Earnings Call: Q1 2024

May 22, 2024

Summary

Q1’s $159.1m net loss reflected exceptional tax costs, while Hapag-Lloyd recovered sequentially amid Red Sea capacity constraints and stronger demand. FY EBIT guidance narrowed to $0–$1.1bn, with substantial uncertainty around demand and route normalization.

We'll be showing now the general comments for the quarter. Since we had a loss of $159.1 million. This is mainly explained due to taxes, due to the dividends that we have to pay to our German company to bring funds to Chile, around $230 million. This isn't really compared to the operational expenses. It's mostly related to high taxes of $71 million. Another important thing is that on Friday 24th, we'll be paying dividends for $15.8 million. We'll be performing four dividend payments in a year. Hapag-Lloyd, on one part, an important thing to say, that we were able to see at the beginning of the first quarter a very important increase in demand, but we're basically still seeing this problem in the Red Sea, which has created an increase in demand. If you compare March to March, our fees fell 20% when it comes to Hapag-Lloyd, and volume increased 27%. That explains the falling fees. We are working now in ports, which gave us an increase in 2.5 million. We approved a dividend of 9.25 euros per share. This was already paid for a total of €1.6 billion so far. Regarding the market environment, we've seen the outlook towards March. It narrowed its range. It went up to an EBITDA that was net positive. We expect this year's results to be positive and to get rid of anything negative. Just to give a bit more context of what this first quarter was. First of all, when you compare this first quarter with the first quarter of 2023, the results fall, specifically because of the first quarter of 2023, contract prices were still changing coming from the pandemic. The average fee of that quarter was different, and we were seeing a normalization during 2023. When you compare with the fourth quarter of last year where Hapag-Lloyd had a loss, you can see how the situation is considerably improving. This is happening because of what we're seeing here on the slide due to the conflicts in the Red Sea. You have to remember that towards the end of last year, on December, these container vessels start being attacked in the Red Sea area. That is when freight companies decide to change the course of their vessels, going through the Cape of Good Hope instead of the Red Sea under Africa, which meant that the transited times and distances to be a lot longer. As an immediate consequence, what happens is that to offer the same service to our clients, you need more vessels and more containers. In practice, it's like we absorbed 5%-9% of the fleet. This is because the Suez Canal has around 25%-30% of the global fleet. With an increase in transit time, this adds around 7% or 9% of additional fleet. This additional fleet had an immediate impact on our fees. Also considering that the first trimester and towards the end of last year, we were in a contract period. We also expect that the level of contracting to also reach a good level. It says as the volume is at a margin above what we had last year with the same fee. This situation in the Red Sea is ongoing. It's kept ongoing for around five months, and we're not seeing any improvements in the short term. As this situation continues, this absorption of a fleet is compensating for any new fleets that we would be getting. You have to think that October of last year, we thought that it would be complicated for 2024 because we had a 10% increase of fleet in the market. But the situation has reversed, and we are now seeing good results for this year, although we expected them not to be that good. This is a bit of the context of what is going on in the Red Sea. The good news, to have surprised the short-term market, has to do with volumes that we are seeing for this 2024. Demand increases in the first quarter are only 9% on a global level, which is huge. A lot has to do with the fact that the de-stocking period that we saw throughout all of last year has ended, and the economy is a lot more dynamic. Due to the fleet need that we were talking about, we see that the fleet that is not being used is around 0.9%, very low levels, idle fleet. As the fleet being repaired is around 2.9%. This is the spot rate that we are talking about. We see how the spot is raising around January, reaching its peak. Then we saw some normalization around March and April, and towards the end of April and May, it sees another increase. We believe that this is associated mainly, first of all, to logistic problems for the industry. Due to these route changes, due to the conflicts in the Red Sea, we have had to get a bigger fleet. There is a scarcity in containers. All these logistic issues start adding up, and they generate scarcity of equipment, vessels, and this is then reflected in the price, the needs of the clients to transport their cargo in the smallest amount of time possible. This is something that I just want to mention very shortly. There is some speculation that part of this could be due to the fact that on the East Coast of the U.S., the Syndicate of Ports is in a collective negotiation process to a contract that is currently standing since September, and this is something that we need to continue observing in the case that there are any possible conflicts. When you take a look at the price of fuel, the price is relatively stable. Since the second semester of last year, it is still in high levels, if you take a look at historic prices. In the first trimester, we remain sold at $573 per ton. Before we continue, I have to mention that Hapag-Lloyd along its line of fuels, we are starting, since this first trimester, to reflect