Good morning, everybody. Good morning and welcome to our full year 2022 result analyst call. It's a little bit more condensed this morning because we're moving in an hour or so in our Capital Markets Day, where we will share more information. We will focus now pretty much on the year 2022. I'm here in London together with my CFO colleague, Markus Blanka-Graff, and we are happy to present our results in advance of the CMD, which we will start at 10:15 A.M. local time. Before we begin, we would like to highlight 3 topics. First of all, as you have seen from the release this morning, we have achieved a record high result in 2022, the highest ever. We have the flexibility and resilience to adjust quickly while maintaining the strengths of our core business.
Thirdly, our focus remains on yield management and customer experience. I talked about that during the Q3 call already. Full year highlights. The results for the full year 2022 reflect strong organic top-line growth with significant more of that growth converted to EBIT than in the previous year. While momentum decelerated in the final quarter of the year, the EBIT result of CHF 644 million in Q4 would have been the strongest quarter ever, if not of the phenomenal Q4 2021. Based on this exceptional result and record free cash flow generation, the board of directors propose a dividend of Swiss francs 14 per share, an increase of 40% on the prior year. The strengths of the full year 2022 result points to our resilience and ability to continue to provide an exceptional customer experience.
You will hear more about the customer experience and employee experience during the Capital Markets Day. In volatile markets, we remain in a strong position to manage through future market dynamics, leveraging our long-standing experience and technology capabilities. That is as well something which we will share more in the hours to come. To reiterate a point I made on Q3 call, yield management, so profitability yield management, and will continue to be a top priority for us moving forward. Looking into Sea Logistics, business unit Sea Logistics. You see the figures here, development of the volume on the left-hand side, GP per TEU, so our yield, and then EBIT per TEU, bottom line result. Our flexible business model delivered reliably for Sea Logistics customer in 2022.
While yield normalized over the course of the year, reaching their lowest point in Q4, the final quarter average yield was still 1.9 x that of the 2019 average, with unit EBIT at 3 x that of 2019. Still significantly above the pre-pandemic phase. This reflects a conversion rate of 46% compared to 58% for the full year. Remember, 2019 was at 30% conversion in Sea. Our focus remains on yield management, unit cost reduction, and market share optimization. In the full year 2022, we assessed that our overall market share was stable in a market that declined by approximately 6%. In Q4 alone, our reported volumes point to a decline of 8% or 7%, excluding the effect of exiting Russia.
Overall, we have reported -5% or -6% organic, excluding net Apex in Russia for the full year. Air Logistics next. Again, on the left-hand side, development of the volumes in tons, GP per 100 kg, and EBIT bottom line profitability in CHF. The strengths and flexibility of our business model is equally visible in Air Logistics results for last year, 2022. A key distinction, however, is the relative resilience of yields over the period with a somewhat more modest pace of decline into year-end. The last 3 weeks of the year 2022 were particular weak in demand. This speaks to a closer matching of capacity to the demand environment relative to what we have sea freight market 2022.
Unit EBIT Q4 remains at 2.3 x the average of 2019 and reflects a conversion rate of 40%. Full year, 48% for 2022. We are focusing on cost optimization and market share expansion. In the full year 2022, we assessed that on an organic basis, our overall market share was stable to slightly greater, given a market that declined by approximately 9 percentage points. In Q4 alone, same sea freight, our reported volumes point to a decline of 16 or 15, excluding the effect of exiting Russia. Overall, full year figures, we reported +1 or -8 organic, excluding Apex and Russia. Next is Road Logistics. Road Logistics delivered a record result over the course of 2022.
Remember, in 2017, so a couple of years ago, we had CHF 40 million-CHF 50 million profitability, and now we have 3x the profit of a couple of years ago. This is a credit to effective yield management. Again, yield management is key. We started that journey years ago. High-end utilization of networks across all geographic areas. The US business, in particular, showed strong momentum in 2022. While the war in Ukraine and regulatory measures placed upward pressure on cost, we, as Kuehne + Nagel, successfully passed these on to our customers. The focus in Road Logistics continue to be in the following areas. First, scaling and leveraging the U.S. platform for existing Air and Sea customers. I mentioned that already in the Q3 call. Global expansion of our customs standalone business. You have recently seen a press announcement on that. Maintaining high-end network density, in particular in Europe.
In Q4 alone, EBIT of CHF 26 million reflected a conversion rate of 8% versus a full year achievement of 11% conversion rate. Contract Logistics delivered a very solid growth in 2022, and expanded market share based on our assessment of market growth. In the Contract Logistics result, you have to note that 5% negative FX effect is included. EBIT for the year ended up to CHF 187 million, and the conversion rate of 6% represents a record high result. We never had that result in Contract Logistics before. CHF 48 million was generated in Q4 alone. These are the product continuous systematic efforts to improve margins through portfolio optimization, along with nearly full utilization of warehouse capacity around the globe, which extended into the year-end.
We will remain focused on growth and profitability in terms of the way ahead. With this, I would like to hand over to Markus to give us a little bit more insights on the financial KPIs.
Thank you, Stefan, and good morning, everyone. I think it's a great pleasure to have you here physically. Most of you I know quite well over the years, so it's nice to see you again in a setting like that. 2022, a year with operational challenges for sure. Started at the back end of 2021. You may remember still with the capacity shortage, something that has turned during the year very quickly into even capacity oversupply as we, as we speak right now. I think what we can take away from the year 2022 and specifically from the fourth quarter is the speed how market conditions can change, I think, is news to everybody.
When we think back over the last 10, 15, 20 years, how Shipping industry, how capacity has developed, I think nobody has ever expected that within weeks rather than months, there is a shift from overcapacity, or from shortage of capacity to overcapacity. I'm slightly oversimplifying it, but I think the message is speed of change is unseen or was unseen before. Having said that, right now, the fourth quarter was the weakest quarter in the year. You can see it here. The earnings before interest, the earnings before tax, EBT, stands at CHF 657 million. CHF 657 million, which is CHF 450 million below the 2021 fourth quarter.
To put that into perspective, CHF 650 million, that was a full annual result, 2012, and it was the second highest fourth quarter ever in the history. That shows a little bit how extraordinary the situation has been in the year 2021 and 2022. Yeah. Still, I think that is what everybody's interest today. Did that situation, what Stefan also mentioned over the last couple of weeks in the fourth quarter of very weak volume demand, did that continue to January and February? Without giving away too much on current trading, of course, but one can safely say, yes, it did continue that way. I think everybody can read that through different public sources as well.
Having said that, the first 3 quarters then, Q1 until Q3, you have all seen the numbers. Each of them returned more than CHF 1 billion on earnings before tax. All together, we are now at CHF 3.8 billion, which of course is an absolute record result. Coming back to the slowing down of the economic momentum that carries forward into 2023, working capital management for me, I mean, you know me, working capital is one of my most important focus areas. Because it's easy to go wrong there. It's very easy. It's something that goes with volumes. We have more than a 500,000 customers out there at any point in time with 500,000 counterparty risks, 500,000 credit limits. Every customer has an individual credit limit.
It goes easily wrong the moment you start, let's say, getting loose on the tight management of this. Especially with the rates coming down very quickly. You can see the working capital has contracted from CHF 1.8 billion to CHF 1 billion at the back end of 2022. Altogether, the good news, if you like, is CHF 800 million or CHF 770 million of working capital has transformed into cash. The second good news is we have not slipped on the DSOs. The DSO level around 50 is something that you're well used to.
The ones that are following for a longer time period, it used to be 42, 43, 44, but that has already changed a couple of years ago into the high 40s and low 50s. You can see the change really happens on the DPOs, and as I'm conscious that we do treat our suppliers extremely fairly. We are keen on partnership with suppliers. The DPO development is mainly due to the reduction air freight charters. Because charters, as you may know from the industry, is basically a prepaid business also for us. The extension of the DPOs is, to a large extent, attributable to the lower number of charters.
All of that, quite logically, good profitability, good working capital management has led to a very good free cash flow. I think, with free cash flow generation of CHF 3.8 billion, that equally is a record over the years. More importantly, I'm always watching the trajectory of the free cash flow generation because it gives me quite reliable information around the sanity, if you like, and the homogeneity of the business, how it's being executed. It gives us confidence not to forget for our future and how we manage our Ambition 2026 and Vision 2030 then which you will see in the capital markets today. That's gonna start in a couple of minutes.
We believe Stefan Paul, myself and certainly, the entire Board that you only can start a journey when you have a good starting point. A solid balance sheet, a good cash flow management, I think is something that is a prerequisite to start an ambition. The decision has been made to make the dividend proposal at the annual general meeting in May at a value of CHF 14 per share. That compares to CHF 10 that we have paid out last year. In May, in the AGM, the proposal for the financial year 2022 to be paid, I think in the second week of May. That would then be through all shareholders in the extent of CHF 14 per share.
Some of you are quite familiar with the Swiss financial environment. I think that represents a dividend yield of 5.8%, which I think from a Swiss perspective and maybe also from an international perspective, but they are not so accustomed to. From a Swiss perspective, I think 5.8% is a quite remarkable dividend yield. Following our unwritten but historically proven dividend policy, we are still staying within the framework that we have that we have given, somewhere between 55% and 65%. Here, specifically this year, that is 63%. As such, I think we are well in the or maybe slightly above the expectations that had been put out in the market.
With that brief summary, for the 2022 year, I would hand back to Stefan.
Thank you, Markus. Some of you might remember we have met the last time here in this round, at the Capital Markets Day, September 2017, under the leadership of that time of my predecessor, Detlef Trefzger, where we launched at that time, KN+ NextGen, the strategy which came to an end of 2022. We had at that time three goals: strong organic growth with a clear focus on new sectors. I come to that in a second. Harvest due to digitalization and automation. We said clearly at that time that we are going for bold acquisitions mainly in Asia. In addition to that, from a finance perspective, we have given the outlook, our ambition, 16% conversion rate to be achieved within the four years after 2017.
We have met and delivered on all promises. We made the largest acquisition ever in the history of Kuehne + Nagel, very successful. Apex, number seven on the marketplace when air freight volume. we are now clearly the number one on the Transpac , China, Asia to the U.S. marketplace. We started our journey on the air freight. you will hear more about that in the next couple of minutes and hours to come today. We have overachieved, of course, our conversion rate target of 16%. One can say the pandemic basically was the key driver. We are pretty or absolutely convinced, not only pretty. We are absolutely convinced that we would have achieved that as well without the pandemic, due to the measures we have taken at that time.
Customer technology and people was the key message leading the transformation in September 2017. We have started the journey. We have delivered as promised, you can be absolutely ensured whatever we are going to tell you today, this will be our key theme. We will deliver as promised as well for the next couple of years and decades to come. Thank you very much for listening to this very condensed full year 2022 analyst conference call. In a couple of minutes, coffee and breakfast is served outside. We will come back to this room, we kick off the Capital Markets Day 2023. Thank you.
Just to be very clear, we'll kick off at 10:15. That gives you some time to grab some coffee as Stefan mentioned. We can also discuss any questions you might have. Thank you
Are we ready to start? Good to go? Good morning, and welcome to our Capital Markets Day 2023. Before we start, may I introduce you the team who is going to guide you into the new KN Vision and Roadmap 2026. I start with Andrea Debbané , Head of Sustainability. She will give us an insight on ESG. Here on my right, Gianfranco Sgro, Contract Logistics and integrated logistics. Hansjoerg Rodi, Road Logistics and sea freight. you have Markus Blanka-Graff, our CFO. I wish you very exciting moments in the next couple of hours. Stay tuned. We will share a lot of interesting stuff with you, we open the Q&A after every single presentation. A combination of Markus and myself afterwards.
You have enough time to raise your questions after each individual section. Thank you very much. See you later.
This is the story of a company made up of teams built by humans with hands that work, heads that imagine, and hearts that care. This is the story of a company that outlasts chaos and congestion. That flourishes with joy and determination. This isn't the story of just any company. It's the story of yours. The one we build together every day. We've come a long way, but there is still more road ahead. An open road that asks us: what if? What if we got onboarding right? Making connections with colleagues and customers seamless from the beginning. What if we listen to customers and to each other consistently and proactively? What if we made service our purpose and partnership our goal? What if we saw the bonds of trust as the single greatest power on the planet?
This company, this story, isn't about what we wish were true. It's about what we believe we can do. We believe in this: working for and working with Kuehne + Nagel is an extraordinary experience. Building on trusting relationships with each other, we will be renowned for the most consistent and dynamic customer experience in the industry. In this company, we create extraordinary Kuehne + Nagel moments every single day. That's the road ahead. Let's take to the road. Are you ready for the journey? Do you believe in extraordinary? Will you take the lead? Let's write a new story together. Extraordinary is now.
Hopefully, you are so excited that we are. I will now guide you the next 25 minutes through the storyline. What is our aim for the next couple of years? KN Vision 2030 and Roadmap 2026. You have heard that word, trust. A very important word. 5 letters. You have to earn trust. It's not a one-time wonder. You have to earn trust with your customers, employees, every day, every week, every month, and every year. You will hear me speaking about trust as a red thread through this presentation again and again. My colleagues will pick it up in their individual speeches. This is a clear theme for us. Building trust with different stakeholders. Building even more trust with you from a Kuehne + Nagel standpoint of view. These are the key takeaways for the next couple of hours.
Most trusted by customers and employees. I will give you the reasons and the details. Focus on yield management and product mix. Maintaining growth paths. What does it mean? It does not mean that we will give up our growth agenda. We will still focus on growth. A company who is not growing anymore has no future. Pretty clear, growth will maintain our DNA. However, more than in the past, and I said it a couple of times already, we will focus on the right product mix, and we focus on the right yield. Yield is absolutely key for us in our strategy moving forward. We have an experienced team. Some of them you have seen already. I will introduce you later to the entire management team.
