A very warm welcome to everyone watching us online from all over the world, and also to all of you who are here at Lysaker today. We have a quarterly presentation, and what have you prepared today, Anders?
Well, we have been through an active period since our last update, so we are going to hear a little about what has happened since we met last time.
First, our CEO, Lasse Kristoffersen, will take the market and the business. He will be followed by Bjørnar Bukholm, our CFO, who will take more the financial highlights, and then Lasse will take the prospects, and after that, you have prepared a Q&A session. So what do we need to know about that?
We are going to take Q&A from the audience, but there is also a possibility to ask questions through the Q&A on the webcast. So please put your questions down, and we will try to answer them as best as we can. As always, it might take some time before the question arrives this end, so please start your questioning as soon as you can.
So I think we're ready, are we?
We are ready.
Yes. With that, Lasse Kristoffersen, please welcome.
Thank you. Thank you. That was a very modest introduction. Thank you. Good morning, and we realize we're not the headline news globally today, and we're still happy that you are here and also that you are online watching us. We will take you through Q3. We have already shared expectations for the quarter, and the general picture is that we deliver as expected, and we also maintain our outlook for the year. But I'll take you through some more of the details and certainly also talk more about the market, which is very exciting and developing fast for us. Starting with a few highlights, the demand for our services continue to grow, and we are now in a very active contracting period. We have open capacity in our Shipping Services business around 40% next year, which we are now about to close. And we deliver a result as we expected.
The Q3 EBITDA came in at $428 million, and that is driven by improvement in both Shipping Services and Government Services. We maintain our outlook for 2026 of an adjusted EBITDA of $1.6 billion. As Anders alluded to, we have had some activities during the quarter. We raised $300 million. I will come back to some more background on that. We have also appointed John Felitto as our new Chief Customer Officer, as Pia is leaving the company by the end of the year. That has also caused some other adjustments in the organization, but we are continuing with the current structure, and we are really, really focusing on serving our customers in a market that is very, very strong. Let us then jump into the market, and there are four main factors I will try to touch today.
It is China, it is the capacity in our shipping segment, the rates, and also the geopolitical scene. Starting with the big picture on the volumes, as you can see on this slide, the growth continues out of Asia, and it continues to decline out of the West. If you look out of Asia, we tend to focus a lot on China, and for sure, that is where the growth is. It is also very important to note that both Korea and Japan are maintaining their exports, so they are not losing market shares, largely speaking, to the Chinese. It is the Western OEMs that are losing market shares, and as you can see, both European and U.S. manufacturers have reduced their export volumes, and you can also see that their volumes inside these markets, in particular in Europe, are declining.
The strong trend of a push out of Asia continues. The main driver, as we said, is China, and if you look year-over-year, the export volumes on autos have grown with about 50%. This growth, if you look all the way to the right, is across the board. This is not just Europe or not just Latin America. This is in all markets. Quarter-over-quarter, there are some adjustments because of capacity constraints and priorities, but if you look year-over-year, Chinese automakers are taking market shares in absolutely all markets, not least in China. If you see the report from European OEMs, more or less all of them report 30% reduction in their sales in China year-over-year in Q3.
That is also partly driven by the fact that the demand for cars in China has fallen during the year and in the quarter. This is another reason why we see a strong push out of China. I came back from China last week, and I can say that there seems to be no end to the ambitions, at least, on exports, and more and more of the smaller companies are now also focusing on exports. This drives an incredible demand for RoRo capacity, and in this illustration, we are showing that the gap between the need for transport out of Asia and the available tonnage is just increasing. We see that this results in more volumes going into other segments, like container and even dry bulk.
When we speak to our customers, and this is mostly happening in China, and we speak to the customers in China, I have not yet met a single one that tells us that they prefer container or dry bulk over RoRo. RoRo is cheaper, it is more effective, and they have far less damages. The fact that we now leak some volumes into other segments, we do not see that as a long-term threat to the RoRo sector, and I will come a little bit back to that. We estimate that maybe in the range of 3 million cars now need to find other means than RoRo to get to their destination markets outside China. Due to this, rates continue to increase. These are proxies for the market because there is a very limited spot market.
