of them are expected to come within a relatively short time window, starting at the end of this year into 2025 and partly 2026. So then the big question is, of course, will they be delivered as planned? We dare to say that we doubt that all the plans will be delivered in time. We have demonstrated that in this graph. When you see the orange columns, well, these are different yards that have RoRo vessels on order. You can see that five of them have 66% of the global order book. Hardly any of these have delivered RoRo vessels before, and they have an enormous order book of RoRo vessels.
We have ordered at the one that says CMGL, that's Jinling. That's a yard that has some experience. Well, not some. They have good experience in building RoRos. Most of the yards do not. Then you can see a similar picture for some other yards as well. So based on experience from the past, when new yards are entering a segment and they have an enormous order book, typically we will see delays. We don't know how much and how long, but we expect the order book to be somewhat delayed as compared to what's in the actual contracts.
I also said that we are very happy with 2023 in terms of renewal of our business. I think our team has done a tremendous job together with our customers to grow with those customers who really share our journey. When we say sharing our journey, that means that we are partners on shipping, logistics, and even digital solutions. We are partners on sustainability. We are partners on making sure that we have predictability in terms of volumes and resilience. The contracts we have made, more or less all of them have an element of all these things in it. In 2023, we renewed 25% of our shipping book.
We also did other renewals, but the major year in shipping. The rate increases varies. That depends on the rate we had in the previous contract when that was made. Also depends on the volume of the contract, the trade route of the contract, and so on. Typically, we see rate increases in contracts somewhere between 20% all the way up to 100% and more than 100% rate increase, where we are more in the upper band than the lower band of this range when we renew contracts. We also have a big year coming up in 2024 for shipping.
We will renew close to half the book of business in shipping in 2024, and this constitutes a significant part of our shipping revenue. And these are both on large auto contracts and large high and heavy contracts. In terms of fleet efficiency, we have been working systematically to reduce congestion, congestion being waiting time in ports. And we have been successful in that, and you can see on this illustration that congestion goes down, and that is reduced in average around the globe for us. The problem was that just when we got to manage the congestion better, we had the Panama Canal coming up situation in last quarter, and now in fourth quarter, we had the Red Sea situation coming.
And just the Red Sea impacts on trade are larger in terms of lost days than the reduction in congestion. So overall, fleet efficiency, meaning the effective days we have a fleet available for cargo, are not changed quarter-over-quarter, and we expect this Red Sea situation to remain for a while. The reason why we pulled out of the Red Sea was that we realized it was not possible to send a vessel through the Red Sea safely, and we never compromise on safety. So for us, it was a quite easy decision to make. But being the first player, of course, it was also challenging to communicate this to our customers and to our partners.
We see that putting the vessels around Africa instead of through the Red Sea reduces our total capacity on an annual basis with 4% to 6%. There is no sign of improvement in the safety situation in the Red Sea, meaning that we foresee that transiting around Africa is the new normal for now, and we plan accordingly. We will not compromise our sustainability goals either, so we are planning those deviations within the targets we have for reducing carbon emissions. So we will not overcompensate with speed. So in general, summing up shipping: fully utilized fleets, and we expect that situation to continue.
Logistics had a very good development over the year. I'll give you some more details, but I'd like to give you one example of a very specific story that we have seen, and that's in Australia. We're a significant player in Australia on big equipment. We call it EPC, Equipment Processing Centers, and we are involved in logistics and finalizing equipment for all the big players that are targeting the agricultural sector in Australia, targeting the mining sector, and also the construction sector. So we are putting together excavators in our processing centers.
We are completing trucks and tractors. We are building and transporting and managing the full flow of new agricultural machines coming into Australia. This segment has grown significantly through the year, and we are now a leading player in Australia in both moving, completing, and orchestrating everything around large equipment coming into Australia. We have talked a lot about previously in the year, the Mirra Terminal, which is a terminal operation that has also been going very strong. But in particular, our EPCs have delivered significant growth, very good bottom line, and customers that are really strategically investing in using our infrastructure.