We will commit ourselves to certain KPIs, which you will measure and be able to measure us on a regular basis. We will disclose the KPIs which we have in mind. This morning, 6:45 A.M., we have released and we talked about it very briefly today, the full year 2022 figure. Within the documentation, we have committed ourselves to one particular goal, the financial ambition, which is the conversion rate. 25%-30% conversion rate on group level by 2026. Remember, and I said that this morning when we met the last time here in London, we committed ourselves to 16%, which we overachieved. Now, looking into the more normalized situation, 25%-30% as our commitment from a group perspective moving forward. Our goal is aiming higher. What does it mean, aiming higher? Most trusted by customer employees.
I said it already. Trust will help us to increase customer retention, and which will support our growth. I come to that in a couple of minutes again. We will create world-class service and a unique insight from our data perspective. This will help us to have a sustainable growth. The CX, the customer retention topic, the EX, the employee experience. The CX, the customer experience, and the EX, the employee experience, is absolutely core for us moving forward. I will share our view on that topic moving forward a little bit more. Yield and product mix, I said it already, will enhance profitability paired with automation eTouch and an optimization of our model, which will then lead to the new conversion rate ambition of 25%-30%. Starting position, looking a little bit backwards.
All of us have experienced the last 2.5 Years a different environment, a different world. Zoom fatigue, Teams. Everybody was working from home, sitting behind the screen. We had to basically, in autumn or in spring 2020, we had to ensure that all of our people, all of our white-collar people around the globe, had access to our systems. We did it seamlessly, and we executed the order to cash process in a very, I think, professional way towards our customers. We acquired Apex, the largest acquisition, I mentioned it this morning, during this time. Number 7 in terms of the volume is concerned air freight. now we have created the air freight service provider in the 3PL market on globe. Thanks to Yngve and the team.
He, by the way, mentioned that when he came on to the Kuehne + Nagel International Management Board, one of his first statements he made, and we had a little bit of a laugh, "I will become a number one." He promised internally, and he did it. Thank you very much, Yngve. The largest acquisition ever in history, which was very successful. You have seen that we have not integrated Apex. We do it somehow a little bit different than some of our competitors. We leave the best of both worlds because the Apex model is a different model than the Kuehne + Nagel model. Yngve can talk about it a little bit later. You see, we have been hit quite fast by the Ukraine war.
This is our facility in Kyiv, which was destroyed after a couple of hours last February. We did a lot of support for the UNHCR and other support organizations supporting the people there. The good news is we have delivered more than 4 billion vaccine doses during the course of the pandemic. Why do I say that? It's not only the fact that we helped the people, and we made logistics as a very important pillar of the entire healthcare situation on the vaccine side. This was based on a decision we have taken in summer 2020. In summer 2020, nobody knew at that time whether there is a vaccine on the horizon or not. We have been contacted by some of our major customers, and they indicated that at that time that they're working on a vaccine.
The question was, are you ready? Are you ready to support whatever it means from a cost investment perspective? We sat together, we said, "Yes, we will." Independently, whether a single business unit will make profit or not, we are going to step into it. We invested heavily in cooling units, in Contract Logistics. We air freight and road logistics, they paid off pretty well. This is a clear statement. Today, we are stronger than ever. Kuehne + Nagel is stronger than ever in history, in the history of more than 130 years. Number sea freight. number 1 air freight logistics. Number 3 in Contract Logistics. We said it this morning, focusing more and more not only on growth as well on profitability. The highest profitability ever.
Road Logistics, a solid number 5, quite nice profitability development and more to come. 130 years track record, 80,000 logistics expertise people, white-collar, blue-collar, colleagues around the globe. 6 industry verticals. We are focusing from a sales perspective on the following verticals. Healthcare, high-tech, automotive, consumer retail, industrial and aerospace. This is where we are already having a certain market position. More to come in the strategy moving forward, which I will share with you in a couple of minutes. Technology. To ensure that we have all the right understanding, what we have done the last years, we have modernized our TMS landscape, our transport management systems. We have just concluded last year in December with the rollout of our new SeaLOG and AirLog system for sea freight and air freight.
A one- file concept, which is now live everywhere in the world. We have connected in Road Logistics, 40 countries, + 40 countries in the last 2 years towards our new TMS in road, which is called RoadLOG. AirLOG, SeaLOG sea freight air freight, roadlog in Road Logistics, and ControLOG in integrated as well as SwiftLOG in Contract Logistics. We manage our own destiny and we build our own systems. We don't buy it from the marketplace, and we will not buy our core systems, our TMSs from the marketplace. We maintain with our intellectual property, and this is a core value proposition from our perspective towards our customers and partners. eTouch, we started it already air freight with great results and an impact significantly on our conversion rate the last couple of years.
We will accelerate as well in Sea, and Road Freight in parallel has started the process as well. Financial strength. Markus shared his position this morning. We have a unique ownership structure, strong dividend track record. You have seen this morning how much we are going to suggest the General Assembly to pay out in May this year. If you manage a new strategy, if you come together and thinking about what do we do in the next four to five years, you need to start with the trends. You need to look into, okay, what is the trend in the different marketplaces? What is the trend from an industry perspective? What is the trend which I need to cover in order to be successful with my customers, their end customers, and with all the stakeholders around the supply chain? This is what we have.
This was our starting point in order to create our North Star. We thought about where do we wanna be in 2030. This was the starting point. We looked at the consumer needs. Everybody, most probably in this room, has increased the e-commerce orders, the behavior, the individual click to buy in the last two years. Right? That is a trend which we're going to continue. The growth rates currently as we speak since the fourth quarter, the first quarter, and most probably until mid of this year in e-commerce, will not be, of course, at 20% to 30% anymore, but you still see growth in e-commerce, and this pattern will continue. You have to have an answer, and we will come up with an answer, how to manage this trend moving forward. Supply chain challenges. Everybody talks about nearshoring, shoreshoring.
Is the globalization over? Is there a new pattern to be expected? We have a clear position. Globalization is not over. We see that still, right? A certain demand. The workbench, China, 30% of all the products are still coming from China with the best infrastructure around the globe from a production perspective. What we see, and we see that already since 2022 more and more, there's a clear effect that companies, blue chip companies, medium-sized companies, SME, go for double or triple production facilities. There is a clear trend into other countries. Vietnam, for instance, has seen tremendous growth the last 12 months. Indonesia, India, Southeast Asian countries will see more and more growth coming in from production shoreshoring from a single window opportunity into a more diversified workbench. Does it help us?
Of course it helps us. As more and more customers are demanding additional service components, as more they need us as the 3PL. For us, everything what is increasing complexity will help us to grow and to achieve a better yield. Competitive landscape. You guys, I think you have almost asked 100 times, what is happening with the new situation? Is it a threat for you? Two particular carriers are moving into the 3PL space. Not particular into our space, but two carriers have invested heavily in Contract Logistics activities outside of the port-to-port capabilities in order to offer their BCO customers, their top 200, 300 customers, an end-to-end solution from Asia to Transpac into Europe. Multi-fulfillment last mile. Is that a threat for us? I wouldn't call it. Cost. Couple of key messages.
First of all, none of the carriers will tackle the SME business. 50% of our business is SME-related, small and medium-sized enterprises. 100 container, 150, 200 container importers, exporters. The basic load. None of the carriers will have an answer to the SMEs. We have an answer to the SMEs. The fundamental question is: what is our quality stamp? If our quality, with all of our capabilities, the ingredients, is better than anybody else in the market, then whatever they do, we will have better customer relations, and we can serve our customers better. That is an area, don't get me wrong, which we do not underestimate and we watch carefully, but we don't see that as a threat. It's exactly the opposite. We are inspired to go the extra mile, to become always better in order to outperform. Digital forwarders.
I said it, I think, a couple of times, you cannot beam freight, right? What is a digital forwarder? We are digital as a digital forwarder. The only difference is we are not a startup. We are already 130 years in the market, right? What we have to consider is they start, some of them, they start from a greenfield perspective, and then they have a very good, in terms of TMS, IT capability with a platform towards their customers, which is quite nice to use. What they are lacking is the expertise, the people. We have both. We have the digital capabilities, and we have the people. That is what distinguishes us from any startup in the world. That's the reason why we watch out, we learn.
We don't underestimate, but we believe we can do better. Data and automation. Data is key. I said, I made a statement a couple of minutes ago, our TMS landscape will be our intellectual property as well in the next years to come. We will not buy from the market. We will not buy a software which we then purely integrate into our businesses. This is our core. However, how do we manage the connection to our customers and partners will become different in the future. Sustainability, Andrea will talk about that. That is a topic which will never go away in the next decades. We all have to tackle it as an individual person supporting the CO2 reduction in business for our customers, for the purpose, for our people, for the entire stakeholder community. Transport capacity. Currently, you can book as much as you want.
Remember, a year ago, transport capacity was extremely scarce, right? This is something which will sooner or later come back. You have a disruption sooner or later in the supply chain, and then you need to really make the choice. What do you do for your customers? How do you position? How is your planning? What is your predictive analytics? How can you use data in order to become better for your customers? From a customer perspective, we as Kuehne + Nagel, we try to put ourselves into the shoes of the customers as many times as possible. We need to look from a customer perspective into the key questions. What kind of questions, problems a service provider as us need to fix? What is my problem from a customer perspective? How can I ensure I have access to capacity? Remember I said that, right?
Two, three years ago, from a sales perspective, we always were dealing with a procurement department. Now we are dealing more with the supply chain organizations of the customers, because they need to ensure, all of them, that their products are arriving in time at the right place. It doesn't really help you if you have the best price on Earth, if you cannot deliver to your end customer needs. Do we understand their business? Do we have powerful technology in order to support? What is all about our market insights. At the end of the day, from a customer perspective, who can I trust with my critical supply chain? That was exactly the question. Friends. Trust. What does a customer need? This is our claim for the Vision 2030.
Becoming the most trusted supply chain partner supporting a sustainable future. Now somebody can say, "Okay, how are you going to measure trust? What do you do?" People employ experience, EX. Customer experience, CX. How do you measure? How do you measure trust? I can tell you, we will measure, and we will be able to measure. This is what we would like to hear from our customers. Kuehne + Nagel is worth it. Kuehne + Nagel is my safest choice. Kuehne + Nagel is my trusted partner. Trust, think about it. Who's a prime customer of Amazon? Oh, quite a few. Okay, quite a few. Do you check on the price level when you order? Most probably not anymore 'cause you trust. You trust that the cargo, whatever you are ordering, the pair of shoes which you wanna have in the afternoon, the book, the shirt, the laptop.
You trust them that it's going to get delivered exactly at the moment where you wish to receive it. That's what trust is all about. You are becoming less sensitive on the pricing 'cause it's extremely convenient. That's what we would like to achieve. Becoming the most trusted supply chain partner in our industry. Roadmap. Why have we chosen 2-time horizons for the vision and the Roadmap? 'Cause you want to measure us, of course, right? Your horizon is not 8 years. That's the reason, one of the reasons. The main reason was, of course, focus, focus. Whatever we are going to do, we need to have a certain focus on leadership, and we need to have the capability and the ability to execute what we promise.
That's the reason why we condensed it into the first four years, which we call Roadmap, with certain deliverables. Then the next chapter, in order to accelerate what we will have achieved until 2026. For me, this is a very important slide 'cause this will create transparency for you about our clear choices we made. You have to make clear choices when looking at the strategic footprint moving forward. For us, we made these choices. First of all, I said it. Lead with quality and trust. We don't wanna be the most competitive on price. We don't wanna be a transactional service provider. We wanna lead with quality and trust. Best logistics expert and technology. We don't focus on either/or. It's a combination of both.
We strongly believe only with the right people, with the employee experience, the EX, and the right technology, we will be even more successful than in the past. Asset-light model. This is going to continue. We will not move into any assets other than maybe a couple of trucks, two or three aircrafts, where we have a back-to-back requirement from customers in order to support their supply chain needs. We will maintain an asset-light business model. Yields and margins. I said it. Yield is more and more the important driver for success, but don't give up on your growth aspiration. Whatever you do, don't grow with commodities. Don't grow. That is our mantra. We are not going to grow with businesses or with certain trade lanes, activities below a certain threshold. The market is so big, even as the number one.
The market share we have gives us huge potential to grow into sectors and businesses where we have a much higher yield. It's an evolution and not a radical change. As an involvement of the previous Roadmap, of the previous strategy. We have not only short term, we have midterm and long term goals. Vision 2030, Roadmap 2026. Roadmap 26, the next four years. The experience piece, the Digital Ecosystem, the market potential and living ESG. I will touch a little bit more on the experience, the digital and the market 'cause living ESG, Andrea, as I said, will share 20, 25 minutes insights on all the aspects. Kuehne + Nagel experience, customer experience, people experience. There's a common problem statement in the industry. This industry, it's not a Kuehne + Nagel problem. We are part of that statement.
The problem of this industry is that this industry, somehow on an analyzed basis, is losing 20%-25% of its customers. Statement. I'm not talking about large customers, of course. I'm talking about Telesales customers, small mom-and-pop shops. Customers who book once a while, right? 2 times. Why is that? 'Cause the small forwarders, the SME forwarders, they exist based on an extraordinary experience they create for their customers. That's exactly what we wanna do. We wanna basically move into the space in order to create extraordinary experience with our customers. What have we done? We have 6 priorities. We call these priorities discover, connect, develop, and evolve. They are equally important for our employees and our customers. I give you just a couple of in examples in the interest of time. Discover.
From a customer and employee perspective, what is our employee value proposition in the marketplace? If you know us as a potential candidate, if you have good experience, even if you did not have any touchpoint via social media, via recommendations in the family, friends, colleagues, relatives, you have a positive experience. You could potentially think about joining a company like us. What do you need to do in order to have the branding position before even people think about joining a 3PL like Kuehne + Nagel? Same goes for the customers. How do you interact with your potential customers? Connect and onboard. What is your experience? We have seen in the pandemic that our industry has lost more people than ever before. The reasons are pretty clear.