To the left, you see the spot market is up maybe 10%-15%, but that is very limited volumes, but it gives you a feeling for how the market develops. Same on the time charter market. The time charter rates are increasing. Again, this is a bit of a proxy because there are hardly any vessels available to charter, and for sure, hardly close to zero for one year. This still tells that the demand for vessels, demand for freight is just continuing to outpace the available supply. That, as always in our segment and in shipping, leads to ordering. We have seen a strong uptick in ordering into 2026, and in particular in Q3. You can see there was an order of 49 vessels. The vast majority of that is for 2030, some in 2029, 2028 are probably options that are declared.
The reality now is that if you want to go to a yard and order a new vessel, the slots they can offer are in 2031. The new building capacity for our segment, and I would say more or less in general for shipping, is sold out all the way into 2031. The ordering activity seems to continue also into Q4, and we are currently now at 26% of the sailing fleet on order. We had numbers like 40% two years back, so it is relatively speaking less, but then we also have to remember that we have a much bigger fleet now due to the deliveries over the last two years. These vessels will be delivered over the next few years, and as you will see, the rate of growth in the world fleet falls down.
We have had the major growth behind us, but, and I would add a but, we do not live out of percentages, but absolutes. In absolute numbers, we have more or less the same amount of vessels being delivered every year up until 2030. Of course, from a much bigger fleet, the percent of growth of the fleet is lower. As we have seen so far, at least into 2026, all of these vessels have been needed and far more. The last point on this update we said were around regulations and geopolitics. We all read in the news that due to this excessive growth out of China in many sectors, a lot of countries are putting in measures to try to control this growth.
We see that in E.U., we see it certainly in the U.S. where the Chinese don't have access, but basically all over the world. Then you have geopolitical issues. Generally speaking, we are living in a world where politics and security affect our business. This is something we're used to. We live with this every day, we live with this for decades, and this is something we manage well. Of course, this also affect our customers. Again, talking to in particular the Chinese auto manufacturers, we now see signals that they say we need to establish a more diversified production. They are moving some production into Asian countries like Thailand, Indonesia. They are also setting up some factory capacity in Europe and in Latin and South America.
We do not expect that this will affect the export volumes over the next year or two. The biggest news probably in the quarter that got some attention was that in E.U., they have made a cap on the hybrid cars. That means setting a maximum number of cars that can come in from China being hybrids. This follows the regulations made a few years or the tariffs made a few years ago on EVs. EVs were selling strong in Europe, they put in tariffs, it flattened out, but now it's growing again. In that, call it vacuum, the Asian OEMs started to sell a lot more hybrid cars. Now that is capping, and we have here tried to put into context how much does this mean for our markets.
If we are saying that we have around 9, 10 million cars exported out of China in relevant markets this year, you can see that today we estimate maybe short of 1 million cars into Europe being hybrids. That's probably on the high end. Export quota of max 350,000 means that there will probably be around 500,000 cars not being exported from China into Europe next year. This is around 5% of the total export out of China. The export out of China grew with maybe 2, 3 million cars from 2025 to 2026. We do not see this 500,000 cars really affecting the demand, and we also see that cars not sent to Europe are sent to other markets. We are seeing that there is a strong push on EVs into Europe from Chinese players.
We think this quota probably will impact what cars comes into Europe, but to a very marginal effect, impact the demand for our services, both in Shipping Services and logistics. We have made a little experiment or a little analysis of what can we expect going forward. Today, as we have said, we believe there are probably around 3 million, between 2 and 4 million cars transported in other means. If we see a significant reduction in the growth out of China, and remember the growth over the last three years, the annual growth has been around 37%. If that falls down to only 5%, still we believe there is a massive overhang of demand that needs to come into RoRo. Even in a close to zero growth scenario, we see a strong demand and a surplus demand for RoRo capacity in our segment.
With that, let me turn into the business and share a couple of updates from the last quarter. Bjørnar will take you through all the numbers, but generally speaking, we have a good performance in all our segments, strong improvement in Shipping Services and Government Services, and logistics continues a positive trend. We have increased our newbuilding program. I will come back to some more of the details, but in that relation, we also raised $300 million in new equity during the quarter. We are very happy to see that that was well received. It was significantly oversubscribed, and we were able to do that, we believe, in very attractive terms. With that, we have now built this more solid balance sheet, and we are prepared to take on these investments into new vessels.