the cost of emissions associated to burning fuel. We have to remember that this year, the new standard for the European Union starts, which will be progressing. It will be in full order, full operational since 2027. But for this year, we have to account for 40% of emissions of the vessels that are operational between ports in Europe. The upcharge, just so you can look at some figures, for this line of fuel is around $24 million. Now, if you were to look at the order book, we have this income of around 10% for this year for our fleet, where we started showing for the first quarter. We've had deliveries of around 3.6% above the global fleet. This means that the order book is falling, compensating also some new orders that have been placed during the year. We see the order book at a very healthy and stable level for this industry in a fleet change process, a technology change process. We still have some fleet that is left over that we need to account for the next year, which is a positive thing. When we take a look at the balance for supply and demand for 2024 and 2025, in this graph here, we expect, at least our initial expectations is that the demand to grow at 4% this year, 8% next year. This could be corrected if we keep the volumes that we've seen during these first five months of the year, around the order of 9% and 10% of growth. Nonetheless, we have 10% of fleet joining this year. To know how long the Red Sea conflict will last, it could really change this balance of supply and demand very quickly. But with certain numbers, 10% is what we expect as income. Maybe we could have some delays over the next periods, and this 10% is in part compensated by the absorption of fleet that I was just mentioning, that is not reflected on this graph, of around 5% to 9% of the global fleet. When we take a look at Hapag-Lloyd's results, it was a very good quarter. Compared with the first quarter of 2023, we're very far away from these positive results because that quarter had pre-pandemic numbers. But regarding the fourth quarter, there's a very considerable increase of revenue, 13% EBITDA to 108% of EBITDA. It was a very good quarter regarding the very negative expectations that we had. If you see something relevant about this slide, is that the EBIT was around $396 million against the $325 million of the group profit. This is due to taxes, which is relevant, or around $100 million for Hapag-Lloyd. This has to do with the exchange rate effect, the tax effect that the exchange rate has on financial investments of Hapag-Lloyd. Just to make this a lot easier, Hapag-Lloyd now has a very relevant investment level with a very good portfolio. These investments are done in dollars. Accounting in Germany is in euro, so any devaluation in the euro generates some kind of taxable issues in Germany. Although they're not losses, they have to be accounted with these taxes. As I say, it's mainly due to exchange rate. We can see the reach in EBIT for the first quarter of 2023 against the first quarter of 2024. We had a very strong first quarter 2023 with $1,855,000. The positive thing was how the volume grew in Hapag-Lloyd at 7% with 195 extra containers. But we saw a very important decrease in the price of fees. Although it is better than the fourth quarter of last year, it is lower than the fees that we were seeing a year ago. But regarding costs, we also see a negative impact. This is done mainly due to more fuel needed. If we see that the price of this quarter, fuel prices are falling compared to the last quarter, there is more fuel consumption due to the conflicts in the Red Sea, which meant that you need to accelerate more and to traverse a longer distance. So fuel consumption is bigger, it is higher. We also have this issue of emissions that I just told you, that is also being considered as expenses. We also need more containers to do the same because there is a smaller rotation, and we have seen no balance between where some empty containers are and when they are needed. So this has also had an effect on the line of equipment, and also has meant a bigger cost for vessels, and this means an EBITDA of $378 million for EBIT. When we take a look at cost per container, they have been declining since a year ago. We have a decline of around 5% that has to do with the plan that Hapag-Lloyd has had, trying to get rid of all these costs that we were dragging since the pandemic, that due to logistic problems, they had been increasing. So this is a very good piece of news. If we compare the cost level, for example, with the third trimester of 2023, it has increased, because although we have more conflict and logistic issues, this also has a repercussion on the cost level. So we see more expenses, as I was saying, bigger distances, higher speeds, they imply a bigger consumption of fuel also when handling freight. It is implied that the vessels that went through the Middle East, they were stopping in the ports that they need to. Now they need to deviate, and they need to leave their cargo in some other intermediate point, it could be Europe, and this means more changes. So it increases these costs for moving cargo. But it is something that we are monitoring regarding quality, which has also been reflected in higher fees. When we take a look at the results, we have to remember that Hapag-Lloyd, since September of 2023, it has been reporting two business segments, related to liner shipping and Terminals & Infrastructure. Obviously, the strongest segment continues being liner shipping, which is around 95% of our EBIT. But it is also interesting to see the results of the business in Terminals & Infrastructure, how it has been stable. It is still in a consolidation process of a business that is growing. The construction is still ongoing, and it has quite