If you look into the data sets, you find out that people have left the industry after six months already, or have left certain providers after six months already, 'cause the onboarding didn't work out properly. What is the purpose of the onboarding? The same is with customers. You want, as a customer, the same onboarding experience whether you do business in Shanghai, in Barcelona, in Santiago, in New York. You wanna have a seamless onboarding experience with us. That's exactly what we need to develop. I'm not saying that our onboarding is not sharp and not properly managed, but it's not consistent around the globe. That's exactly what we are going to change. One consistency around the globe. How? I'm going to tell you. Develop.
How do you develop your people into new opportunities, new opportunities inside their environment or moving them outside into other businesses, other functional units? Same for the customers. Continuous improvement, how do you evolve that? What we have done there is that we have asked our general managers. We have a matrix organization, and we have five regions. The regional presidents are responsible with their general management to roll out, to execute this customer and people experience in the future. It comes from the heart of our organization for our people and for our customers. This is the glue for everything what we do. This kind experience, customer and people experience, is the glue for everything what we do. This is the center of our focus in the next years to come. Have we done that already? Yes, we did.
We started NPS, measuring our customer experience in Contract Logistics in 2018. You have seen the results of Contract Logistics, how positively the curve went up. There's a correlation always between NPS, customer retention, and the operation margin. We are not reinventing the wheel within Kuehne + Nagel. We use what we already have in one business unit and now replicate it on a common standard into the organization. Digital Ecosystem. One message, please. A Digital Ecosystem is not, we are moving our infrastructure from on-premise into the cloud. This is not a Digital Ecosystem. A Digital Ecosystem is if you look at your business challenges, what are your business challenges you wanna manage? For instance, do everything faster and more effective versus what you currently provide. Generate new revenue streams. What do I mean? Our revenue streams are purely coming from executing freight.
Can you imagine we would have a subscription fee on certain solutions, new value propositions, using the new Digital Ecosystem? That could generate potential new EBIT, right? First of all, become faster and more effective, generate new revenue streams, and use artificial intelligence and machine learning. That's the reason why we move into this new Digital Ecosystem. Digital Ecosystem for us is we will, with a partner which we are not yet ready to announce, with a large cloud partner, we will move into this new ecosystem in order to create a complete different customer onboarding, customer experience, people experience, in order to have a better value proposition for our customers. On that slide, please remember, it's not a transformation from an on-premise landscape, infrastructure landscape into the cloud. It's much more. It's business-driven.
What kind of problem statements you have you wanna solve for your customers? We have done that already. This is the first cloud project we ever started. Some of you might remember, we did eTrucknow back in 2018. we now have a 3 million digits. It's a little bit more than CHF 100 million revenue stream based on this idea with a quite nice EBIT margin in Road Freight. as well here, the proof of the pudding is we have done it already. everything what we have learned, and I tell you learn quite a lot, and you fail a lot of times if you do things like that. The only topic is, don't fail twice. Take your lessons, use it, utilize it, and move forward. This is a perfect example which will guide us into this new Digital Ecosystem.
Living ESG, customer demand, of course, more and more to help them in their CO2 transition. You have seen a lot of announcements. Lenovo was the air freight. Novo Nordisk was another one. Yngve will speak about it, where we are helping customers to become more neutral or totally CO2 neutral by a certain time by helping them with biofuel, SAF, or any other alternative fuels. Same goes with the SBTi target. We have signed up to the SBTi target. By 2030, our commitment is to reduce 33% of our footprint. This is not offsetting, this is technical reduction, right? We have just ordered in France a couple of months ago, the first 100 BEVs, so e-trucks, in order to support the transition. It's Scope 1 and 2, but 98% of our emission is in Scope 3.
It's more and more helping customers. What is the purpose of the company? Andrea Debbané will tackle it as well. This is important, I said it already. The purpose for what do we stand for in our customer, in our employee experience? Of course, an appropriate governance. Market potential. I need to speed up a little bit. Market potential. Remember, we started 8 years ago with the first we called it leverage area at that time. Healthcare. Pharma and healthcare. Now we are leading this industry from a 3PL perspective. This is an ongoing journey. Yngve Ruud is the sponsor of healthcare on board level. Everything what you see here has a sponsor on board level. Every board member takes a certain initiative and drives it forward, full responsible. Healthcare, we will maintain.
Not only maintain, we will even develop and execute faster on our healthcare ideas. Renewable energy is brand new to us. Renewable energy, Otto will talk about it. By 2050, 50% will come from renewable energy globally. 50%. Can you imagine? Two main areas, solar and wind power, offshore, onshore. What this industry will require from a logistics standpoint of view. What kind of equipment they need to sea freight project logistics, heavy weight. It's Contract Logistics. air freight and road. this is a huge area where we will invest heavily, similar to what we have done in healthcare as of now. Semiconductor. We are large provider in high-tech, but we have not touched so far on semiconductor. This is an area where we as well will invest.
The commitment is CHF 500 million revenue by 2026, mainly air freight in Yngve's camp. E-commerce, I said it already. It's the multi-fulfillment for sea freight. we are absolutely great in offering dedicated solutions for large customers. We will invest organically and inorganically in e-commerce final mile solutions. Customs will be touched by Hansjoerg. Great opportunity, very high yield, and excellent conversion rate. We started that journey already in the U.S. and in Europe with very nice growth rates. Asia. Organic and bold on acquisitions. We always said Asia is our focus area. You can expect whenever we invest, we go into the Asian marketplace. This is part of an inorganic growth strategy in the next couple of years. Japanese and Korean customers, very close shop the last decades. For us, it was rather impossible to tackle Japanese and Korean customers.
Now they have opened ourselves. We have hired in almost all markets in the meanwhile, consignee sales peoples. Japanese consignee sales people selling for us at the destination point with great success. This is an area where we believe we can grow our large customer base significantly. Now, I said, how does that connect overall? Global consistency with dedicated board leadership. The CX is a CEO topic together with the regional presidents. The data, this new ecosystem, is not an IT topic purely. It's not a transformation. This is something the entire leadership team, the board, will drive forward. Because remember what I said. It's the business challenge. It's not the IT infrastructure. This is our core. This has to come from all the members of the leadership team.
We have Mark Buckle here just in case in the afternoon you have a couple of questions on the Digital Ecosystem. Mark is over there. He will be more than happy to answer. Global sustainability with HR and Andrea. These different market aspects, which I have just shared with you, dedicated each individual initiative to a certain board member. This is the team. This is the winning team of the industry. The two gentlemen on the left, you have seen already a couple of times. We have Martin managing our IT and the Digital Ecosystem. Sarah will join us as of April first as our new Chief HR Officer. She has a large experience coming and joining us from Migros, and she gained certain experience as well before at a stock-listed company in Switzerland.
Marc Pfeffer has joined us effectively 1st of January as a management board member, but he's still with the company since 2014. Hansjoerg, you have seen. Yngve is here, Otto, and Gianfranco. You can now argue about diversity, right? In all honesty, we are very proud that Sarah is going to join us in order to help the company to really drive the diversity forward. Last slide before Markus is going to take over on the financials. Everything what I have shared, the cornerstones, the vision, the focus on the experience, will lead us to this new conversion rate target, 25%-30% by 2026. Another, I think, message I would like to bring across: It's important for our strategy that we tackle the soft stuff as important as the hard stuff.
The cultural change in CX and EX, in this experience, is as important as the development of the markets and all the other cornerstones. With this, thank you very much. Markus will now guide you more and tell you more about the financial ambition and how we are going to achieve that.
Thank you, Stefan. Thank you very much. I think, let me pick up here quickly on the key takeaways, the slide that Stefan had originally presented at the front, just to, you know, keep it in good memory. Most trusted by customers and employees, focus on yield management, maintaining the growth path. I think Stefan was very explicit on it. A company that doesn't grow has no future, and, of course, we have future. We wanna, we wanna mold, we wanna, we wanna manage that future going forward. Experienced team, you have seen that, with a clear plan and KPIs. You will see some of them I'm gonna present. Of course, the target, 25%-30% group conversion rate in 2026. Let me pick up on that slide.
It wouldn't be me, it wouldn't be me if I would just start in a time continuum, right? I need a starting point. I need somewhere where I can reference to, because otherwise I have difficulties to see the development going forward. Let me just recap one minute on what I call the slide of swans. You see these little swans there. I did like these slides because that's, in a nutshell, that's the summary of our 2017 to 2022 program. Earnings before tax CHF 1 million, earnings per share . We have put in that green dotted line as the reference point to what we have communicated at that point in time as our targets for the conversion rate of the group, 16%.
As I, at multiple occasions, I always said our return on capital employed on a natural basis of our balance sheet and our business model should be around 70%. Free cash flow generation, don't need to mention it anymore. I think has been exceptionally good and, I think we are very clearly committed to continue that. Moving forward, Roadmap 2026. The old Roadmap is closed. The new Roadmap starts and, I had a suspicion that Stefan, because he comes out of the Road Logistics, he's continued with Roadmaps for a long period of time. We will say it's strategic programs that we talk about. Whilst we acknowledge, of course, that the years 2021, 2022 have been quite extraordinary, but on the other side, it gave us opportunities.
It gave us opportunities to develop very specific solutions to customers and generate an operational platform that is one to none, right? Absolute operational excellence in all business units. Which is, which we are building on, as our platform for success. It becomes slightly tricky because in my simple world, there is only 3 core elements that the business model is shaping. It's growth, it's profit, and it's cash. Whatever you prioritize is gonna give you a certain tilt towards your profitability and to your success. Simplifying and maybe even oversimplifying, I admit that a business model that probably pre-pandemic was driven by, you can see it here, incremental volume, bit of incremental profit, bit of incremental cash flow. Everybody was happy. Why was that possible to do?
Resources were not a topic, neither in capacity, nor was it on the workforce. We got plenty of people to work for. If there is another 1,000 to use that Otto Schacht has one on an RFQ, we just hire another 5 people, and that was it. Today, that's not possible. In the future, that's not gonna be possible. Workforce is a scarce resource. Skilled workforce that actually can deal with customer requirements, customer requests. That is something that you need to educate, that you need actually to bring from within and have the right people to do that. When we talk about customer experience, employee experience, this is what matters. If you have the wrong people on the phone, and I'm using phone as a communication stand-in, if you like.
Nobody over the last 2 years really liked to work in this industry. You know why? Every time you picked up the phone, you got yelled at. Customer was unhappy. Things didn't arrive. Ships were late. When a ship is late, it's not my fault. Still, I need to deal with the customer request. A lot of these things are changing. We need to get the right people for delivering the right customer experience. Only then our yield, our management on yield is gonna be successful. Because only with that extraordinary customer experience, we can focus on yield management as we want to do it. You will say, "Of course, we have heard that. 2017, 2019, 2020. You always, you know, told us you are looking for the higher yield business.
What's different this time? Allow me for a moment, I'm being conscious of time, but allow me for a moment for each of the business units to pick out one single impact of the four cornerstones. What does it mean in reality? What does it financially mean in reality when we put a highlight on some of the initiatives within each of the business units? Look at Sea Logistics. You all know, Sea Logistics is the still, I may say to the, to the honor of my colleague, Inge, still the largest business unit in the company, but we have a little competition going on there, right? Maybe sea freight and sea logistics and Air Logistics fighting for the number 1.
Offering an extraordinary service, we can earn an average of $50 more per TEU. Otto is gonna tell you how he's gonna do that. What does he actually mean with that customer experience? I give you the idea what's the magnitude that we are talking about. An average of $50 per TEU. Of course, there's gonna be some that is $20 and some that is $200. Yeah. An average, and it's not in every single TEU, but calculated throughout the model, that is the impact. It's massive. It's absolutely massive. You're gonna say, "That's great." I'm also gonna say, "That's great," and Otto is gonna tell you how it's gonna work. Why do we know it's gonna work? That's why I wrote it here. Here is why we believe it works.
The large number of our competitors, I'm not talking about the top 5 or 10. I'm talking about the 10,000, 20,000, 30,000 small freight forwarding companies in the world. Their unique selling proposition is the extraordinary service. If that would not work, they wouldn't be there. Logically combining that customer experience, that extraordinary customer experience with our scalability, reliability, global network, and last but not least, a pricing power that the smaller provider cannot offer to the customer. The sky is the limit. $50, I think, and I know Otto, is a careful estimate. You know what we wanna do, you know the magnitude, and you know why we think it's gonna work. Pure statistics. You can read it afterwards or you have read it already.
It's a short analysis of how much business we do with the development of a certain bandwidth on the GP per TEU and how much of our volume we actually currently ship below average GP per TEU. This is the red color on the volume on air freight. i'm picking air logistics Digital Ecosystem. I'm not picking the experience. Air Logistics also has, of course, impact out of the KN experience. Here deliberately, just to give a different spin, a different highlights to Air Logistics. Different customer portfolio. Much higher ratio of large customers. They already today rely on our scalability, on the global network, on the capacity access, on the reliability of our services. Clear. eTouch was introduced first at Air Logistics operation. Very clearly, Inga says, I can do more.
I can even automate more. I can give better digital solutions. I'm gonna shave off $3 cost from 100 kg. That means $3 more on my EBIT per $100 per 100 kilos. Why do we think it's gonna work? Because we monitor already since 2.5 years on an hourly base on a man-hour basis. Excuse me, the word. On a work hour basis. I'm not allowed to say man-hour anymore. On a work hour basis. On a work hour basis, the progress and the air freight. also here, very similar, very similar setup. The only difference is when we compare sea freight analysis, also look at the red part for a moment.