We are also having a balance sheet where we can take opportunities if and when they come by. In total now, we have 14 vessels that were ordered some time back. They have started to deliver. The two first vessels, Arctic Tern and Royal Tern, are delivered. They are now trading. We have more vessels to come into 2027 and 2028. Now we have ordered vessels, four firm vessels for 2030, and then we have options for additional vessels into 2031 and 2032. These vessels are designed by us, and they are purposely built for trade. We see that we can drive real cost efficiency improvements with these vessels, around 25% lower cost per unit transported. We get a lot of commercial flexibility. These vessels can do a lot of cars, but we can also switch them into doing the majority of High & Heavy.
They have what we call a big, strong ramp, so we have big flexibility of taking the cargo mix we have. Also, in everything we do, we look towards net zero, and we are building in fuel flexibility into this fleet. So we can, into the 2030s, burn any fuel that we think are appropriate, and we are increasingly burning alternative fuels in our fleet. To shipping and volumes were a little bit down. This is largely due to the fall of the volumes out of Europe. We are sold out and more close to full utilization every time we leave Asia, but we have less cargo coming back simply because of the lower volumes. Also, important to note is that we have seen a consistent increase in our High & Heavy numbers. High & Heavy is a very important segment for us.
We are, I think it is fair to say that we are the leader in this segment also, and that share is increasing, and these are cargoes that pay well and also are fitting very well into our trading system. Net freights are up 5%. Some of this is due to customer trade mix, which will vary between the quarters, but also close to $1 is because we had some volumes that were released from Korea due to strikes, and we were able to utilize that to sell more short-term cargo commitments at a better rate. We are also actively managing our fleet. Typically, we can trade vessels up to 30 years. After 30 years, our customers start, well, quite a few customers are not willing to trade them, and typically they are sold into alternative trades, maybe used car trades in Asia.
We have sold one vessel, Asia Captain, in a very strong market, and we have a sales gain of $40 million on that vessel. We have a very attractive options program on vessels, meaning that we have the right or the obligation to buy vessels at the end of a long-term lease or time charter. Grand Uranus is declared, and we have 12 more of this distributed over the next five years. If we compare that to market value today, these options are probably around $500 million above the declaration price if you look at the current market value. There is significant value in these options. As I said, logistics continues its improvement. We have seen a slowly and steady improvement in margins over the last few quarters.
This is because we have been able to work more efficiently, and we have had a very clear strategy of bringing in profitability in logistics. We work a lot also on digitizing the business and making it scalable and make sure that we can grow profitably in that segment. Government Services had a stronger quarter, partly because we had more capacity available. We had quite some dry dockings earlier in the year, but also we see some more of the U.S. government volumes coming into Q3. As you can see from last year, typically Q3 is a good year for U.S. government cargoes. The book of business, if you see here, the illustration is that we have around 40% of our capacity open for next year. We are happy that we have so, because there is significant demand.
We are at the moment prioritizing which customers that we are contracting with, and I can assure you that the demand for capacity is far more than we can offer. We expect to be more or less sold out if we take the current volume assumptions for 2027 to 2029. By the end of the year, we expect to be more or less sold out on our Shipping Services capacity up until 2029. That means that the vast majority of the contracts we do now are for three years, typically starting early or at the beginning of 2027. We have announced two big contracts already, one with a global leading manufacturer. That is what we would call a High & Heavy customer into construction industries, mining, and others. Also a big logistics contract associated with that.
This is a global contract over three years, and really a foundational contract for us when it comes to High & Heavy. We have signed a big contract with one of the big and fast-growing Asian car exporters. Also here, we have quite significant logistics and supply chain scope in Australia, in Europe, and possibly into other markets. They were renewed at a slightly different timing. We have already secured $1.7 billion of that open capacity going forward. Sustainability. In Wallenius Wilhelmsen, we start every day and every meeting with safety, and that is why we are really happy to see that underlying trend of how we perform is improving.
Shipping has shown good performance for a while, and logistics, after a tough start of the year with some one and two events, we now see that they are also back to where we expect them to be, and probably the lowest statistics or the best statistics on safety we've ever seen. On emissions, there are a couple of things to say. If you see the dotted blue line, we are increasingly introducing new fuels. We are burning more and more sustainable biofuel. We are also burning more LNG and bio-LNG. That means that our total emissions are going down, despite that we increased the speed slightly in the quarter. We are also harvesting a lot from the fantastic efforts of our technical team on energy efficiency, and we are consistently using less fuel for the same work on the vessels.