Looking a bit more at the numbers, we are heavily exposed in the logistics business on the U.S. market, and this is very deliberate. We believe the U.S. market is already a significant market. That means cars produced in the U.S. or around the U.S. and consumed and bought in the U.S., never seeing the oceans. We have a significant presence in that market. We are a large processor of cars, both at the end of the factory line or factories. We do inland transportation. We have a pure digital business doing only inland transportation. We have terminals, and we have even digital solutions where our customers are using our infrastructure to be able to deliver digital services to their dealers.
The U.S. is now getting close to pre-COVID levels in terms of volumes, but there is still upside, and you can see that reflecting in our activity on the vehicle processing centers. And we've been able consistently over the last years to improve the margins in this business, partly because we are repositioning ourselves to do more value add for our customers. We are installing more valuable things in the cars, and we are delivering more valuable services to our customers. In the High and Heavy, it's more sideways. And as we said, we think we are not on a peak, but probably on a plateau in terms of volume.
Our terminals continue to be delivering strong. In the inland segment, that is very much that we are orchestrating inland transportation, partly in the U.S., and we have seen a somewhat slower quarter in that sector. In general, we have seen a year-over-year significant improvement in our logistics business, and we believe there are very good growth opportunities both organically and inorganically in this segment. In particular, we see that the U.S. is becoming a self-serviced market. We talked earlier about the Chinese exports of EVs. That's primarily a non-U.S. phenomenon.
The Chinese players are not able to sell significant volumes of cars in the U.S., and they're not able to establish production of EVs in the U.S. Other companies are, and the U.S. companies are, and we see a very big growth in battery factories and new car manufacturing in the U.S. The U.S. has a clear agenda of being more self-served with cars. This is perfect news for logistics business. We see a growth year-over-year in terms of cars produced in the U.S., consumed in the U.S., or in the neighboring area. We are partnering with our customers both in the U.S., in Canada, and in Mexico, delivering services all the way from the end of the factory line.
We use our seaborne network to transport cars. We have an inland network to transport cars, and we follow our customers all the way through to the dealer and the consumer. So the U.S. is a market where we are strongly positioned for more local production of cars. I'll close with sustainability before I have Torbjørn coming in. And as you might notice, in the quarter, we partnered up with some of the big container lines being Maersk, CMA, Hapag-Lloyd, and MSC. During COP, we announced very specific targets and very specific asks when it comes to decarbonization. I'm very happy to see that there is a collective voice around our industry saying that we need to have a date where we stop ordering fossil fuel vessels.
We need to have a market mechanism, and we have a very specific proposal on how we can do that. We need to make sure we align all regulations so we start significant decarbonization on this side of 2030. We have already started, and I'll come back to that. But first, on safety, we are delivering year-on-year good progress when it comes to our accident frequency on lost time incidents, both in shipping and logistics. But tragically and unfortunately, we had a fatality on one of our vessels in January. During cargo operations on one of our vessels, we had one of our crew members that lost his life.
This is tragic. It's unacceptable. I can assure you that we do everything we can to get to the bottom of this accident. We have a firm belief that every single accident can be avoided, and we do everything we can to do so. On decarbonization, we have seen a year-over-year very strong trend. Again, I think we have had a fantastic team, and I would even state a world-leading team when it comes to energy efficiency, driving in technology, everything from artificial intelligence on the bridge of the vessels all the way down to changing bulbs and a lot of technical measures. We see that these are delivering results month-over-month, quarter-over-quarter, and year-over-year. This trend will continue.
We saw a little bit of an uptick in Q4, partly due to seasonality. It's bad weather, and also partly due to the rerouting around Africa. But in general, the long-term trend is very strong, and we are now also introducing a significant share of biofuels. So we will be able to deliver on very ambitious decarbonization targets. So then I'll leave it to Torbjørn to talk you through the details on the numbers. Torbjørn?
Thank you, Lasse! See the microphone now? Perfect. First of all, good morning, and to the romantics in the room and the romantics on the call. Happy Valentine's Day! Very happy to be here to present the results for the quarter and the year. I think as we stand here today, we're extremely proud of having delivered an exceptional year with strong performance from all segments. As you can see on the snapshot behind me here, we deliver an EBITDA growth of 18% year over year. We have strong cash flow in the business, and that has allowed us to propose a maximum dividend in terms of the FY23 results, as well as a new dividend policy, which I will come back to.