The red part, 27% of our volume, we ship below average on a GP per 100 kilo. Why? The vast majority of that is perishables. We absolutely are committed to continue that. You know why? Because perishable has an additional qualifier. It's entirely resilient to any macroeconomic development. It's unbelievable how stable volumes in perishable networks are. At the current stage, we might actually be one, if not the largest, I think we are the largest, but certainly only a handful of global providers can give that kind of network service to perishable customers. It's absolutely unique what we have here. This will stay. The share maybe will change a little bit because we are focusing on higher-yielding business in the dry cargo, as we call it.
Of course, the perishable we are entirely committed to and continue to be committed to. Road Logistics. Matter of scale. You do know our main exposure is in Europe and in the U.S., in the major markets in Europe. As Stefan has alluded to, the digital offering with eTrucknow is picking up pace very quickly and is contributing nicely towards the profitability. What is important, we can still optimize the utilization of our networks. When we do that, we will have an effect that I put here or that we put here on the slide with an 8% gross profit growth. I can tell you, we aim for a higher percentage in EBIT growth. Positive leverage, 8% GP growth, and a bit more on the EBIT. Why we believe it works?
We can manage it ourselves. We don't need anybody else. We can organize ourselves. We're good in operational optimization, and we trust that this is gonna work out. Contract Logistics. The key to nearly everything. I think it's entirely underestimated also from the outside. Contract Logistics with their product knowledge of customer product, of course, customer product knowledge. Supply chain knowledge. They have engineers that actually think about how things need to be handled properly. There is expertise that is spread out all through all the other business units. There would be a good amount of business that we would struggle to obtain in the other business units without a clear proof of expertise through the Contract Logistics folks. We went through a restructuring over the last couple of years. You all know that.
The ones that you all follow us for quite a long time, we have, we have spin-off some of the U.K. businesses. We have restructured some of our existing businesses, the customer portfolio. Safe to say, I think we are absolutely where we wanna be right now. Now it's a matter of scale, growth, and continue that road of success. You might have noticed or maybe not, that's the only slide where something is missing, right? It's the question why we think it works, right? Why do we think it works? On a global scale, compared to any other competitors of us in Contract Logistics, we are already the best. Believe it or not, when you look into the profitability, this is not the largest, but it is the most profitable by comparison.
We believe it works because we know we have done it. That's why I believe it works. I have talked now to one of the many initiatives, obviously, in each of the business unit. I hope sincerely that you understand that each and every of these initiatives is a deliberate, very well-planned part of an overall strategic bundle of initiatives. I have already seen in some of the communications, you have picked out that slide and started to send it around. I know it's gonna become maybe one of these slides similar to the eTouch slide in 2017.
That was also just recently, I think, somebody put it in front of me and said, "So, how did that develop then?" Some slides are hounding you forever. I think that has the potential to do that. What it does, and I wanna be very specific on that. What that slide does, it shows you the magnitude of contribution to the journey. From our starting point towards the 2026 ambition. Really how you need to read it is like the target on the right side, so on the green column. The conversion rate in excess of 40% for Sea Logistics. Air Logistics, in excess of, 10% for Road Logistics and 7%-9% on the Contract Logistics piece. The four cornerstones are contributing in a certain percentage towards that journey. It's a journey.
Again, I'm reiterating that journey also means that there might be a situation, maybe even in 2023 or 2024, where we are gonna go into the opposite direction. We don't know. At that point in time in 2026, we're very confident that these are gonna be the numbers. You see, largest sea freight is KN Experience. That's extremely important for Otto Schacht and his team and the sea freight people out there to get that right. Market expansion. Similar air freight. very important for Road and Contract Logistics. Digital, so on the cost side as well as on the digital offering. Never forget the digital offering. That is the revenue growth as well. Important on air and road. KPIs. It wouldn't be Kuehne + Nagel without KPIs.
Yes, I admit, when we started 2017 on the eTouch, maybe our reporting was not timely at the beginning. It took us maybe a year to get the first reliable reports out there in front of you. I think, we will be in a similar situation here. We wanna disclose on a regular basis on KN Experience Net Promoter Score. Right, wrong, or different, I'm saying, but you will see a progress. We will disclose on the Digital Ecosystem our eTouch indicators. Similar to what we air freight side, we will do sea freight side. market potential. That's the easiest one. I think that is for everybody quite straightforward. Incremental gross profit, incremental EBIT. Living ESG. Total greenhouse gas emissions per net turnover. You can see that already in our sustainability reports.
On the overall financials, at the end, it's the group performance that counts is the gross profit, EBIT, and of course, the conversion rate that we are looking for. Summary. Put everything together. What is the ambition from a, from a financial perspective, and where does it come from? Where do we start? Yes, this is a Capital Markets Day. We talk about business development and everything else. At the end, it's only like a few slides that we or a few KPIs that we need to look at. Compound growth rate between 2019 and 2026, 17%-19%. I leave it up to you. Your models are probably better than my calculation in ahead, but I think it's gonna be relatively easy to guess to a 2026 number. Conversion rate of the group, 25%-30%.
Conversion rate Sea-Air , in excess of 40%. Free cash flow, in excess of 70% net profit after tax. We have exceeded that on a regular basis. You could say, "Well, that's not an ambition," but I think it's good to know. Working capital, 3.5%- 4.5%. There is no reason that that would change. A CapEx that is relatively modest, CHF 200 million-CHF 250 million. You remember that has been already on the CHF 300 million side. Because of the restructuring also on the Contract Logistics part, we have been able to reduce that quite significantly. A final remark to that financial target or set of financial targets for 2026.
Kuehne + Nagel exists now since 132.5 Years. We're focusing on customer value, on customer experience, and how we can best contribute towards the value creation for our customer. We are blessed. You all know that. We are blessed with a family majority shareholder structure, and that allows us to keep the focus always on the long-term view. I think what is important when we think about the family majority shareholding and the customer value creation is we truly believe, as long as we can create value for the customer, we can create value to the investors. You've seen that slide now the third time. It hasn't changed, I hope. 2023 is the starting point.
Allow us and let us and trust in us to deliver our 2026 Roadmap with all its financial success. Thank you very much.
We're now happy to take some questions from Stefan and Markus can address them.
Hey, my name is Marc Zeck from Stifel. I just got a question on what you plan to sea freight, and you said you wanna increase the share of SME customers or the retention of SME customers. My question here is.
If these SME customers are currently with smaller freight forwarders, your competitors, aren't these high maintenance customers, and therefore profitability should be a bit lower than what's your average larger customer right now?
Let me answer. Am I? Yeah. Let me answer the first question. Yes, we will go as well for SME customers. As I said, 50% is with large sea freight and 50% is with SME customers. What we have done, quite a while ago, we have split our sales force into two parts. One is focusing purely on key accounts and vertical, and the other one is a hunting force reporting sea freight business unit, only focusing on SME customers. This is where we invest in the next couple of years more. Hunting spirit on the SME customers. The question is the operational cost to serve these customers higher than in the key account arena? The only question is, what do you do with the onboarding?
Remember what I said, we will create a seamless onboarding capability with our Digital Ecosystem. The trick is to acquire SME customers with a higher margin and then seamless onboard them by using latest technology. 'Cause you avoid that the onboarding process is costing you more than the onboarding process for a key account. That's the answer to it.
Thank you.
Hi, it's Sam Bland at JPMorgan. I had a question on that slide that you were talking about. You've got this sort of Kuehne experience and the sort of market-
Mm-hmm.
Bucket. Could you just be quite clear on what's in each part? You know, is market factors like freight rates, and it's not company specific or, and the company specific changes are in Kuehne experience. I'm thinking particularly also about customer mix, which bucket would that fit in? Thank you.
The customer experience, I take it the market potential, I think, you can explain how we see that active development and the active contribution of ourselves towards that. From a KN experience, that is what I think Otto is gonna explain in details is how can service become extraordinary that customers are not only prepared to pay a higher price for that. You know, the Amazon example of Stefan. But not only a higher price, but also the higher retention of customers. We expect to grow in two areas, not only on the GP part, but also on the volume part. Because you don't lose as many as you would have done in the past. This is basically the customer experience piece. On the...
Of course, the employee experience piece has a pure cost relation to it, because when your employees are happy to work, you know, within that framework and being well motivated. Because every time onboarding and losing employees is quite a costly entertainment.
On the market.
The market, just to double-check, whether we actively or we wait basically, right? How do we actively approach that market potential?
Yes. Like, is it Kuehne specific?
Yeah.
Yeah. Is the market piece Kuehne specific things and changes, or is it market level? I don't know whether it's freight rates or something that you're not in control of.
No. It's from a market potential. What I said before is we actively engage ourselves with certain verticals which we had not on our radar screen the last couple of years. I have given you a couple of examples, right? It's our capability, our willingness to invest in order to gather and gain more market share or more growth in these specific areas, right? Whether it's the Japanese program, the Korean program, which we haven't done in the past. Whether it's looking into renewable energy whether it's looking into customs. We invest in certain resources and capabilities in order to capture potential where we believe there is a higher yield for us if we move into these areas.
Thank you. Michael Foeth, Vontobel. Two questions. Coming back to KN experience and employee journey, can you share what sort of customer churn you have and what you're targeting in the future, and also for employee turnover and what sort of targets you have? The second question would be on capital allocation. You talked about CapEx. You mentioned M&A in that one slide. You paid a nice dividend. What are your capital allocation priorities in the 2026 Roadmap? Thank you.
Let me take the capital allocation first. I think very clear there is no change. That's why we didn't really put any specific highlight on this. I think, you know that, we work on asset light as much as possible. We are adamant on it. That's why also the CapEx came down compared to a couple of years ago. At the same time, from an M&A perspective, nothing has changed there. We're committed to e-commerce, healthcare, Asia focus, small, medium-sized acquisition. Always acquiring expertise, know-how, or special industry access, and then leveraging that through our network.
None of these parameters have really changed and that will drive, logically, I think, and you have seen that here, also with the dividend proposal of CHF 14, that will generate a, let's say, healthy dividend potential.
I take the employee. Before the pandemic, we had below 5% unwanted erosion on the people side. During the pandemic, depending a little bit on the marketplace, we had significantly higher, right? Significantly above 10% in certain markets like the U.S., driven by the market, right? Our aim is, of course, to bring it down globally again to the 5% maximum, right? Think about the following. People are a scarce resource, and we will not get a lot of new people into the marketplace in the next couple of years.
We really need to manage the unwanted erosion attrition from people differently, and we need to allocate the people we can get from the marketplace, train, educate, coach them, create this EX in order to put them on the right yield business, right? That is as well a component of this, of this question. Customer experience, of course, we wanna bring it down significantly from what I have shared with you, a couple of minutes ago.
Thank you. Alex Irving from Bernstein. Can I dig in again on CX and EX, please? On CX, we talk about customer retention improving, but how should we frame the financial impact of this? Are we talking about spreading customer acquisition costs per TU per ton over a larger denominator? What's the way to think about the financial upside? On the EX side of things, you talked about employee churn, but what tools do you have in place to manage EX? How would you assess effectiveness in driving financial results of the company, please?
I think I take on the customer side first. The customer side, I think we have quantified the impact at a GP sea freight perspective, where there is the biggest lever. I think that is a combination of the one side being rewarded for an extraordinary service with less price sensitivity, if you like, from a customer's perspective. I think the $50 per TEU is quite a specific number out there. You know, there is, if you look into the percentages on that one slide, you will see also air freight. you could calculate if you would like, you know, that there is certainly an element of improvement there as well.
I think it has nothing to do with the cost structure. The large difference, and Stefan has alluded to, the large difference between the SME customers and the key account customers is on the onboarding pace. Once the onboarding pace is actually being done on the execution itself, there is difference, but not to a magnitude that's gonna put a question mark around the profitability model.
Let me take the question on the people side, right? What kind of tools? First of all, and I mentioned it as well, we have started to use Great Place to Work as our source, basically, right? We have done it in Ireland. We have done it in quite a few countries in South America. First of all, you need to understand what is the belief, right? What are the touchpoints? How people do come back? What do they want from you, right? Then you need to come up with the tools and the process in order to give an answer, right? This is a little bit how we are going to do that. First of all, we need to have a baseline.
From that baseline, we execute the tools and the ideas we have in order to improve the situation on the different touchpoints. This is the methodology behind.
Hi. Patrick Creuset from Goldman Sachs. Just 2 questions, please. The first is, what yield assumption underpins your 2026 targets in Air and Sea? Perhaps I just, I didn't see it, but what's the base year for the divisional targets you gave, for example, the $50? Just adding on to that, I didn't see any mention of cost programs. You're not cutting costs at all also in 2023?
Okay, three questions. I think the base for everything is, and we deliberately said the growth program goes 2019-2026. You will have to calculate yourself. I'm not gonna give you a number to be very clear. Second part, I think on the, on the yield or the first question on the yield, what are our target yields? I think we have already disclosed some while ago sea freight perspective, we would look at yields on the around $450-$500 level. When we operate or when we continue operating with a CHF 300 cost base, you derive your EBIT per TEU that is, that I think is a target going into the 2026 years.
Cost cutting, interesting that you ask the question if we're not doing it. We adjust permanently our cost base towards the market conditions and the revenues that we can generate. We are on a day-by-day basis, we are adjusting our workforce, we're adjusting our operational base towards what is required. What we don't do is we don't go out and say, "Yeah, great, we let go 5,000 people." That's not our style. That's not how we operate. It might actually happen, but we are not marketing that we are letting go people because we believe that when the market picks up, and we all think that it's gonna happen most likely at a point in time in 2023.
We don't wanna go and, you know, rehire people that are not trained anymore. We do it specifically focused in areas where we know we need to adjust it.
Let me add. Think about our statement, trust, quality, high yield. If you are a fire and hirer, hire and fire, this will not work out. Completely support what Markus said.