With that, I'll hand it over to you for the numbers, Bjørnar.
Thank you, Lasse, and good morning, everyone. Some of you probably recall this, but the word that we used the most in 2025, that was strong. To be honest, that's the word we're using this year as well. That goes for the financials as well. Strong numbers, strong financials, strong balance sheet. It continues to be strong. So it's another good day to be the CFO today, and probably good to be the CEO as well, Lasse.
Yes, sir.
Good. Financial highlights for the quarter, $1.4 billion in revenue. That is up 7% quarter-on-quarter. Two main factors driving that, increased revenues for Shipping Services and increased revenues for Government Services with more normalized activity in Q3, following a relatively soft start to the year for that segment. Moving over to adjusted EBITDA, $428 million. That is a whopping 18% improvement compared to the previous quarter, and this is largely driven by the Shipping Services segment, but also supported by improved performance for Government Services. Reported EBITDA, $414 million, so it is a difference there of $13 million, $14 million, and that is driven by two things. We have this digital transformation program ongoing, and we also have some restructuring costs in the quarter related to the cost leadership initiative that we introduced some time ago that is clearly nearing its end.
Moving over to net profit, $212 million, an improvement of 50% compared to last quarter. This is largely driven by the improvement in reported EBITDA. Taxes, interest payment, depreciation largely flat compared to the last quarter. Operating cash flow, $470 million. That is a massive improvement compared to the last quarter. Two reasons for this, of course, reported EBITDA is up, but the main factor actually driving this is the improvement in working capital. In the last quarter, we took a hit as we had more inventory on our balance sheet, meaning fuel. This has now normalized going into the third quarter, and then we get a big swing on the working capital, which is improving the operating cash flow, and we have that 110% conversion ratio. Despite of that, net debt is up by $100 million. There is two reasons for that.
One is that we had a significant dividend payment during the quarter, not only to Wallenius Wilhelmsen shareholders, but also to our minority shareholder in EUKOR, HMG. Then lastly, we took delivery of the Arctic Tern, and then we had to pay quite a big chunk of money to finance that vessel. Looking at the financial targets, I will not comment on them in detail. It is solid. It remains well above all the relevant thresholds. Then moving over to Shipping Services, revenues up 8%, close to $1.1 billion. The main driver for the increase in revenue, that is increased fuel surcharges. As we talked about in the last quarter, bunker prices went up. Then this quarter, we are seeing that we are getting increased compensation for that increased bunker cost. That is the main driver for why revenues went up.
We also have positive effect from higher net freight rate, as Lasse talked about, but this is largely offset by lower volumes due to seasonally lower volumes out of Europe in the quarter. Moving over to adjusted EBITDA, $355 million. That is up more than $50 million compared to the last quarter. It is two main drivers for this. The biggest driver is net bunker cost, close to $50 million. This is not because it is an improvement, but we are actually avoiding the big hit that we had in Q2. This is more normalized bunker cost we have in Q3, and that is the driver for the effect, not that we are really compensated for what we lost in the previous quarter. Net freight also up $14 million. This is driven by the higher net freight per cubic meter, but partially offset by seasonally lower volumes.
Then there are some swings on the cost categories. We are seeing that voyage expenses are up. That is largely driven by more space charter cost, of which a good chunk of that is internal between Shipping Services and Government Services. This is partially offset by lower charter expenses, so we are more on space charter and then less on charters. It is more of a mix effect. Let's look a little bit at the bunker cost. As you can see on this graph, what we are seeing is in Q1 2026, and especially in Q2 2026, we had a massive spike in the net bunker cost as the prices were increasing rapidly following the start of the conflict in Iran. If you look at Q3 2026, we had a net bunkers cost of $65 million.
I would say that is a normalized cost if you look over what we typically have in net bunker cost during the last two years. There was nothing special of the quarter. It was normalized cost, but we certainly didn't get any benefits on the bunker cost. It was just normalized. What we can say, what we temporarily lost in Q1 and Q2, we did not recover that. We do not expect to recover that in Q4 either, because as you see on the graph, fuel costs has actually continued to increase. If anything, we get a little pressure on the net bunker cost going into Q4. The day we will recover this extra cost that we had in Q1 and Q2 2026, that is the day when we start to see that fuel costs are moving down to the pre-conflict levels.