a bit of stability in the bad moments. All terminals are also part of the strategy published by Hapag around a month ago. We published our Strategy 2030 on how we see our metrics towards 2030 with a lot more complete results. This is something that we have already been talking about for some time now. So the strategy is to continue being a focused player, focused on what we are doing, which is line shipping and maritime transport, but always having some strategic infrastructure to do what we do, but better and more efficient. Although, with all the purchases and acquisition that Hapag has done during the last year, we have around 20 owned terminals. We expect that to reach 2030 with a bit above 30 terminals. We can still expect some growth along this line, and we also want to improve and increase the amount of freight that we move on land for our clients. We want to reach around 30%. We are now around 23%, 25%. We want to offer our clients excellent product for the whole transfer. To achieve this, we have to continue being one of the top five players in the industry. To do this and to continue having this market share, we need to continue growing above what the market is currently growing. How do we grow? With the three strategic pillars that we have defined. One is to continue being the undisputed number one for quality towards our clients. Second is to be focused on sustainability and decision-making, which is something that clients and regulators are demanding. Third is to continue having a top-level performance. How can we do this? Hapag carries out two surveys per year where we are assessed regarding the evaluation of our own clients. The idea is to continue having this net promoter score above 50 points. Currently, last survey, we got a very good evaluation against 60 points or 6 points. Another thing that we see is that more than 80% of the cargo to be on time and to continue being number one in our digital experience, so that all clients have the feeling that we have been working very strongly on our service in the last few years. When it comes to emissions, we plan to reduce our total emissions in around one-third from 2022. This is a big challenge considering how this is taking a look at total emissions and not only a piece of these emissions. It will continue growing towards 2030. Last, to continue having a very good financial profitability, to reduce unit costs in around 20%, and to increase our productivity 30%. One of the news that I wanted to give you, since we had the results from a week now, we updated the range of the result that we expect for the year, and it was narrowed to the upper half that we were aiming for at the beginning of March. We expect that the lower range of the EBIT to be zero, and the upper half of the range to be $1.1 billion. This is in a context where we expect the biggest change that is being visualized, that the fees will fall moderately, differently from three months ago, where we saw a bigger decrease from the last year. We must remember that last year, the average fee was around $1,500 per TEU. Now we have seen a very important increase. Roberto will continue. Now, moving on to CSAV results. We saw that last quarter, we had a result of $598 million, and this is directly affected for this quarter due to two effects. First of all, it is Hapag-Lloyd. We have explained how we have had an impact of $513 million. We have savings in around $2 million for management and financial result of $9 million, where we have no positive financial results. We have an exchange rate difference of around $23 million. This is due to the devaluation of the euro from the dollar. We do no hedging because we have no clear view on the date where things will be paid. We will see reductions in exchange rates if things do not improve for the euro. If we stop there, we have a 61 million before taxes result. Then we see tax expenses of our German partners. This is generated because last year we had a very positive income, and dividends in Chile are taxable, 27% of the dividend received, and this is the effect that we have of around 217 million in taxes that we need to account for as expenses. If we did not have any tax credits, they would not be paid. These 217 are netted with a tax credit if we do not see any flows for the accounted results, or deferred taxes of around 23 million from the exchange between Germany and Chile. A tax income after taxes of around 35.5%. This is a result that we have seen in our financial statements. This is a very temporary difference, that we see the 23.4 million due to the exchange rate. The other is a positive effect of the taxes that we paid in Germany. These accounts for this 10.2 million, meaning that the total amount of expenses for taxes is around 232 million negative, and the net income, 159 million negative. If we go to retentions, we have 601 million of total current tax assets and credits, just like I mentioned before, that we use to pay our taxes. We have around $251 million towards March, and a remaining VAT tax credit of 1.6. These are some of the taxes that can be recovered or future taxes. We have a 331 because this is in EUR here. These are taxes have been paid between May of 2023 and March of this year. So we have seen a decrease of around 40% of tax. We are expecting that these funds will reach Chile directly, but we still do not have a very clear date on when they will be coming to Chile. If we could project this same slide for every year, we see we have the first three dividends that we already mentioned as a very good, important retention for March. I apologize. The new thing here is the Hapag-Lloyd dividends that were paid on May 6th, very shortly ago. This was seen as a dividend between two German companies, EUR 429 million of retention. This will