Good morning. It's Andy Chu from Deutsche Bank. Two completely different questions. The first one's on what could be your famous slide, and it suggests quite a high % of the Contract Logistics improvement could come from M&A. Obviously, when we look over the last few years, it was a big expansion in Contract Logistics and it's reversed and it's now in great shape. I just wondered in terms of the M&A, is that coming? When I look at the shape of that, is that direct Contract Logistics or is that as a consequence of a target that has?
Mm.
largely Air and Sea with some Contract Logistics? That's my first question.
Andy, good to have you here, by the way. I think the M&A piece in Contract Logistics, as I said, Contract Logistics is a nucleus for many other business opportunities within the group. I think when we talk M&A in Contract Logistics, it might be, and I'm just a fictitious example, right? When there is an e-commerce opportunity on an acquisition target, then that would be, from the nature of the business, would be typically Contract Logistics. There is a huge air freight side, on the roadside. Technically from a reporting disclosure perspective, it might actually be straight Contract Logistics.
Around IT, which is, you know, obviously very important question to you, Stefan. You mentioned obviously a lot of your systems being internally and developed and generated, and that seems to be the way forward. There are some systems out there, many systems that are actually quite useful and helpful external systems. Is the way that the business set up from an organic standpoint from IT systems, does that prevent you from potentially utilizing external bits of IT kit to help performance and margins and profits and cash flow?
Good question. I was talking about our TMS landscape, right. We will never, ever develop an own CRM system. This is always what we will buy from the marketplace in order to utilize the capability which will give us a better position in terms of customer service, of course, right. If we use the right CRM system. We are already using a state of the art CRM system from the marketplace, and we have done it as well in Contract Logistics and in integrated. We have modular board certain capabilities from the marketplace. Where we will stick to our intellectual property and what we have done the last years is we will not go into the market in order to buy air freight execution tms program, right. Install that in.
In the interest of time, we'll bring this Q&A session to a close. I think there'll be plenty of opportunities over the course of the day, right, to address some more. Thank you.
Thank you for your attention, everybody. Now, Andrea, please join us on the stage. Living ESG.
Great. Thank you.
Absolutely.
Thank you. Good morning, everybody. As Stefan had introduced me, my name is Andrea Debbané, and I'm Global Head of Sustainability. I will take you through our Living ESG Roadmap. I have about 30 minutes, and I have one goal in those 30 minutes, is really to take you through it, that you will believe that Kuehne + Nagel is an excellent investment because we have a long-term strategy to turn the transport industry's biggest sustainability challenges into growth opportunities. Conscious of time, there are three points here. The first is on environment and what we're doing to be the front runner in sustainable logistics and how that results in customer retention, attraction, and business development. We'll look quickly at the social side and as we'd already picked up, how Kuehne + Nagel is the best company to work for.
Also touching on our governance, that we have a strong governance structure for alignment and agility. Being a front runner in sustainable logistics, why it results in customer retention, attraction, and business development. Essentially, there is more public concern over issues like climate change, diversity, human rights. There are more and more ESG regulations in supply chains. There's more demand from investors for companies' transparency and how they're managing their ESG agenda. Specifically, there's more and more customer interest and demand in sustainable transport and logistics. We see our living ESG action plan as an opportunity for retaining, attracting, and growing our business. Specifically strengthening the relationships with all of our stakeholders, whether that's customers, suppliers, employees, and also investors. Let's start with climate change.
It's one of the biggest challenges that's facing our industry. We know that we need to transition to a low carbon and eventually a zero carbon sector. We've had a number of our customers, as you can see on the slide, that have fully engaged in our sustainability solutions since we've introduced them. We know that climate change is an issue that all companies are going to have to address and tackle over time. Working on these issues, working on sustainability requires collaboration. Collaboration builds trust. That's why we want to be the front runner. Stefan talked about the Science-Based Targets. I'm gonna refer to it as SBT because it's quite a mouthful. That we see that this is a commitment that is growing globally.
We had 72% increase of companies worldwide that had signed up with Science Based Targets last year. If you look at it in terms of our own customer base, we have 47% of our globally managed key accounts that are SBT committed. To put that in context, what it represents, in 2022, it represented 30% of our turnover. It's significant. As Stefan had mentioned, we have become SBT ourselves. What we do is we monitor our customer base and seeing which companies are signing up. Why is it important? Why is it an opportunity? Simply because SBT customers want to work with like-minded suppliers.
They wanna work with suppliers and partners who have similar values, common purposes, common goals, and partners that they can trust to support them in their own sustainability journey and decarbonization journey. Because we're asset-light, and Stefan had mentioned and talked about this, we have a different landscape than many of our customers, sorry, many of our competitors and peers. I think what this slide illustrates is our emissions broken down into Scope 1, 2, and 3. Scope 1 and 2 is what we have a direct influence as a company. Scope 3, which is on the far right, that is the majority of the emissions in our value chain. It's over 98%. Those are the emissions of our customers' freight through our suppliers.
This means that above and beyond deploying our own strategy for reducing emissions in our sphere of influence, Scope 1 and 2, we also have an influence, and we're enabler in supporting the world in transitioning to sustainable supply chains through the services that we're offering our customers. That's what I'd like to take you through now. We're continuously innovating and investing in our commercial offering of sustainability solutions for customers. We know that to make greener choices, it's essential to know the carbon footprint that's generated along each step of the supply chain. The methodology that we're using, it covers all transport modes, and our emissions can also be broken down by trade lane. I mean, ultimately, we want to empower our customers to make sustainable choices. We leverage data analysis.
You've heard that this morning, and you'll hear it throughout the day. That means, you know, working with data, supporting our customers so that they can have operational optimization and consolidation, looking at modal switch solutions, carrier and route preferences, so that they can continuously improve and avoid emissions. Last year, we launched the Essential Emissions Suite that provides customers with a comprehensive overview of their shipments and emissions. It's allowing analysis per shipment and per volume metric based on true shipment ownership. Customers now have the knowledge on how to optimize transport routes and reduce their environmental impact. We have over 400,000 customers. That's an immense database. That also allows us to benchmark either within a sector or across sector.
We can also support our customers in setting and monitoring their own CO2. We also offer the possibility to manage the CO2 emissions for our customers' complete supply chain. These services are an integral element of our business model. They're priced into our customer transactions or separate. We also sell data as in the case of our integrated logistics. I'm very excited about the Digital Ecosystem because that as part of our Roadmap, is only going to enhance and strengthen our capabilities in this area. We believe that customers will increasingly use emissions information to make informed decisions, and that this will increase the value of Kuehne + Nagel services and our expertise in optimizing logistics.
I want to speak a little bit about reducing emissions because this is particularly challenging for our sector because the new transformative technologies for most of the transport modes are still years away. It is gonna take time to test some of these new pathways before they're certified. As an example, electric, hydro-powered or hydrogen-powered aircraft, where there's still a high level of uncertainty and a high level of complexity. Of course, it takes time for these new technologies to be adopted into the market, for the infrastructure to be built and supported and scaled. I think on this Roadmap, here the message is really clear, is the importance of low carbon fuels between now and 2030 for actually reducing transport emissions. We're making significant investments in this area.
In particular, we've done a lot with SAF, that's just sustainable aviation fuels. Stefan mentioned it this morning. Our Air Logistics team is considered the vanguard on this area. We've invested. We take a calculated investment because we believe that there will be customer buy-in, everything that we have bought has been sold. Customers have the option either to opt in for SAF on a shipment basis, or we can look and work with them and calculate it retroactively for larger shipments, for lanes, for certain amounts of volume. Just again, to put this in perspective, last year in 2022, the market for SAF grew over 200%, this will be a market that will continue to grow. We've also increased our purchase and investments in sustainable marine fuels.
In Road Logistics, we are starting to replace our diesel with HVO through a book-and-claim system. In parallel to procuring and securing the best quality fuels on the market for our customers, we're also investing in in-house expertise. We have expertise on low carbon fuels for all of the transport modes. This is important, what our customers are looking for from us is not just to come with the sustainability solutions per se, they also expect us to be leaders and knowledgeable on the topic of sustainable logistics, the trends, what is in the market, when it will come into the market, and expertise in that area. You'll hear a little bit more about this from my colleague, Otto, this afternoon when he'll talk about the renewable energy as a potential opportunity for growth.
Ultimately, though, our primary and our long-term target is to shift to zero-emission vehicles. Firstly with battery electric vehicles, second with the fuel cell electric vehicles. We're already starting to put these into place in 2023. We have a goal to be 60% electrification of our own fleet by 2030, this will be part of our planned fleet renewal. We're also piloting and testing new technologies and ideas such as the solar panels on our long-haul trucks or e-bikes and e-vans for the first and last mile, because being a front runner in sustainable logistics also means being a front runner in innovation. We want to be the leaders in sustainable warehousing and fulfillment centers.
Today we have 100% renewable electricity on all of our Contract Logistics sites, and we are going to maintain this, we're also going to increase our production of clean energy in the future on site. Gianfranco will tell you more about this this afternoon, so make sure you stay around for that presentation. The majority of our contract sites are in Europe, and this is the market with the highest ESG standards. Our team is working to improve the environmental sustainability standards of our existing fulfillment centers, as well as setting the standards for new buildings. We also have very ambitious programs for elimination of plastics and waste and water management. Just in summary, there are probably 4 pillars that we're looking at that are important for driving the decarbonization sustainable solutions for our customers.
Obviously, the first, as I took you through, is the customer engagement, the supplier collaboration, the low carbon fuels, renewable energies, new technologies, and of course, the data analytics. I haven't yet spoken or had really time to talk about suppliers. Of course, the majority of our suppliers, us being asset light, are contracted to deliver logistics services for customers, and we are putting in place in all of the transport units, supplier collaboration programs and initiatives for sustainability. Obviously, the size and purchasing power of our company plays in our favor. The relationship is also changing, and this is what's really interesting. As a 3PL provider on sustainable solutions, the relationship with our customer and our supplier is changing.
It's moving from transactional to long-term, to partnership, to collaboration, and to trust, because our customers also want to trust us, not just to find the right solutions, but also to find the right partners that will be part of that decarbonization and sustainability agenda. I'd like now to turn to why we are the best company to work for. Clearly, we already have many things in place, and we have a great track record. We have over 100 nationalities at Kuehne + Nagel. 41% of the workforce today is women, and 24% of our senior management is women, and 15% of our employees are Generation X. We know that the world has radically changed in the last half decade, and very much largely due to the COVID-19 pandemic, and hybrid working is now the norm.
Even before that, we had a digital transformation, and we saw that what we need to do is different skills. Bring in different skills as agility, data analytics, and also the way that employees are managing their own career and development is changing. It's much through continuous development. And we also have seen that health, safety, and well-being are becoming more important on our overall agenda. We know that a company with high diversity, successful inclusion, is gonna achieve higher results, and we're gonna be able to attract and retain talent and benefit from that. Better team cooperation, more ideas, and essentially, we wanna be an organization that is going to operate on the seed of trust. Finally, what we're seeing is that our employees are looking for purpose.
Very much, the younger generation, they want tasks that are really tied to a greater purpose. UN development sustainable goals as an example. They're not just the only ones. I also wanna be guided by the UN sustainability goals. We wanna give them that opportunity and create an environment where there's a feeling of belonging, a feeling and a sense of purpose, and where that they can contribute in their everyday work to something that they're proud of and that they feel passionate about as individuals as well. We talked about this this morning, both Stefan and Markus, that one of our goals is to create an extraordinary employee experience, because we believe that the employee experience and the customer experience are inextricably linked, and it's also part of our own DNA to be customer-centric.
We're attracting and retaining talent. Just as we're listening to the voice of the market, listening to our customers, we're also listening to our employees. Last year, we invited 25,000 employees to a survey to better understand what was important to them for work. We're sharing those results globally, best practices, and we're also using that insights to put new things in place that are appealing. We've refreshed our employer brand. We're targeting the young graduates on social media, and we've upgraded our talent sourcing centers. We've already met our goal, which was 15% intern intake, and we will continue to maintain that and as well, the initiatives to attract, nurture, our young talent. We're also developing people in the new world of work.
We were very quick with the post-pandemic hybrid team guidance put in place. We're also putting in place tools where employees can really drive their own learning through a very diverse set of learning. We call it our learning ecosystem. We have a regional talent program for future leaders that's designed to empower high potential employees to grow inside the business. We're also moving the dial on diversity, equality, and inclusion. We have a number of initiatives that are regional. We also have a diversity and inclusion policy, and we want to double female representation in top leadership by 2030. We have initiatives such as our Women in Logistics Leadership network that we're scaling, and we've also rolled out diversity awareness training.
On human rights, Kuehne + Nagel is a signatory of the UN Global Compact, therefore we respect and adhere to all of the global human rights principles that are issued by the UN. We have a human rights policy and a human rights officer. Our suppliers are also obligated to adhere to the UN principles through our supplier code of conduct. Over 35% of our global workforce is affiliated with collective bargaining agreements. We remain consistent with our Journey to No Harm. We're implementing trainings, reporting unsafe situations, and our safety performance has reached an all-time high. The lost time injury frequency continues to trend downwards.
We're piloting mental health and well-being initiatives, globally so that on a regional basis, that they can be rolled out globally because we want a company culture that goes beyond just the traditional occupational health and safety to really be a company and a culture of overall well-being. Lastly, we have a strong governance structure to ensure alignment and agility. As ESG becomes more complex and more important, it's further integrated into the governance. We have a two-tier management system consisting of the Board of Directors and the Management Board. Both the CEO and the CFO represent the Management Board during the quarterly meetings of the Board of Directors. The Board of Directors has oversight of the ESG strategy and performance, and the Management Board is approving the ESG strategy.