Whether that happens in 2027 or 2028, that's for everyone to speculate. We just don't know. But don't expect to see that in Q4. If anything, there is some pressure on net bunker cost. That's what we see right now, is prices are actually moving up again. Moving over to logistics. Stable performance, I think is the word. It's the third quarter in a row where we have an adjusted EBITDA starting with four. Everything starting with a four in logistics on adjusted EBITDA is good. In order to make it great, it needs to start with a five, and that is the long-term target. But we are happy to see everything starting with a four. Revenues declined slightly, but also costs declined slightly, and it's largely stable performance across all the business units.
We continue to see a good activity level for auto in the U.S. and especially Canada, but also Mexico. Terminals continues to perform well, and we're seeing a slight uptick also on the High & Heavy side of the logistics business. All in all, stable performance for logistics, and we don't expect any material surprises here going forward either. Moving over to government. Revenues, as Lasse alluded to, increased sharply in the quarter. This is due to two main factors. Increased U.S. government revenues in what is typically a stronger quarter for this part of our business. And then we were also able to take on more commercial revenues as we had significantly less dry docking activity.
As we talked about in the last quarter, we had quite a lot of dry dockings, but then reduced our opportunity to actually go after cargo opportunities and also support the Shipping Services side of the business through Government Services. The revenue side is what is improving the EBITDA, and more activity also means more cost. Also on this side, increased bunker cost is certainly part of the operational cost. Moving over to cash flow and our liquidity position. At the end of the quarter, we had around $1 billion in liquidity. Around 50% of that is in cash, and the other half is credit facilities. Please note that this, of course, then do not include the private placement or the equity we raised during October, because that happened after the quarter.
What we have done with the cash is that we have used opportunity to repay credit facilities. In total, we have long credit facilities of $900 million, meaning that around $400 million was drawn at the end of the quarter, and we used opportunity to repay $300 million of those with the equity we raised in October. Operating cash flow I already touched upon. This reflects the strong EBITDA and also the improvement in working capital. Net CapEx, negative $150 million. This largely relates to the new building program and especially the delivery of the Arctic Tern. On the financing cash flow, the main drivers is the dividend to ASA shareholders of $258 million and also $28 million in dividend to HMG as a part owner in EUKOR. Net proceeds repayment, negative $106 million. This is largely driven by voluntarily repayments in the system of debt.
Only $22 million is regular installments, and the rest is then actually voluntarily repayments of debt, as we have a very solid liquidity position. Moving over to the balance sheet, trying to avoid the use strong, so this time we rather used robust. It is certainly a very robust balance sheet, not a lot of movements from quarter to quarter. We start on the equity side. Equity ratio 47%. It is down from around 49%. A couple of factors driving this. First of all, we paid dividends of more than close to $300 million when we include the minority investor in EUKOR. Then we also had a remeasurement of the put option in EUKOR of 20%, and any changes that goes directly over the balance sheet.
The liability on that 20% was increased by $78 million in the quarter, and the reason for that was that our fleet values, as per external valuations, actually increased by 30% from Q2 to Q3, and the fleet values are then impacting the measurement of that liability. Please note that the earliest date for that liability to potentially kick in, and it is really potential, and we have no expectation of that would be January 1st, 2031. So up until that, this is more like an accounting matter. Looking at net interest-bearing debt, $2.1 billion. Already touched upon it, that increase is driven by the dividend payment and the delivery of Arctic Tern, and the leverage ratio remains well below the 3x threshold. Liquidity reserves, $1 billion, excluding the $300 million equity raise, so we have sufficient liquidity and more so.
So with that, Lasse, I will leave it back to you for the prospects.
Yeah, I will do that quick. I think we have covered most topics. We see that demand for our services across Shipping Services and logistics continue to be strong. As I mentioned, coming back from China, all the customers I met, they indicated somewhere between 20% and 100% growth into 2027 in their ambition on exports. So there are all reasons to believe that the strong demand out of Asia will continue. We are now writing our book of business for the next three years. We expect that to conclude by the end of this year, and of course, at rates reflecting the current market conditions. For 2026, no big news. We are maintaining our outlook of $1.6 billion in adjusted EBITDA. With that, I invite you back to the stage, and we can do the Q&A.