be reimbursed next year. This year was March, last year was August. So we can expect this as a range in our dates for delivery. When we got our tax return, around 10% retention rate, and the rest was used as a tax credit with EUR 38 million. So you can see that we are going from 321 million to 487 million in retentions as of May 2024. If we quickly check the balance on the upper part of this chart in main asset changes, we began with 8,269 total in assets. Dividends received from Germany, 685 million, and also considering the retention from the taxes in Germany. This was reflected in our total of $86 million for Hapag. On liabilities, they increased from 180 to 193, specifically due to the deferred income taxes of around 24 million that explain this different. The rest are taxes in Germany. When they are retained or when they are reimbursed, this compensates the taxes payable, and this is what we have been seeing this year. Regarding equity, we see a negative result and a decrease down to 7,122 million EUR. If we take a look at this cash flow, we began in 152 from other inflow, and now we are at around 163. Concerning the retention of taxes in Germany, this is mainly due to the dividends being brought on from Germany. Now, going over to our ESG strategy. We've mentioned previously that we have a policy aimed towards different communities in San Antonio. We created a new upgrade to the bathrooms and to the courses. We rented a gym. We renovated this gym and sports facilities to have a fully equipped gym so that the community can use it. Last, some of the final comments. This is our main investment. We saw a very solid start for this year. There were some issues expected with the problems during the Red Sea, and the increase in the offer of vessels has meant that the situation in the Red Sea is mitigating some of the effect in other places. When it comes to CSAV, we have $3 million to get back, to reimburse from this year to the other. With that, we can pay our investors. I believe this would be around everything for the presentation that we have. Now, we ask you, so that those of you that want to ask any questions, you can raise your hand and we will allow you to speak. You can tell us your name or from what company, or whether you're investors, or if you want to see it personally. We're open to answer any comments that you may have for this presentation. Go ahead. Hello, everyone. How are you doing? I have three questions. First of all, regarding the strategic plan for the long term, when you expect to reduce unit costs around 30%, I would like to understand where you're leveraging to re-achieve this objective. This has quite a bit to do with the Maersk and Gemini agreement, or are you doing something else to achieve this? The second question is the volume. The demand had a very strong beginning, quite a bit above what we expected at the beginning, but it doesn't seem to have changed the expectations that you have for the whole year. Is there any increase in risk, or is the good season coming on early? Third, I would like to understand, what is the things that you're supposing for this increase in range, meaning that the fees wouldn't be stabilized if the issues in the Red Sea are not solved. What are you thinking about this? I will clear up the second question because I think it's very similar to three. Second question is more around demand. The volumes were very strong, and three is more about how you assume to be part of the upper range. Because it doesn't seem to me like you changed your expectations of demand towards the whole year. But it seems like you're assuming that fees will not be falling towards the rest of the year. Let's take a look at the strategic plan, first of all. When Hapag is talking about falling costs, we're talking about pandemic costs that were very high costs that have been falling. The main leverage to get this discount has to do with vessels. Investment in more efficient vessels, which we have been doing, we have to continue doing. More efficient vessels in the sense that they have less emissions, so they consume less diesel, less oil. We're comparing the same thing. During the pandemic, we didn't pay the carbon bonds that we have to pay now. We're a much more modern vessel, so we achieved this. Second, we actually expect these alliances to generate economic benefits and cost reduction. What we expect here is to have some sort of network where we can have more transfers with a certain amount of. When we do a transfer with a certain amount of containers, we're accounting for this amount of volume for transfers, and we have to make sure that the service towards our client is maintained. We have also increased our amount of ports and Maersk. It has a very important port portfolio, and this could be aimed towards increasing the quality of transfers. This creates savings. We are doing transfers, but we're doing it more efficiently with bigger vessels in a combination like that. A bigger vessel doesn't drop off fewer containers to a small port. This is some of the main layers that we have when it comes to cost savings. There's also savings in our investments in technology, because with more technology, you can probably have a better control of containers of the ship network. These are some of the main drivers. When you take a look at volume, I'm talking about question number 2 now. When you take a look at the volume, you can clearly see that we have a very surprising increase of around 10% of volume from the industry in the first quarter of the year. You compare all this with the first quarter of last year, that was very dull. Notwithstanding, the EUR 3 million that Hapag moved was a historically high volume for the first quarter. This is our historic record. There's a very important growth