The global head of strategy has a responsibility to develop and propose a strategy, monitoring and performance reporting, the cross-business unit coordination, regional and country-level alignment. Just lastly, I want to talk a little bit about the cross-collaboration and how important that is within our sector and across sector to ensure common standards. This is extremely important. We're a global industry, a global business. Having common standards is very, very important, as well as scaling new technologies needs to be done in partnership and in collaboration. Here you can see we belong to a number of key international sustainable transport initiatives. Equally, we're very much in line with both ICAO, which is the International Civil Aviation Organization governing international aviation, and the International Maritime Organization, which oversees international shipping.
Both organizations play a key role in determining the CO2 targets and technology standards of our industry. I've got 23 seconds left, and hopefully in concluding, I do hope that you now believe that Kuehne + Nagel is an excellent investment because we have the long-term strategy to turn the transport industry's biggest sustainability challenges into growth opportunities. Thank you.
Thank you, Andrea. Any questions to Andrea before the lunch break?
Andrea, thanks for your presentation. One question around governance and could you remind us if there are any sort of specific targets for management remuneration around ESG? One of your sort of loose peers has, I think 20%, tied of remuneration tied to ESG equally split across ES and G. Thank you.
Do you want to make a response to that, Stefan? Because it's something that I know we're addressing.
Yeah. With the new strategy we didn't have that in our former target, remuneration principle, but with the new strategy focusing on ESG, this will be part of our remuneration principle moving forward into the organization, and as part of all the other cornerstones, right? All the cornerstones will be represented in this one as well.
Any other questions? If not, thanks for your attention thus far. We now have lunch, and we'll start again sharp in one hour. Thank you.
We will now kick off the next hour and a half. We will hear from Otto Schacht and also Inga, looking after Sea and Air. In each session, we'll have adequate time for questions after each speaker. Over to you, Otto.
Good afternoon, everyone. My pleasure to present you now the Roadmap. I would have loved it would have said C-map, but you heard it's Roadmap. The Roadmap of Sea Logistics. Before I start, I would like to give you a little overview what I will talk about. The lessons of the last 3 years, these were 3 extreme years, as you know. I will talk about that a little. Where our market stands today, where we sea freight see ourselves right now, of course, most important, the Roadmap. Towards the end, I will describe one of our future growth areas, renewable energy. Stefan Paul talked about it. It covers all the business units. I talk about it because somehow it sea freight, it will extend into the other business units.
Before I begin, I would like to give a couple of thanks to our employees, to our suppliers, because they did something outstanding in the last 3 years. Which I am in this business now for 45 years, and I've never seen this before. I would like to say thank you to the employees, to our suppliers, and of course also to our customers, because also our customers did an amazing job during those 3 years. We built up amazing relationship with customers during these 3 years, and that gives us also a very good foundation for the future. Some of those reflections, those relationships that what we built up in those 3 years, also we put into our Roadmap, and you will hear about that.
Like I said, the last three years, this was the biggest disruption we have ever seen since Malcom McLean invented the container ship in 1956. Some of you remember the 100 vessels waiting in front of LA. We had the SeaExplorer Disruption Index created during this time, and the peak was 18.5 million queue waiting days worldwide. That was an index for us to see how the disruption was either improving or getting worse. The peak was one and a half years ago. That was of course something which we have never seen before. Millions of shipments had to be rerouted, rebooked, and mostly over the phone.
That's one thing we should not forget, because at that time, and I will talk later about eTouch. eTouch didn't work during those times because you place bookings and you didn't get a response from carriers, and you had to do everything then over the phone, and you only got answers after 1 to 2 weeks. We learned very quickly to adopt during those times. Stefan talked about it. We recruited a lot of people. We lost, unfortunately, also a lot of people because they left the industry. We onboarded a lot of people in these times. This is a time, and I will also talk about this later, a time when we implemented our global operating system, SeaLOG. Separately, we also reorganized the organization into operational care centers and customer service centers.
We did 2 things in extremely difficult times. We managed quite well as you can see, and as you have seen with the numbers. Let's look at 2 numbers on here. I think that shows you already part of our Roadmap because it looks into the future. Our volume compared to 2019 declined. It declined for 2 reasons. Deliberately, because we walked away from certain business where we didn't get the right margin anymore. Secondly, also what was mentioned by Markus and also by Stefan already earlier, the scarcity of people. We had to concentrate on the right business with the right margin, and that's why we deliberately said we rather do less business with more profitable margins. This beneficial cargo mix helped us quite a bit.
These learnings which we have seen here from our margin cargo mix is part of our Roadmap in the future. Where do we stand in the market today? We heard that what our customers expecting from us. A top experience, that's what they expect all over the world. I will talk about that in more detail later on. They expect real-time transparency. That's something which we can provide, where we are very proud of. When it comes to sustainability, we see now an uptick that also because of the Emissions Trading System in Europe, that there is a higher demand from customers for, sea freight, for biofuels and better data when it comes to CO₂ emissions. Andrea was talking about that earlier, I come to give you more details on that also later on.
When I took a look at the competition and I think Stefan mentioned it, I would like to repeat this here. All forwarders are digital. There are no digital forwarders. All forwarders are digital. Some are a little more digital than other forwarders. It is secondly, an extremely fragmented market. That's part of the reason when we talk about Roadmap, when we talk about the SME segment we go into. That's what we all have to understand this market. During the luncheon break, I talked to some of you. This market is so fragmented for one reason. These small forwarders provide an extremely good service locally. That's what we are now targeting. The ratio carrier forwarder roughly 50/50.
That has not changed in the last 3 years, and we do not foresee any major change in this in the coming years. Stefan referred to it. There are two carriers out there, Maersk Line and CMA. CMA through the CEVA acquisition, who said we want to offer to our customers, to our larger customers, especially in Contract Logistics, air freight, solutions which we could not offer in the past. I am pretty relaxed on this when you look at... Take Maersk as an example. Maersk had already offerings in this respect many years ago. I was at a Maersk at their first Maersk Capital Markets Day many years ago.
They invited me, I was speaking there, one investor asked me, "Are you here as a customer or as a competitor?" I said, "We are both a customer, a partner of Maersk Line. We are a competitor. Actually, Maersk is also a customer of ours because we manage quite a bit of business for the Maersk group." Has this material changed over the years? No. I don't believe this will change in the coming years. This ratio, roughly 50/50, will remain in my view. Because of this segmentation, because of these hundreds and thousands of small forwarders, we believe that the SME market is, for us, the most valuable market also in future. Today, just, I think Stefan also mentioned it, our ratio roughly is 50/50 larger accounts versus smaller accounts.
There will be a shift, which I will explain to you. Where do we stand today? What is the most important thing? We have implemented our new software. We are done. ControLOG has been implemented worldwide. We do not have to buy any outside software, so we are there. We are now in the coming years getting the benefits out of this software. We have segregated our operations into two buckets, meaning that we have operational care centers centrally, one per country, partially also the first ones, one per region. Then we have lots of customer service centers. We have a unique technical platform, myKN, and we have within SeaFree something very specific. It's our SeaExplorer platform.
Some of you have heard of this, where we have something extremely unique which no competitor has, where we can measure reliability, where we can measure direct emissions of each container vessels. We are using this intensively in our discussions with customers, and we will develop this platform even further in future. Most important, although we are market leader, we only have 2.5% market share. We still have ample room to grow. Now I would like to talk about the Roadmap '26, the specifics for Sea Logistics. The initiatives, of course, built on the same cornerstones Markus and Stefan already talked about. It's mainly the experience, the Kuehne + Nagel experience part, both employee and customer, the Digital Ecosystem and ESG, and of course, the market potential overall. This is the most important slide for you guys.
This slide describes what we want to do sea freight in the coming years. This very consistent global service. The underlined word should have said consistent. Let me explain this a little. Perhaps a general statement. I think in this industry we are in, I talk forwarding, including also I include the ocean carriers. None of these big players, including Kuehne + Nagel, is offering globally in every branch a consistent service. We offer good services, but in some branches, very good services. In other branches, not so good services. That's where the problem is and the potential for the future is. Because you always have sea freight, you always deal with the exporter, you deal with the importer. There are always two branches involved worldwide.
If you provide in the export side a very good service and on the import side a relatively good service, there's a high risk, especially with small customers, that you lose the business because the importer will tell his exporter, "Let's switch. Let's go back to the small forwarder." This is our biggest challenge, but also potential for the future that we provide globally in every branch, in every air freight branch, the same kind of service, because then we will lose less business and we will retain a lot of business, especially in the SME segment. How will we do this? You probably will ask, okay, that's easier done than said. It will take a while 'cause we will not do this overnight. This will be a Roadmap. Stefan talked about it. The people part, which is very important.
We will measure branches amongst each other. We have not done this well enough. We can see this today. Once we're getting there, and I always compare this with other industries who are much better, and that's the hotel industry, where you create these kinds of standards . There is a huge potential in this respect if we do this well. If you look at the On the right side, this is to what the potential is. The margin on our SME business is back from the slide, which also Markus showed. There is a much higher earning potential for SME business compared to the very large customers. That's where we will focus in future on. If we retain these customers, and I think Stefan mentioned a number of 20%-30%, which we are losing, especially in this segment.
If we retain a major portion of this, we have a double effect. First of all, we keep those customers. Automatically, if you provide a better service, you get more money from them because they will not discuss every last $5 with you. That's where we believe, and I'm confident about it, if we provide this extraordinary consistent global service, that on average, for my total volume, I can do a roughly $50 more per TEU margin. I have 2 positive effects in this respect. We have on top, we have rebalanced our sales force. Stefan talked about it. We have within the business sea freight sales. we have Road Freight air freight sales, and we have our key account pillar. Each business unit has its own sales force.
I sea freight, the biggest sales force worldwide, selling especially to these SME salespeople. This sales force we want to increase substantially in the coming years. In the next four years, we will have a far bigger sales force. We already today have a big one out there, and this will be far bigger. We become far more agile in this respect. We will open, because on our new foundation, having central operational care centers, I can go into new markets. I can open new customer service centers with salespeople relatively quickly and penetrate markets which we were not able to penetrate in the past. The U.S. will be our number one market worldwide. Although we are market leader in this already today, but it's also for our Roadmap in the coming years, our most attractive market.
Although we are leader there, as I said, small market share still. We see in a lot of lanes, we see potentials there. I just came back from Los Angeles. We had sea freight meeting there. We discovered that there are lanes where we have a zero presence. We believe we can become also in those markets a leader. We wanna grow, sea freight, but also in the other business units with Japanese and Korean customers. Africa is on our Roadmap. We are today a very small player in Africa. We're building up a presence in Africa now. Africa is a very fast-growing market. We have many other smaller lanes where we have small market shares, where we, with this concept, can actually drive both higher margins, attack the SME accounts in those markets.
In the larger customer segment, those international supply chain customers, we will be more selective than in the past. This has to do also with the people part, which Markus talked about. I had 2 years ago, 3 years ago, actually, we had a very large global customer, wanting to give us all their global business, that we manage all their global business. I would have had to hire 260 people to do this. We would have made some money with the account. We walked away from it, no people, margin too low. 10 years ago, we probably would have taken that business on board. Today, we would not take this business anymore on board unless we see that we really can make good money with these large accounts. We become far more selective.
On the cost side, the Digital Ecosystem, we will improve our quality, of course, and we believe we can reduce our cost. There's still quite a potential in future to reduce our cost further. Markus made some comments about eTouch. 5 years ago, we talked air freight. we also had, of course, always eTouch initiatives. We have not communicated them yet enough. We will do this in future. Customer EDI booking, carrier EDI booking, shipping instructions coming in by EDI. There is a huge potential, and that potential is probably as big as perhaps even bigger than air freight, and you will get in future numbers on this on a regular basis from us. The two biggest important aspects right now are customer digital bookings coming in, where we give you already 1 number.
We are there roughly at 30% today. Not hope. We are very confident by 2026, we will get this to 50% and similar on shipping instructions, inbound shipping instructions, which are relatively low. That we will get up by 2026. These are two key initiatives. We have our CoreLOG is our CRM system. MyCare is our external platform. SeaLOG, our internal TMS system. We let these systems in future communicate with each other, that's part of the Digital Ecosystem. That's part of our eTouch initiative, where we can get costs down and improve service to the outside world. ESG. The most important message on ESG is creating transparency for customers. There we have a unique offering.
I said earlier, we have a platform, SeaExplorer, and we have the data for each container vessel worldwide. As there is a higher and higher demand by customers to create this extreme transparency, our customers starting to ask us, "Can you please choose between the more sustainable vessels?" That comes in future, I think even more, becomes even more important that you have that option that our operational people can make that option when they place bookings and you need all this data. We have that data. This will become a strategic advantage in future. That of course, means we can also keep customers longer on board. Secondly, the biofuels, Andrea talked about it. Biofuels becomes similar like the sustainable aviation fuels, more and more important.
We have seen last year, first customers testing it in the last couple of months and going forward. I see a nice uptake. It's still low percentages compared to the global volumes. We will announce in the coming weeks or months some major deals with some big brands in the world because they will set, I think, also a precedent for the, for other customers out there. In summary, the EBIT improvement will come from various segments, SME, keeping SME customers for longer, pay higher margin. By this, I believe the cost will come down through the Digital Ecosystem. With this, I believe we will by 2026 achieve a 40%+ conversion rate.
If I go back, and probably I'm here the oldest in the room, when I started in Kuehne sea freight in 97, we had a conversion rate of 20%. By 2005, we had 25%. By 2010, 11, we got for the first time above 30%. I'm very confident that by 2026, we will get into the 40+ range. What comes after that, I will not talk about. I have 3 minutes left. I have to speed up a little. Now I would like to talk about an exciting growth area, the renewable energy, because it will probably be one of those fastest-growing parts in our whole society. The decarbonization means there will be huge investments in this respect.
It's a very complex industry, it fits our business model. Not easy to enter this business segment and when it comes to logistics. There are, like I said, huge investments planned by governments and by others. This, I think, is my favorite slides. Stefan mentioned that 50% of electricity generation by 2050 will have to come from renewable. I think this is only the beginning. Probably it will be even more. When we include cement industry, when we include the steel industry, every industry has to decarbonize. This can only come from renewables, either wind or solar and a little hydro. This is the future in respect and the growth is phenomenal in this respect. Like I said, it's a very complex industry. This graph shows a little what we are up to.