All right. I mean, do you have questions? That's a good thing. Although we have to stay for a little bit longer. Just starting off, Lasse.
Yeah.
When we were standing here last year, you actually said that we had a strong outlook for this year, but the peak of the market was probably behind us.
Hmm. Did I say that?
You did say that. Reflecting on that, where do you think we stand today compared to where you saw a year ago?
Yeah, I mean, let's be honest, when we were standing here a year back, the sentiment was softer. We were, of course, a part of that sentiment. You saw on the numbers that the year-over-year rates are slightly down. We did write contracts at somewhat softer levels last fall than we had done previously. In hindsight, we were too much focused on the sentiment and too little on the fundamentals, because there was nothing with the fundamental story of the growth out of Asia that stopped. I think we underestimated basically that massive force of exports, and we were more caught by the sentiment. I can say now that that was not right. At that time, it was right.
We had softer markets, but it has picked up this year, and we are now renewing contracts in what I would say is a very strong market.
Thank you . Bjørnar.
Yes.
This time around, we say that we are going to release the outlook statement for 2027 in connection with Q4.
Yeah.
Why not earlier?
Yeah, that is a good question. There is a couple of reasons for that. First of all, I think what we are doing is actually aligning with market practice, which is to share the outlook for next year when we are finished the year we are in. The second part is that this actually better aligns with our internal processes. Then thirdly, I think we have already given quite a lot of information for what we expect for not only 2027, but also 2028 and 2029 with the contracting, which is ongoing.
Very good. We will take questions from the audience first, if there is any. Please raise your hands. My glasses are not too good, but I cannot see any hands. I think with that, we go to the questions from the analysts. First a few from Sondre at Nordea. I guess this is for you, Lasse. On the east-west balance,
Yeah
with the increasing dislocation, how do we address that in terms of our tonnage demand, and do we see any big opportunities out to the west?
Start with the latter one. We do not see any big opportunities out of the West, but we are certainly into also a contract renewal there. There are still volumes, in particular out of Europe. In U.S., they are limited, but out of Europe, there is still volumes. In terms of capacity, what drives our capacity is the demand out of Asia. We need to add a couple of days to pick up cargo going back because you need to load, so you lose a few days. But in general, from west to east volumes are not eating much capacity. The capacity driving factor in our industry, that is out of Asia. Increasingly now, of course, and not only increasingly, but now fully, we are pricing that on a round voyage.
Meaning that any additional volumes coming out of Asia, they need to pay for the full round voyage, also going back, because there are no added volumes to come from the West.
Okay. The second question on logistics. Given the increased amount of cargo coming out of Asia, do we see any synergies between our logistics operations-
Yes
and the cargo volumes?
I would say that what we really see from the Chinese players is that they want one-stop shop. Just last week, we got another RFI asking, "Can you take care of everything from end to end?" We have already in Australia, in Northern Europe, we are looking into Canada and other markets. We are supporting our customers or are working on supporting our customers with end-to-end. Then, of course, the biggest logistics business we have that is in the U.S., where the Chinese are not really relevant. So in terms of the total numbers on logistics, it does not affect that. But for sure, we see increasing demand. And we are, in reality now, totally sold out in several of our European and other facilities due to the growth out of China.
If you look at the market now, it is very tight. It kind of compares to where we were back in 2023, 2024.
When we renew contracts, how is the environment that we do that today compared to that time?
Very different, I would say. Very different. Out of two main reasons. One is that our counterparts are addressing the market differently. Only one year ago, the Chinese accounts were really looking for one-year contracts. They were much more transactional, and they were looking for Shipping Services only. Now, we see that they are doing longer contracts. We have written partnership agreement with several Chinese OEMs, and they are changing their behaviors. I would say their approach to the market has changed a lot in this period. On our behalf, the priorities have become even tougher. We are making decisions every day on who should we offer capacity and who not. To be able to offer new players capacity, we need to say less yes to existing.
This is really a challenge for the organization, but I think we are doing quite well in that, and we are trying to balance making sure that we continue to be the strongest player out of Korea, a significant player out of Japan, and adding more capacity also out of China.