in volume that has been persistent even in April and the beginning of May. Now, whether this is permanent or not is hard to say, because there's a lot of disruption in the production chain. The issues in the Panama Canal and the Red Sea, this has also repercussions in the ports of the U.S. It's very hard to know whether what we're seeing here is an important increase of demand due to overstock, hoping to have some operational decreases in the U.S. due to agreements with the syndicates, whether it has to do with participation in the high season. It's very hard to diagnose just now. Now I will move over to point 3. We continue having a very conservative point of view towards the rest of the year because it's very early now to see whether certain volume operations will remain so. The World Bank are also having these conservative ranges of around 3%-4%. That is what we use as a basis to continue working. If this is not the case, then this could mean that our projections will aim towards the higher range from the range that was just informed by Hapag now. It is also very relevant what will happen with the Red Sea. You have to think that the Red Sea crisis has basically required around 6% of additional fleet all around the world, just to continue with this traffic. If this issue is resolved, we will see if it does happen, plus a lower growth towards the half of the year, we can go back to a scenario of bigger risk, like the one we thought we would have at the beginning of the year. The initial forecast that Hapag-Lloyd had was between -EUR 1.1 billion and +EUR 1.1 billion, so it was a very wide range. The forecast that you are seeing is aimed towards a second half of the year that is a lot more conservative than the first, with very volatile results. This is a lot more conservative considering the first trimester, and considering this guidance is being done by Hapag-Lloyd now at the beginning of May, knowing some of the results from April. This guidance is now between zero to 1,000, and not from -1,000 up to 1,000. I do not know if this answers your questions. Yes, everything is clear. Thank you very much. Sebastián. [Foreign language] Sebastián, go ahead. Hello, how are you doing? Sebastián Silva here. I have two questions to ask. One, it caught my eye how much the fees from China have increased towards the world. It has really shot up, especially now in May. It has increased quite a bit. If you were to make any reservations and bookings in Chile, there are no containers. There are no reservations for vessels up to June. Why did the demand increase so much? Did something exceptional happen? Are world inventories decreasing? What is the explanation of this? Because the freight around 6,000 and something here in Chile and in China have been increasing. I would like to know what happened now in May, that we project it will continue going up until the end of the month and the fees will continue rising in China until June. The other smaller question that I would like to know, how much do you project in utility for the segment of containers for Vitto towards the end of the year? I believe it is not 100% operational, so I would like to know when it is 100% operational, how much utility we will get for Vitto. Thank you very much. Well, first of all, the last thing is very easy to answer. We do not do utility forecast for any network, for any line of business. What we do is we give a range, but not specific forecast. I have nothing else to add regarding this. Regarding what is happening since in May, we are talking about the results from March. We try to avoid talking about things that are going on in quarters where we have not informed any results. What is going on throughout the whole world in April is that this strong demand that we saw during the first quarter has continued, and we need to understand that this global network, when you need more vessels to any particular area, they move towards this area. What has happened in the world affects every single place when there is a vessel scarcity. What has happened, especially with the Red Sea, is that this disruption has caused the productivity of containers to be lower. Meaning, if you could go around the world 4 and a half times with one container, you do less than 4 now. This means that there are fewer containers in the world. Companies, along with us, we're doing a very important investment to get more containers, and this isn't solved from one week to the other. Same thing happened during the pandemic. Not only they would have a vessel scarcity, but a container scarcity, because there's not a matrix of network designed around containers to move around with efficiency. We have this matrix, but when there's any disruption, they become inefficient, very inefficient. They are trapped in warehouses, in industries, because there are ports that you can no longer reach. We have some trapped in those ports, and this generates this container scarcity, and this has an effect on every single market, not only Chile. I don't want to talk about Chile because it's less than 1.5% of the business or half a GLOY, so it's not that relevant for the yearly results, but it affects every single area of the business. Can I ask another question? Sorry if I forgot about it. What percentage do we have of assigned contracts for the long term regarding spot fees of this year? Or are you not negotiating due to them being so high, they're not closed? No, they're closed of around a bit more than 50%. A mix between long-term contracts for more than 3 years and yearly contracts. Thank you very much. Thank you, Sebastián. Francisco. Francisco Vera. Hello, good morning. Here, a stock owner for the company and an investment analyst. I have 3 questions here. I don't know if we could ask them one by one to not