It's not sea freight, a lot of these products will be moved by charter vessels, the big turbines, but you need then also warehouses to store these blades. We will have a very close cooperation, and there will be quite some growth also in the contract services area. Afterwards, there will be both in road and air. We believe a lot of shipments, urgent shipments have to be placed in this respect. This will be new. If we get into a new growth area, we have a bigger customer base in this respect. Just to give you an idea what numbers are we talking about. There is over $4 trillion CapEx already approved by governments and companies for the next 10 years.
Roughly, we estimate this means about CHF 200 billion, CHF 200 billion logistics spend. That's what we are targeting. We want to become the major player, a major player in this industry. Of course, I have to say this because I'm a firm believer in this, that we are doing also here the right thing, that by investing into these renewable energy solutions will help us to align it with our own ESG goals. One can say this will help also our commitment to our customers, to our stakeholders, including our investors, of course. In general, this means this will be sea freight, a major contributor to our higher yield and also to our higher long-term conversion rate. I'm very optimistic to achieve this. Six minutes left.
Thank you. Thank you, Otto. We have plenty of time for Q&A. 20 minutes or so before we move to the next session. First from Muneeba.
Muneeba Kayani, Bank of America. Just going back to your comment on customer churn, what sort of customer churn have you seen in the past, and how does that vary from large customers to SMEs? Is my first question. Secondly, just in terms of when you're onboarding SMEs, I think previously it was said that there's no cost on that. Could there be some cost like now and then it evens out a few years later? If you could just go back to that kind of onboarding cost.
The first question. Large customers, we lose relatively seldom because large customers normally do not walk away so fast from you because there's an integration system-wise. You have on large customers a relatively low churn rate. Whereas on small customers, you have a much higher. That's the problem or the challenge or the potential for our industry, especially also for us, because a small customer, you get the small customer on board, you don't do the right implementation, and he goes back to his small service provider and says, "I got a better service there." That is the relationship large versus small. The second question was on the cost. Getting a small customer on board is through our sales network. We expand our sales network. We...
The cost, actually, once you have them on board is actually lower than servicing a very large customer because large customers, the requirements are much higher. Then it depends very much on what environment you operate. When you have an environment where you have a lot of problems, and of course also a small customer. In the last three years, the workload, the cost for a small customer was as big as for a big customer because nothing worked in the whole environment.
Hey, it's Robert Joynson from BNP Paribas Exane. A couple of questions from me, please. You provided a chart which showed that the GP per container from SMEs is about 1.8 x higher than non-SMEs. I noticed in the footnote that was an average for 2018 to 2022. Was that number significantly different for 2018, 2019 versus the COVID years? The second question, In Marcus' presentation earlier, he teased us a little bit by saying that you consider the targeted $50 increase in the GP per containers be conservative. You could maybe elaborate on that. Do you agree with that?
No, I didn't say conservative. This, we are discussing this. There is no scientific number to this $50, huh? The difference is from some customers you get, in certain markets you get $200, $300, $400 more. From some customers you get $10, $20 more. We estimate today, if we provide this extremely good service globally, then you have to take the $50 really on the average worldwide on, you know, how many TUs we handle, huh? Is it a conservative number? By 2026, then we know how much we achieve. Number 1, I'm confident we will achieve this consistency. We can prove to you, hey, how much did our average margin go up in comparison to the average which we had before? Is it conservative?
I wouldn't make a bet today on this.
Nicholas.
Hi, it's Nicholas with Kepler Cheuvreux. Couple questions from me as well. First one on the unprofitable volumes that you walk away from in general, where do they go? And where will they return, if ever, in the marketplace, not in your accounts? Secondly, a technical one. When we discuss churn in this context here, are we talking account churn or volume churn? And is it materially different? Because you said a large account doesn't churn, but what's the volume churn like? Finally, on renewable energies, who are the customers that you want to work with eventually? Are we talking Vestas or, like, the installation customers? Or are you more on the production or the installation side? Thank you.
First question, on the large customers we walk away, either some competitor takes them because he's happy with the lower margin. This one instance I was thinking of, one competitor took this on. He was prepared to do it at a much, much lower margin than we were. There's always somebody doing it. On the commodities, we have seen then it was handled directly by carriers. What I talked about was more the complex managed business. On the complex managed business, where you need a lot of very well-educated people. As we have a scarcity globally in future, I rather allocate those people to business where I can make money than I cannot make money or not make enough money. Secondly, our churn rate.
The churn rate is, when we talk 20%, 30%, it's not on our total volume. It's especially on the small customers in there. We talk easily. This goes in the hundreds and thousands? If we can maintain a certain volume there, that has a major impact on the bottom line. Thirdly, the customers, we go after all customers in the renewable segment. Give you one idea. The renewable segment is even the oil majors now. Because, Shell, BP are doing a lot in this respect. It's the Vestas of this world. There's so many. We looked, we analyzed the market. We have hired now a couple of people. We are looking right now at a customer segment of roughly 100 customers in all kinds of industries, suppliers to the wind turbine manufacturers.
It's a very interesting industry. There's no player yet, really with a global concept in this respect when it comes to global logistics. That's a positive thing.
Felix Rann from SEB Capital. Three questions, if I may. You mentioned this, that the SME customers are 1.8 x more profitable, and that you want to chase more in this. You want to grow in that segment, even hiring salespeople. Why haven't you done that before more aggressively? Is it just a customer onboarding process which you get now right? Just to understand, because it looks quite obvious to me now to do that.
Mm-hmm.
First question. The second is on you said you focus on yield and you're willing to walk away from businesses which do not offer the right profitability or you don't take that on board anymore. What does that imply for your volume growth assumptions going forward to 2026? The last one, very quick one. I mean, I look a couple of renewable companies. If I know one thing, barely anybody is earning money in that sector. Why should that be different for transportation companies?
Yeah. First question on why didn't we do this earlier? Very good question. The company finally embarked on a program to work on this customer experience. We knew that we had a challenge there. Secondly, also I would say pre-COVID, and I talk the last 10, 15 years, we took on, and this is what Markus was saying, we took on all kinds of business. We were growing fast. It was helping us. We had enough people. Now we are actually looking into and say, "Let's analyze." We are being almost forced also because of the scarcity in the labor market. This is one important aspect that we say we have to become more selective. Secondly, if having this concept of experience globally, we say, if we have so many resources only, let's focus on these.
We have a small market share, and we can still grow substantially in these. 10, 15 years ago, we probably would not have had the possibilities to grow in Africa, for instance. Now we target, when we talk about Africa, we talk especially there also SME accounts. So I foresee in, by 2026, that our ratio 50/50 to a high level larger accounts, smaller accounts will shift more towards to a 60% smaller accounts and 40% larger accounts. We will see. Definitely. We continue to grow. For sure we will grow, because there is such a potential right outside of our traditional markets or even inside the traditional ones like the United States. The United States, I can only repeat that United States will be our number one market for our Roadmap.
Although we are market leader there, but also there a small market share. Huge potential. We will open many more offices in the U.S., getting closer to the customer. There are so many white spots for us, which we have not even covered yet.
Thanks. Alex Irving from Bernstein. 2 from me, please. First of all, on volume growth. How do you think about appropriate levels for volume growth? Whether you've got 2019 levels? How should we grow from there, or as an annualized rate sort of 2019 into the future? Secondly, regarding carrier competition. We've heard this morning that we're not too worried about carrier competition, but is there any concern that if they start subsidizing the rate, they're able to take volumes away from logistics service providers in that way? How would you defend against that more aggressive approach if it were to come?
First on volume growth. Like I said, we will do a more selective growth, but as the potential is still so big, we will grow also in the next 4 or 5 years. Target is to be. Perhaps in the past we said we want to grow double market. Today, I would not come with such a statement anymore. We want to grow with the market and depending whether we have to be more selective, less selective, but we will see also by 2026 a very nice growth in our volumes, for sure. With our expansion going in new trade lanes into new markets, with our Japanese business, with our Korean business, et cetera. For sure, you will see a nice growth there.
Carrier competition, like I said, the carriers will not go after. They do not have the capabilities to go after the SME business. On the larger accounts, it's very often that we offer something which they cannot offer when it sea freight. we manage those accounts with very complex systems. I take the example, we manage, interestingly enough, for the most group part of their own business because we offer them a very good IT solution in this respect. The competition, I'm not afraid of. First of all, it keeps us on our toes. We have to make sure that we are always better. The market is so big, I do not see any fundamental change in this respect. If you take CEVA, having been bought by CMA, CEVA was there before.
CEVA is there today. CEVA do their job. They're competing against Franco, mainly in Contract Logistics. They are not sea freight business away from us because of CEVA.
Otto, hi. It's Andy Chu from Deutsche Bank. Could we just have your views, please, on the carrier market? Maersk have broken the agreement on two ends as soon as they could with the two-year notice period. Are there any implications from that alliance breaking, other alliances breaking? What's your view on what carriers look like going forward? Thank you.
Yeah. First of all, I don't think to what I know today, what I heard. Also, I was in Los Angeles now. I talked to a couple of CEOs there. I do not believe this will have an impact on the other alliances. This was a strategic discussion between MSC and Maersk, and they had different views how to operate in future. They decided because they are both big enough to go on their own. Will they go into kind of slot charter agreements? Not really in the alliance. Time will tell.
May be best not to comment much further on that topic.
Yeah.
Yeah. Thank you.
Yeah.
Sam?
Hi, it's Sam Bland at JPMorgan again. Hi. We've seen the freight rates come down to pretty close to where they were before COVID now. Just wanna check, are you happy with all of the sort of financial guidance out to 2026, assuming that freight rates stay somewhere close to where they were in 2019? Are you comfortable with the guidance if rates are at that level?
I do not believe that freight rates will remain until 2026 at today's levels. For sure not. We will see. We've like Markus was talking about it. I'm confident about our 40% + conversion rate. Whatever happens, we will see during the course of these years, of course, rates coming down, rates will go up again. We have seen how fast rates can go up. In this respect, that will not have an impact on our target of 40% +. Globalization will continue. Right now, we see a slowdown because of higher inventories, this can come back very quickly already in the second half. We don't know. This has no long-term impact for our Roadmap. Not at all.
Hi. Patrick Creuset from Goldman Sachs. We've talked a lot about 2026, but when you look at 2023, 2024, at current ocean rate levels, how should we think about your gross profit yield in those, I mean, in-between years, perhaps relative to history, relative to 2022?
I would not like to speculate on this today because I don't know what will happen in the second half of the market year.
No, at constant rate levels.
We have seen this, how quickly this can change. As I said, long term, I'm very confident to achieve what Markus was talking about GP. That we see a GP in future of CHF 450-CHF 500 and a cost against it of CHF 250-CHF 300, and that's what we see long term. In between, we might see changes. What this means towards the second half of this year, early next year, I would not speculate on this today.
Yeah. Thank you. Marc Zeck from Stifel. I guess I have two questions. Let's see. I'm still trying to get my head around the SME plans. I guess you said that in pre-pandemic times it was easy to hire talent or sales for sales people, and it's much harder right now. I guess if you target SME customers who probably have quite a tight relationship with their current freight forwarders, you would need pretty good relationship managers, right? It's hard to get them. Why this push now? Why didn't that happen, the push when those good sales managers were available like last 5 years or so? Second question may be related to that is, I guess to really measure how successful you are, you need to break down profitability per sales person probably, right?
When you said before that, you didn't really have the ability to measure profitability in between branches, I guess that was also hard to do versus with a view on sales people. Do you have the visibility right now that you can drill down profitability to every single sales person or is it still stuck?
Yes.
Maybe the last one would be, and that's not meant to be provocative, but your Danish neighbors, they kind of have the notorious for this sales approach. Are you just, like, trying to copy that, or where do you differ in terms of your future strategy versus your Danish neighbors?
Okay. First of all, first question on, again, similar to what we heard here on the left, why only now? Like I said, we said we can only do this when we go for this global, consistent, extraordinary service. The company now decided, we and the board all decided this is our future Roadmap. Especially at those times it made sense. I felt very comfortable in saying, "Let's now target this market." Where we get these people from, these sales people, we will probably recruit the additional sales people, and we have done it in the last 2 years already. 60%-70% will come from in-house. We do not have to get external people for this.
We use people which are today working in customer service centers, would like to be part of this sales team. Of course, it's going after these small customers, and that's any normal sales job, convincing the customer. You have to go in there and try to convince the customer, and we have seen this. We are very successful in this respect. Winning new business was not our problem. Retaining it was the bigger problem on the SME. We know we can. We are very successful in convincing customers to join us, but too many left us, and those we want to retain. If we accelerate this and retain people, then this has a tremendous impact, of course. Last question was on?
Yeah. I guess, second question was on if you.
Our Danish competitor.
Yeah, maybe before that, if you get the visibility.
Oh, yes. Yes. We have. We know for each salesperson exactly what kind of business is giving us, what's the GP volume, et cetera. We have very detailed analysis. We know this. We are extremely good with KPIs at Kuehne + Nagel so. Last question was on our Danish competitor. Are we copying him? I would not say copying because what we want to do one thing differently as a company, provide this global consistent service. I dare to say that none of us, including them, is providing this consistent global service in this whole industry. It doesn't exist yet. That's why we want to do it differently.
On that note, we're out of time. Thank you, Otto. Thanks for the questions. Next up, we have Yngve Ruud, the head of our Air Logistics business.