We are—do you apologize? I have it on the page. There we are. Sorry. We're so excited about the Valentine's Day. Yes. So we are proposing a record dividend to our shareholders this year, and we're also proposing to transition to a new dividend policy in which we will pay as you go, and I will come back to that in a little bit. On the right-hand part of the slide, you can see that we're delivering exceptionally strong on all our financial targets, which are, call it, over-the-cycle targets, with a strong return on capital employed, a strong equity ratio, and a leverage ratio of 1.1 times.
Moving on to the quarter, the quarter was another strong quarter for us, despite a small dip in the EBITDA. Total revenues for the group were $1.28 billion, which is 2% down from the previous quarter. And I will come back to that. The EBITDA was $454 million. And if you were to exclude some of the one-off costs that we had in the quarter related to discretionary bonuses and a security transaction cost, this quarterly EBITDA would have been $468 million. We've also seen a very strong increase in cash and an overall decrease in the net debt position.
So if we go into the overall business and the segments, apologies for those at the back of the room, some of the text might be a bit too small, we had shipping. They reported EBITDA of $392 million. The reason why it is a little bit down is the lower ships in operation that we see in the quarter and the resulting decrease in volume that Lasse talked about as a result of having to reroute around the Cape of Good Hope. But what we have seen is that we've seen an improvement in the voyage efficiency because we're carrying more CBMs to the port that we are calling on.
Logistics reported revenues of $298 million, which is up 3% quarter-over-quarter. And this reflects a strong performance in the auto business where we've seen increased volumes and an increase in accessorization activities. We've also seen a strong terminal performance, particularly related to Black Marmorated Stink Bug seasonality, which always drives performance on the terminal side. The EBITDA was $43 million, which is slightly lower than the previous quarter. This is mainly due to a $7 million one-off related to the discretionary bonuses.
Government continues to perform well. Government was a little bit down this quarter, and that is mainly due to seasonality, in addition to the fact that one of the vessels was on a scheduled dry dock. This is a business which, of course, has seen volumes tick up as a result of the ongoing conflict in the Ukraine. If we then look at the sort of revenue bridge and the EBITDA bridge, I've talked a little bit about the volume effect. As you can see on the top there, it's a $23 million volume effect, which has been offset by a $7 million improvement in rates. Net fuel or fuel surcharges in the quarter were negligible.
And as you can see, logistics has performed well. If we look at the EBITDA and we, so we've covered the revenue change of $30 million, we see that we have lower OPEX, cargo and voyage in particular. And this has been slightly offset by an increase in fuel cost. And we have seen some higher SG&A expenses, one related to the one-off bonus I talked about and another related to a security transaction tax. If we look at the cash flow conversion, you can see that we continue to deliver strong cash flow conversion and strong underlying cash flow.
The slight drop you see in the LTM operating cash flow is basically because you excluded the fourth quarter of 2022 from the rolling calculations. The LTM cash conversion continues to increase, and this reflects the company's solid cash generation. This is also reflected in the LTM free cash flow to equity, which you can see on the right-hand side. Moving over to cash, if you start with the operating cash flow, $518 million of operating cash flow, very, very strong. We had some net CapEx. This relates to installment on the new builds that we have.
We have a dry dock and other investments in tangible assets. We see that net debt development consists mainly of scheduled repayments of debt. And then we also paid the final installment of the 2022 dividends in the fourth quarter. Overall, we saw a $128 million increase in cash in the quarter, contributing to our strong financial position. Moving on to the balance sheet side, as I mentioned, we have an equity ratio at 46.9% at the end of the quarter. The net debt declined again due to debt repayments as well as cash generation.