have any miscommunication. First, it's very easy. I want to refresh this. Utilities from the first quarter, I believe have some leftovers from the loss of vessels. I believe that bigger part of the first quarter have contracts that are signed 2 months before, 3 months before. I don't know. I assume. I want to know that if the results of the first quarter has accounted up to what increase in prices since January. That would be the first question to kind of understand the accounting part. You're talking about the results of the second quarter. Will be the same. I can't answer that. Second question. I understand that vessel companies such as you and others have done yearly contracts of around 10%, I believe. Do you continue having this policy or It's what you just mentioned, that we have around 50% our contracts. A part of that, around 20%, 23%, 24% of those, meaning around 12%, are long-term contracts, and for a year, and the other is our for one year contract. You could expect that the contracts that we had 3 years ago or 4 years ago to start being negotiated with better prices, with better cost. Better for who? For you. No, not necessarily, because these contracts were done during the pandemic with a lot higher spot fees, a lot higher than what we're seeing now. Many of those contracts are already being renegotiated because many of them are out of the market. Generally, these contracts are not working with the fees that we had. We see this very stable. Not all contracts are expiring during the same month. The yearly contracts generally tend to have maturity around November and March. That's where they're concentrated every year. I see. Perfect. The last thing here regarding global demand, not consumer demand. We know that this cannot be predicted, but for the industry, you see that many vessels are freezing. We see vessels that are more than 20 years old, that are around 20% of the global fleet, that are still operational. You would tend to think that the highest speed that vessels had to satisfy client needs should normalize towards the second quarter, when you have all this logistic in place and they can spend a bit less fuel by decreasing speeds. I don't know if this effect should be seen in the second quarter. Related to the same thing, I have another question. How long will this take to come out? These new orders that you see in this quarter that are relatively high and not so high. When you see it that way, why are all shipping companies so conservative towards the second semester? My question is, why are you being so careful? Is it so volatile? There's quite a bit of space to mitigate all these risks that you see. The thing is that there are two different parts of your question, and I will answer them separately. First is the order. We see that structurally, at an order of around 20%, with around 12% of the fleet, with all the new emission standards, because of course, their older vessels are more efficient, because you have to pay for each ton of CO2, especially like in Europe, for example. The industry has a scrapping that hasn't been used for the last five years. When you take a look at the scrapping, it's very unrelevant. We've been accumulating ships that should go to scrapping. During the pandemic, these ships extended their contracts from three to five years that are now maturing in 2025. With the Red Sea issue, you need to continue reserving ships, and because you need an additional 5%-6% of the fleet of the world, and it's operational. It will increase in around 9% this year. This 9% plus the older ships and vessels, they continue operating, and since volume has increased in around 9%-10%, we need more ships. That's why fees increased. If the Red Sea issue is resolved, we assume that it will end up being resolved. This will free up 6% of the world fleet. This will happen fast once this is resolved. We see the story of this industry, when you have overcapacity of around 67%, which could last up to the second half of 2025. The original expectation of the industry towards the end of last year is that we had a situation of overcapacity that will end up being absorbed if the world grew around 3.5%. It will be resolved around the second half of 2025. If your growth projection for this year is around 3.5% or 4%, the industry hasn't changed despite of these issues. If your point of view is that it will liberalize traffic in the Red Sea, we go back to the basis that we had when we did the first guidance, between -1,000 up to 1,000. But we saw for around five months that this didn't happen. That is why we have such a conservative point of view, and shipping companies have such a conservative point of view because this venture that we had from 18 to 20 months had disappeared due to a very high demand. The issue of the Red Sea that ate around 9% of the fleet. This can return in a shorter period because we have not created any more ships. Having idle ships around 20% is not a structural problem. We are still careful towards the next 12-18 months. It is not a long-term. Towards the long term, we do not see any balance problems. As you say, space for industry to do quite a bit of scrapping, it would be necessary. It is hard to know because we take a look at the Shanghai index. In four weeks, we went from 900 to 1,500. Can you perform the scrapping of so many old ships? Is there a capability to do this? There is a bottleneck. Generally, European companies are doing scrapping only in docks that are worried about the environmental issue. This is a limited capability. If you want to send them to India, for example, and just leave them stranded on a beach, this increases capability. Not many contracts are ongoing. They will mature around 2025, and those that are maturing now, due to business scarcity, will also have