Thank you. I do have some questions for you, Bjørnar, but you have to hold your breath a little bit longer. From Jørgen at DNB Carnegie, we are saying that we are pretty much sold out through 2027 through 2029. Does this mean that our legacy contracts only expire around the same time?
Yeah, largely speaking, if you look through the announcement we have made, the big contracts are all extending into 2029 or beyond. Of course, there are always some smaller contracts coming up, but generally speaking, with the current volume assumptions we have, and that is a big assumption that volumes are not materially changed due to politics or other things. But assuming what we know today, the vast majority of our capacity will be contracted until 2029. That is because most of the big accounts for renewals have been done or are being done this year.
Okay. A follow-up on that is, do we see any increased capacity as we get newbuildings delivered?
Yes, of course, we see a little bit of increased capacity, but that is taken into account when we look at our capacity and what we contract. So even with that capacity coming in, we have three vessels this year, we have, what is it, five next year, and then some. Even with that, we are, we believe, sold out when we are done with this contracting season. In general, we are adding around 300,000 of CEU capacity into the fleet every year going forward. That is not close enough in terms of catching up with the growth.
Okay. Next one is for you, I guess, Bjørnar. One question is that, why do we increase the fleet in Government Services by two vessels?
That is more of a technicality that in order to put vessels into the Government Services, they cannot be more than 15 years, and they can only be in that fleet when they are less than 25 years. We need to plan ahead of time to ensure that some vessels that are planned to go out to the fleet during the next couple of years, we have to put in new vessels. We had to do that now during 2026 to ensure that we had the vessels that were capable of being part of that Government Services part of the business. This is moving in between the systems. Right now, we have 12 vessels in Government Services. That means that some of these vessels will be largely deployed for Shipping Services, but then being time charter agreements in between the two businesses.
That would mean that in terms of looking at the numbers, everything else equal, we should expect slightly better results actually on the EBITDA side in Government Services, then slightly less in Shipping Services as some of the capacities moved into Government Services. This is more like a technicality in between the companies than anything else.
It is important to say that we manage the fleet within Government Services and all across EUKOR and Wallenius Wilhelmsen as one fleet, and we try to optimize across all vessels.
Yeah.
Okay. Then there are a couple of questions on our newbuilding program or the new newbuilding program. First one is loan-to-value. What can we expect, Bjørnar ?
For the new financing?
Yeah.
Yeah. We typically do is that we finance the vessels with up to 70% debt, but I would say everything between 60% - 70% should be seen as quite normal.
Yeah. Then on the optionality.
Yeah.
When do we have to declare the option?
Yeah. These are part of non-disclosure agreements with our counterparts. In general, we have very good optionality, both in terms of the number of vessels we want to build, but even more so the type of vessels. We have, as I said, a very dedicated fleet to the trades we are, so we can increase the optionality. We can make them even more High & Heavy or car-specific. We are very happy with that optionality, and we've had now a long relationship with the yard. Thanks to that, we found good mutual agreements on how we can make decisions as late as possible to make sure it fits the market. But in general, we would say that our intention is to declare these options, but we have still quite some time to decide.
Okay. Then there is a question from August at Pareto. Can you add some color around the share of 2027 volumes that started up in 2025? Were they mainly signed during 2024 or early 2025? Is it possible to say anything about the levels that you're seeing now?
Yeah. I hope I understood that question. When we are reporting a contract to be started in 2025, that means it was written in 2024. If that was the question that the contract starting in 2025, they were signed in the market and at the levels that were present in late fall 2024, typically.
Yeah. What about the levels that we see today? I guess compared to those levels that we saw at that time.
Well, that depends a lot. It's different volumes, different trades, and we see more volumes not going to Europe but to other destinations. Rates into some of these smaller markets are stronger than into the bigger markets. I would say, largely speaking, we have a strong market, more or less in line with what we saw in that period in 2023 and 2024.
Okay. That seems to be the end of the question line. Any closing remarks from you, Lasse?
No, I think as we have said, we think this is another good quarter. We expect 2026 to come in as we have said for a while. We are very excited about the opportunities we see on contracting and the fact that we are able to serve our customers across everything we do with Shipping Services, logistics, and supply chain solutions. We see that as a true competitive advantage when we are dealing with the new and growing OEMs. Thank you for coming, and have a great day.