We did cancel one RCF and put in place a new one. But the effect of canceling the first one was that we freed up five vessels, which are now unencumbered. We have undrawn credit facilities, just shy of $400 million. As you can see on the bar chart on the right side of the page, we do have a maturity on the bond side this year. This we expect to repay with cash and not refinance. So moving on to the dividends, as mentioned by Lasse, we do propose to pay 50% of net profit for 2023. This represents $1.14 per share and a total payout of $482 million.
This will be paid out in two installments over the year. And you can see the sort of flow of declaration and payments on the right side. And the dividend itself represents a 34% increase from the dividend that we paid for the last fiscal year. We also are introducing a new pay-as-you-go policy, which is suited to, call it, our structure, our internal cash flows. And this will then be, we will seek a mandate from the board at the upcoming AGM. And the board is seeking a mandate to declare and pay dividends based on the first half of the year and the second half of the year.
That means that the first potential payment, which, of course, the board needs to resolve after first half, would be paid along with the second tranche of the 2023 dividends, which comes in October this year. So we're very pleased with this new policy. We think this shortens the time between results and payout to our shareholders. It is also well-suited in terms of our group, which has different cash generation units, to lift the cash up and pay this. I also want to note one of the reasons why we are paying down debt in terms of the bond that I talked about on the previous page is that bond debt, of course, is at ASA level.
By taking bond debt out at ASA level, we also free up dividend capacity because interest and principal payments from ASA will no longer be there as we repay bond debt. But we still aim to keep some bonds out there. So with that, I will hand over to Lasse for the prospects.
Thank you. The prospects, as we see it, we saw a very strong 2023, and we believe that the 2024 will be somewhat better than 2023. This is due to very strong demand in the car segment. We expect to see China continuing to grow their exports. We believe that we have a new high level on high and heavy, not necessarily growing, but very strong demand. So in general, the demand for services will increase. What has happened since Q3 is, of course, a larger uncertainty on geopolitics and the Red Sea situation in particular. As I said, this will take out 4% to 6% of our capacity if it continues for the whole year.
But despite that, despite the uncertainties in Panama, we believe that 2024 will be a better year than 2023. So that concludes the presentation. And then, Anders, we open up for any questions in the room or on the chat.
Vi skal også se om det så langt vi kan ta med den. Skal vi ta den til slutt?
Okay. We can start with questions in the room. And if you have any questions, please state your name and company. So any questions from the audience? Seems not to. Seems not to be? Clear? So pretty clear. There is only one question at the chat so far. That's from Erik Hovi at Nordea. And it's basically for you, Torbjørn. With a new pay-as-you-go dividend, what is holding you back from a quarterly frequency to reduce the lag to market performance even further?
Yeah. As I said when I talked about the dividend slide, the semi-annual pay-as-you-go is much better suited to us given our corporate structure. Keep in mind, we do have different cash generation units. One of our units is EUKOR, where we own 80%. In EUKOR, the max dividend frequency you can have from a Korean company is twice a year. And of course, EUKOR is an important cash contributor, also up to ASA level. So by having a semi-annual pay-as-you-go, we also have a dividend policy which is matched to the flow of cash within our system.
Okay. There are some additional comments coming back or coming in here. Let's see. What is happening here? Here's one from Eirik Haavaldsen at Pareto. Can you elaborate on the discussions you're having with your clients in reference to the Red Sea situation?
Yes. And of course, these are ongoing discussions. For all new contracts, if we have any spot contracts which we do not have that much, or for new contracts, this is, of course, covered in the contract negotiation. For the existing customers, this is an ongoing dialogue. As of now, we have taken the cost implication of the situation. But in general, we are partnering with our customers, and we also expect them to cover some of this if the situation remains. But for now, the majority of the cost is covered by ourselves.
Okay. Then there is one from Petter Haugen at ABG. What does somewhat better in 2024 compared to 2023 mean?
Yeah. Okay. So you read report with diligence. That's good. We said after last quarter that we expected 2024 to be better than 2023. This time, we have said somewhat better, meaning that there's no doubt that the situation in the Red Sea will have an impact on our numbers, and we already saw it in Q4. However, we don't think that it's so material that 2024 will be lower than 2023. So we still believe that we will be somewhat better in 2024, but with a little less confidence on the global situation and the uncertainty related to the Red Sea. But of course, there's also upside if this situation is resolved.