to be signed towards the long term, so this dilates the scrapping period. The shipping companies themselves, us, in the case of Hapag-Lloyd, if you take a look at the fleet of each one of these shipping companies, they all have old ships that could be scrapped. This could go to scrapping before rented ships. This capability has not been used because there are no idle ships. They are all being used. Just to wrap things up, the Red Sea crisis, this issue will persist, right? No, exactly. The speed has to do with this. The Red Sea, the road that we are taking is more than 20% longer in miles. We used to do this with 10 ships. Since now it is 20% longer, we need to add two additional ships in each loop. We had to do this in each route. It is not 20% longer. It is longer than this. It is around 25% longer. This 5%-6% additional is speed. The industry has increased speed, and I need more ships. That is why speed has been increasing, and we are consuming more oil. While the Red Sea crisis persists, we will continue having these issues of fleet and add to having the acceleration problems. Thank you very much. Thank you very much, Francisco. Antonio. Antonio. Hello, can you hear me? Yes. My question has to do with the strategic plan towards 2030. In one slide, you talk about contracts. How 50% of the utility of Hapag-Lloyd will reach around minus 30% by 2030. The thing is, the company is forced to give its vision on the dividend policy. If you read the dividend policy of Sud Americana, it says 30%. Same thing, right? Yes. Now, a declaration of what the administration or the director of Hapag-Lloyd could say, and another thing is shareholders. Those that vote for dividends are shareholders. We should not see any changes heading towards 2030. Until this pact is working, unless we see a situation that requires this, which could happen. To go below 50%, we need all members of the pact to agree. Very clear. Another thing, I do not know if you could talk a bit about this. You are starting work on Terminals & Infrastructure, and now in your Strategy 2030, do you see an increase in around 30%? To understand a bit more about this, if you could talk about this. This doesn't mean buying land assets. We're talking mainly about developing door-to-door sales of door-to-door services for one segment of the market. This doesn't mean that we will continue investing in trucking companies. That's my question. Are you still focused towards the maritime freight? Yes, completely. There are many ways of doing this. You can develop digital platforms through which you integrate land services and that your smaller clients, because this isn't for big clients. Big clients generally solve these issues themselves, but for smaller clients, this could eventually They could eventually book in your webpage from door-to-door services. Hapag-Lloyd could be able to provide the service being integrated in some sort of a marketplace with providers without owning anything. Thank you. Amazing. This is everything I wanted. Thank you very much. I don't see a CapEx between billions in the land market. Which doesn't mean that we'll have to buy some small things here and there, but our strategy is that we're a liner shipping, and we want to enter the Terminals & Infrastructure business. That's 99% our focus. Jaime Valenzuela. Jaime Valenzuela. Jaime, you have to activate- Jaime, you have to unmute yourself to be able to talk. We can't hear you. There. There you go. Well, my question is Good morning. My question is related to the previous point of the ships. In the ship contracts, I imagine, as you said, they would be about to mature, right? What are the feelings about renovating this with this demand, this match with what is going on in the Red Sea? Because supposedly, by lowering the amount of ship rental, the cost of this rental should decrease. Well, Jaime, we have a plan that is growing around what the market is doing. If the market is growing around 3%-4%, our fleet has to grow around 3%-4%. If not, we're not capable of achieving this promise of not shrinking. When you have inefficiencies, like what is happening today, to be able to grow around 4%, the fleet grows a bit more than this because ships are navigating for more hours. So we will continue renting ships and purchasing ships to make sure that we have a 4% or a 5% in growth every single year. Sometimes, it could happen that you place a purchase order for a very cheap ship, and sometimes you get more expensive purchase orders. The same thing happens with rentals. We don't make decisions for long-term for the spot prices. We are consistently renovating the fleet, so contract renovations in years when business is very good, they tend to be more expensive than those that happen when the business is bad. But if you don't renew these contracts, your competition renews them, and you have no contracts, right? So what we try to do, both for the purchase and for rentals, is to continue working with the industry, to work with the average. To not see this as some opportunistic thing that rentals are expensive. I will only rent when they are cheap, because when they're cheap, probably no ships will be available. This is a much more industrial vision, more than a trading thing. Great. Thank you very much. Thank you, Jaime. We have one more question. Marco. Hello, good afternoon. Very short question. Very simple. If you could please explain. It says total current tax assets, $601 million, from which there's a credit for taxes of $251 million. In the last slide, it says that there are $600 million in current tax assets, meaning, can we get all this back in dividends or is it not possible? Well, Marcos, I suggest that we take your questions separately because for the rest, Marco is a journalist, and this is an investment-