Okay. Then there is one from Clément Molins . Could you provide some commentary on the amount of volumes annualized coming open throughout the 2024 and 2025 period?
I assume they're then referring to contract renewals. We have not given any statements for 2025 yet, but we did for 2024. 45% of our volume is coming up, which is basically half the book of business. We have already started the process on most of them. We are having customers that have been working with Wallenius Wilhelmsen for decades. They are basically building their logistics around our services, both for shipping, for terminals, for processing, and for inland transportation. So we expect these contracts to be renewed, and we expect to renew them at current market rates.
Okay. Then there is one from Fredrik Ness at SEB. Are you seeing data points across your logistics assets which indicate that it takes longer time to sell/move Chinese EVs in Europe? And are vehicles taking longer to move to dealerships?
We see a little bit of this, but it's very brand-specific. So some brands are moving slower, other brands are moving extremely fast on cars. So the general picture, I would say, not that much on cars. We do see it not only in Europe but globally on the dwelling time on high and heavy. So in general, high and heavy equipment is sitting longer in our facilities than it did a quarter and two and three back, indicating that there is a little bit of an adjustment in the demand on high and heavy. But in general, we're seeing quite strong volumes in both segments, but a little uptick in dwelling times, particularly in high and heavy, a little bit on cars.
Okay. Then there is a question from Keith Wallis. Do you see any threat on China EV exports from the European—or probably to the European Union—and the probe into China subsidies for EV production?
Of course, this is a big factor in our industry, and for sure will have an impact if Chinese EVs are not allowed into the European market. There is a probe going on. Nobody knows what comes out of that. But we have to remember that this is a very complex situation for Europe. First of all, you have a big part of the European OEMs that export a lot to China. The German OEMs have 25% to 30% of their bottom line delivered from the Chinese market. More or less, all the European producers are depending on Chinese supply chains to build batteries and equipment in their new factories.
So Europe and China are much more tangled together on the EV value chain than what we see in the U.S. So there's not an easy disconnect for Europe. If it should happen, and I'm saying if, of course, it will impact global trade.
Then there is another one from Erik Håvoldsen at Pareto, and it's probably for you, Torbjørn. Are you opening up for extraordinary dividends, and what will it take to pay such dividends?
Well, extraordinary dividends are something that is also captured in the new policy. And that is, of course, a discussion or a decision that the board would have to make depending on the circumstances. And I can't stand here and sort of presuppose when they will declare it, but that is, of course, a dialogue we would have with them if and when that would happen. But just adding to that, I think 2024 will likely be an extraordinary year because we're changing the policy. So we're having the full dividend from 2023.
And also, if the board wants and the AGM approves the new mandate, we will have a second tranche of—or a first half dividend delivered together with the second tranche of the 2023. So in a way, 2024 will be an extraordinary year for dividends if things materialize as we plan.
And this one is from Kristoffer Barth Skeie at Arctic and along the same path. Can you elaborate on the new dividend policy? You mentioned that the board, from time to time, may consider extraordinary dividends and/or share buybacks to enhance shareholder return. Is it correct that this will be on top of the 30% to 50% payout?
Yeah. So if we just take the new policy as such, what we're asking the AGM to give the board is an authority to declare and pay dividends based on the first half and the second half of the year. In addition, the board will have an authority to declare and pay an extraordinary dividend if they so choose. Then we do have today a buyback authority from the AGM, which we haven't utilized. That is, of course, a mechanism which will continue to be there. And buyback dividends are also sort of a decision and a choice that the board would have to make at the appropriate time if the circumstances allow.
Yep. Okay. And then there's one from Frode Mørkedal at Clarksons. And it goes on cost recovery linked to the Red Sea. Are you seeing any ways to recover as the container lines are doing in terms of cost?
Yeah. As I said, this is a subject that we're discussing with our customers. We have to remember that there are two sides of this recovery. One thing is the increased fuel cost for routing the vessels around the Cape of Good Hope. That is more or less compensated by the Suez Canal fee. So by removing the Suez Canal fee, adding the fuel cost, that more or less equals out. So this is mostly lost earnings days, meaning that we lose 4% to 6% of our earnings days during a year, which is less obvious, obviously, to change in existing contracts.
But this is a dialogue we have with customers, and we continue to do it. Container lines have a much larger share of spot and short-term business and will be able to reprice this while we have a long-term book of business. But having said that, we have a long-term partnership with customers, and we have a very good experience with finding solutions for them when things like this occur. But for right now, we are covering most of the cost.
Okay. Then from Petter Haugen, an additional question on rate increases. We said that the rates are up 20% to above 100% for the year. Are there any typical differences between type of cargo and geographies in these upticks?
In general, we see very strong upticks in Asia to Europe volumes, which is natural because that's where we see the growth in volumes. While on the lower side of the segment are more typically high and heavy contracts that have been much better priced previously and where we have more of a global trade pattern, not only Asia to Europe. So we should expect to see Asia to Europe being more on the high end of what we have done and on the lower end, other parts of our business. But in general, as I said, the average is well above 20% when we are now when we in 2024 renewed our contracts.
Okay. Then another one from Erik at Nordea, and it is a bit more granular in terms of our outlook. He's asking how the first half is looking compared to the second half of 2024.
Yeah. We have not made any specific guidance to the first half and the second half. And that is because we know that there are periodization effects in our business. As we saw in Q4, we had more Atlantic volumes than we had Asia volumes. This varies between quarters and half years. So for us, it makes more sense to look at the full year. And the full year of 2024 looks strong and maybe even better and likely better than 2023.
Okay. Then there's one from Daniel Nash. Are manufacturers showing a firm interest in CII emissions yet, as it seems to be a slow burner?
If you mean by manufacturers, OEMs, or customers, this is, of course, something that they are slightly worried about in terms of capacity being taken out. But I would not say that we are engaged in detailed dialogues on CII. That's more an internal issue. CII is the new IMO regulation where we need to make sure that each single vessel meets a performance criteria. For older, poor vessels, this means most likely we need to slow down over time, and this will impact our customers. And that, of course, worries them. Yeah.
Then there is one from Michael Gill. It's on the Suez Canal. I think we have covered that. So we move on to the next one, which is from Øystein Arneberg. In which percentage are your contracts fixed rates versus spot?
All the contract renewals that I can recollect are fixed rates, fixed numbers, fixed volumes, and fixed rates. We are not pricing anything on index except for spot and liner cargo, which is minor in our portfolio.
Then there is another one from Keith Wallis. You briefly touched on congestion. Has there been any improvements in port congestion, especially at European ports where the delays were linked to inland transportation issues?
Yes. We have seen an improvement in general in congestion, also in Europe. This is partly because the situation is somewhat better, but also because our team has done a great job in coordinating better shipments and not moving volumes into congested areas. So as I said, we have been quite successful in driving down congestion. Unfortunately, this has been countered by the situation in the Red Sea. In total, we see a more or less stable amount of vessel days available to us.
Okay. And there is a final trick question from Erik Hove. He's asking about the last exercise date for the options and whether the options are in the money. We haven't said it, so it's...
We have not said anything about it. We have said that we have options coming up this year. If and when we decide, we will share with the market. And as we are not sharing anything now means that we have not decided. We ordered these vessels last year. Since then, we know that the new building index has gone up. So I think it's a fair assumption to say that these contracts are very attractive.
Yeah. That seems to be the last question. If there are additional questions, please feel free to reach out. Finally, we just want to remind you that we'll host a Capital Markets Day in Zeebrugge on the 5th of June this year. We invite all people interested in coming there.
This is a good opportunity to learn that we are so much more than just a shipping company. It's fantastic to be a shipping company. But we are, as you can see on this picture, we are the step between the factory and you as a consumer, making sure that the quality is 100%, fitting in all the accessories that you have ticked in the box, and also even doing all the transport and delivering all the way to the delivery point. So this is a good opportunity to learn more about how we run a logistics operation. So with that, we close this session. Thank you for attending.
Thank you.