Thanks a lot, Otto, for still being able to be behind you. As Stefan said, we have a healthy, friendly competition, and maybe next Capital Markets Day, 5 years from now, 3 years from now, we're gonna change the sequence. Good afternoon. It's a pleasure to having you here. In the next 25 minutes, I will lead you through why we believe we will be successful in our Roadmap 2026. We will prove to you, and I will prove to you that we have been very successful the last 5 years. I will spend some time on that today to make sure that everybody understand what kind of transformation we have gone through.
I will also give a brief overview of the growth area for healthcare and semicon, which Stefan said has a great potential for the company in the future, is a great growth potential. Before I go into the agenda, I would also like to thank the complete Air Logistics team worldwide for the tremendous effort they have done the last few years. Would also like to thank our customers and our suppliers for trusting us in the last few very, very challenging years. To better understand our Roadmap 2026, as I said, I would like to touch upon our successful transformation over the last 5 years and include some proof points, what we think has been a very, very successful execution. I will also talk about healthcare, as I said, and I will also talk about semicon. Also to manage a bit of expectations.
I will not talk about the short-term market trends. I will not talk about our competitive landscape. I will only focusing on the midterm strategic plan and our execution. It's all about giving you now today a sense of how we'll achieve sustainable, profitable growth with high yields. Our Roadmap is representing the marketplace where we are and the position we are in it. As you all know, we are an asset-light Air Logistics provider, and we will continue being that in the future as well. Our greatest strength is managed market volatility and complexity. Also talked about market share. We have a market share in Air Logistics of 10%. 10% is a market-leading percentage, there is ample opportunities for us to grow.
I will not talk about if the market is going up, if the market is going down, because the market is so huge, so we will grow whatever the market is doing. As I said, I will give a snapshot on the transformation the last 5 years. We are the market leader in Air Logistics, that was our ambition 5 years ago. We put a plan together. We wanted to be the market leader because in our industry, size and scale matters. It's due to the investment needed, particularly in the Air Logistics side, and the global reach required from our customers. I think Marcus mentioned that our customer base is 80% global multinationals. 80%. These customers require a different structure, a different setup. Being a market leader is not only size and tonnage. It's about robust future growth operation.
Digital capabilities with world-class TMS. We talked about TMS in-house. We believe we have world-class TMS. Scalable solution for specific industries and highly skilled, dedicated people. This is encompassing the size, the scale to be a market leader. Let me offer some specifics into these three areas of the transformation we made, because it's important that we understand because we will build on what we have done, and we have done fundamental changes. We have transformed how we grow our solutions. We acquired Quick group of companies to enter into the time-critical space. We have significantly grown our Asia presence and become the market leader in the Transpacific trade lane by acquiring Apex. We have solidified our position in perishable by organic growth and by inorganic strategic growth.
We are delivering value, and we're delivering value, for example, to the healthcare industry, which has been extremely challenged during these critical years that we have behind us. We have transformed how we work and operate. We have expanded our carrier and controlled capacity network through long-term commitments with own flights to manage increased volatility. That is an important part we will have to have in mind moving forward. We have also implemented the Air Logistics future operation. In the pandemic, we completely transformed the way we work. With the model which has the foundation of the new GMS, our AirLOG. This is supporting now the changing working environment and the skills needed. We have transformed how we use technology and automation. I think we have talked a lot about eTouch. We have invested a lot of innovation into eTouch.
Our Roadmap is an evolution of the last five years transformation. You will not have the opportunity to ask me, why haven't you done it before? I have done it the last five years. Now we're gonna refine it and we're gonna make it world-class. As we have done the last five years, we will include new industry-leading initiatives to ensure that our ambition is gonna be reached in 2026. It's easy for me to stand here and say, we've been successful, we implemented, everything is so fine. It's a different thing to prove that with facts and figures. I would like to show you two graphs, two datasets that backs up that what we plan to do, we have executed successfully with the outcome we expected. Here you see two slides, KPI development and tons per vertical in total. Nothing new.
Markus showed it, but I just wanna give some flavor on what you see here. The key number on the left-hand side, KPI report, is not the tonnage development, which has gone from 1.5 million tons to 2.2 million tons over the last 5 years, but it's the constant yield development. A constant yield development, at the same time, dramatically increasing the volume and yield improvement started way before the pandemic. Yes, we have the peaks of the last 2 years, but as you see from 17 to 19, it's been constantly evolving. That gives us a great comfort in what we have decided to and what we will continue doing. As mentioned, size matters, but without the right mix, we will not be able to have the best results.
As the next data sets shows you, we have had a stable mix between general cargo, high-yield cargo, and perishables. We understand now over the last few years, what is the correct mix. As you can see, it's been very stable and will continue to be stable. With reference to Stefan's and Markus' presentations, with this achievement, what we have done and this foundation we have built, I think we are set for future success. In the next 5 slides, I will describe our ambition, what we want to achieve, and provide some insights in the main levers that we will deploy. Our complete Roadmap is, of course, much, much more comprehensive than what we're gonna talk about here. As Markus said, we have a proven way of executing our Roadmap.
We have done it before, we will do it again, and we have an agile and flexible way to implement our Roadmap to cater for market volatility as we have today. As everybody mentioned, the KN experience is the key pillar of our success. I don't know if you noticed, but even our CFO spent a lot of time talking about people experience and customer experience. I'm very proud, Markus. I strongly believe this is gonna be a major differentiator for us in the future. We will invest in building trust. As mentioned, you have to build trust, you have to earn trust by extraordinary customer experience. Regarding product delivery, as you see here in the, in the middle, and customer service. I think somebody used the word obvious here before.
It seemed obvious that we now gonna start to focus on customer service and product delivery. We're not gonna focus on it. We're gonna redefine the meaning of world-class customer service and product delivery. That is something completely different. The dedication we will put in place to customer service is the foundation of growing our market share and improving the yield. We have a global standard for execution, so our operation with a global GMS. We have a clear, centrally managed strategy. With highly skilled employees, we will ensure global consistency in our product delivery. What is included in the product delivery? Few couple of points. Data quality. Data quality of what we provide to the customer, what the customer provide to us. Timely availability of information. Scalability. These are 3 points.
When this is consistently 100% correct globally, we have put a new standard forward as an industry. As Andrea highlighted before, sustainable solutions. Our customers can trust that we will continue to innovate and be the vanguard for sustainable services solution. We have three clearly defined areas we're gonna talk about and we're gonna show visibility, avoidance, and reduction, as well cooperation with partners. We have strong cooperation with our industry partners, and we're signing MOUs with some of our biggest partner to drive sustainability agenda for our industry. With this, we will continue to set new standards for the industry. Yield protection and optimization. I think we spend a lot of time today talking about yield, and I will spend some time on it as well. An extraordinary customer experience gives us the foundation to maintain our market-leading position.
Giving us the foundation to keep and maintain the market-leading yield as we have today. At the same time, we will continue investing in dedicated solution for our customers. We will invest in, for example, the biopharma for healthcare. We'll continue investing into engine logistics in aerospace. We'll continue investing into semiconductor logistics in high-tech, as I'm gonna show you a bit later today. By the strong belief we have that world-class product delivery, all of this solution has been certified externally and internally by quality audit and given now the KN Quality Chain certification. This is a certification that goes above and beyond any other external certification. We believe this will be an important differentiating factor. Markus talked about the business mix. I mentioned it previously as well.
Here you see it again, the business mix, where we have a stable perishable mix in a growing volume. Perishable is, for us, a strategic initiative that we will continue growing with. Why? It's the counterbalance in our global capacity management, and it adds stability and makes us more recession-proof. As Markus says, if the recession is there, everyone gonna eat, everyone would like to buy flowers, it's still gonna be a product and vertical that is gonna grow. Efficiencies. We are constantly monitoring operational production costs, and that comes maybe back to one of your questions later about our customer mix and SMEs and large customers, 'cause we are monitoring operation production costs, meaning how much is reflected... No. How much is human effort from a cost point of view goes into execution of a shipment.
The more we automate a shipment by eTouch, the more we centralize tasks into global services, the more time our people have to serve customers, and the more likely our customer service and customer experience can increase. The eTouch starts with receiving customer data, and we've been working on this for the last five years. I'm very pleased to report that we have more than 60% of all our shipments is now an online booking, EDI, API or myKN. Our eTouch ambition is very clear, and it hasn't changed for the last five years, and it will not change for the next five years either. Our ambition is to create and run an intelligent digital operation with real-time visibility into every action with fully automated shipments at its core.
When we couple that with our pricing engine, supported by artificial intelligence, we will have dynamic pricing on all our spot shipments, which again, is industry-leading. This will further optimize efficiencies and increase our yield. The last piece missing for having our ambition fulfilled when it comes to eTouch is the sensors. That is in place, we stick to our target that we mentioned five years ago, that 40% of our shipments will be eTouch shipments. Meaning a minimum human intervention and a world-class conversion rate. To optimize our future-proof operation, because it's transformed and we have to optimize it, we have to make it better, we will focus on global consistencies enabled by enhancement of our GMS, our AirLOG. Continue invest into AirLOG and enhance the capabilities. As an asset-light provider, we need to create value for our customers.
I'm just gonna give you two examples of why do we think we can create additional value, why do we believe our action is gonna drive increased yield. One key lever is global capacity management. You might know or you might not know, but every year, we have more than 3,000 charters. Could be one way, could be two ways. With a global standardized gateway structure as our main backbone, we can focus now on evolving a point-to-point network design, meaning connecting the dots, meaning connecting this charter and utilizing the capacity much better than we do today. That will drive our trade expense down. It will drive our gross profit up. It will also drive a consistent, scalable solution for our customer. It will be a solution which is consistent in any market.
Strong market, slow market, in any market, this will be a solution which is scalable. Second point, M&A. In our Roadmap 2022, we had a clear strategy, defined where do we need to make M&A. We have done it. Just to give you a couple of examples. CFI, a market leader in perishable in U.S. We closed the white spot in U.S. by acquiring CFI. With the Quick group of companies, we have expanded our service portfolio. With Apex, we have expanded capacity and scale. We will follow the same principles for the next 4 years when it comes to M&A. We will have to make sure we have ensure profitable, long, sustainable, profitable growth, at the same time protecting the value of what we acquire.
Over the next 4 years, we have strengthened our number 1 market position and we deliver more than 40% conversion rate. All cornerstones, as you see here, will contribute. It's the same structure as you have seen from Markus, but what I have done, I've broken it down to increased or incremental conversion rate in %. The KN experience, we believe is gonna give 5%-10% increased conversion rate. Market, same. The digital and M&A. If you take the 2019 baseline, you see how the different cornerstones gonna play into the increased conversion rate versus the baseline 2019. With this Roadmap and our committed team, I'm confident we will achieve our ambitious goal. Healthcare.
I will give you a brief overview of the focused investment we have done and will do in healthcare. It's a company-wide focus and it has tremendous growth potential. Our clear ambition for 2026 is to have roughly 10% of a market estimated around $70 billion addressable spend, logistics spend. Where does our confidence come from? It's how the healthcare vertical has over-delivered the last 5 years. Growth in volume, increased financials, and new customers have exceeded all expectations. For example, our agility and investment, as Stefan mentioned, allowed us to transport more than 4 billion COVID vaccines doses around the world. With further investment and expanding this portfolio into a broader customer segment, which I will show you, we aim to further increase our market share. What exactly do we do in healthcare? We understand the product life cycle.
We are covering the complete product life cycle. By this, we are in a unique position to serve our customer from early discovery and R&D to commercialize development of finished products. Because of this early engagement, we can understand the product needs and design the commercial supply chain, launching activities in a very early stage. These capabilities enable our customers and their patient in a much shorter timeframe if the product is approved. Many of you have probably seen the press release with Moderna a couple of years ago. We are very proud how we work with Moderna from clinical trial to commercial launch and supplied worldwide with. All business units was included. Quickly, five key objectives for our next four years. KN experience, I don't think I have to go into that anymore. Quality is our differentiator.
We're gonna launch quality matters with our HealthChain certification. Global access, we already today cover 95% of the globe. With GxP approved stations. We will continue investing to provide a standardized, high quality service for our customer. Customer growth, we're going to increase our segments. We have focused a lot on the pharma segment. Tomorrow, we're going to include biopharma, medical devices, diagnostics, animal health, and customer healthcare. M&A partnership. We see opportunities either to partner and/or acquire companies that can support all aspects in our customer product lifecycle. We are excited on continue growing the healthcare vertical. One thing we will not change is our mindset. When it mattered the most, we launched five years ago. It's been a focus internally and externally. This focus on the patient and the way we have changed to work, to talk, and do, and execute in healthcare.
Next section, semiconductor. Final section, since I'm over time anyway, is about our newly designed solution for semiconductor logistics. Based on market demand and feedback from our customers, we have decided to replicate the healthcare and aerospace success to create a unique quality offering for the semiconductor supply chain. By 2026, we aim to provide core services for half of the companies which are involved in this semiconductor supply chain. We're aiming for CHF 500 million of new business. Semiconductors plays a crucial role in our life today. The demand is constantly increasing due to the digital world. Research has shown a 10-day disruption at the semiconductor fabrication plant can cause a wave of additional disruptions through the entire supply chain, causing delays that could last for almost a year.
I'm quite sure some of you have tried to order a car in the last 6 to 9 months, and I'm not sure if you have got it, or I'm not sure if you even know when to get it. This, of course, created significant financial losses to everyone involved. Based on this and the changes we see in the market, because there is changes going on, such as the future shift of production back to Western economies, the complexity will increase, and we believe a reliable and high-quality service will be in high demand. The Roadmap is clear. Standard or general logistics offering are not sufficient anymore. This is a clear message we hear. The need for a special logistics solution for semiconductor supply chain is there. To meet this demand, we have deployed our Semiconductor chain network of certified services and experts around the world.
It will include some of the experience that we have taken from healthcare and aerospace, like reliability and predictability, industry knowledge coupled with digital solution, safety, security, and risk mitigation. We're very excited to bring these services to our customers already today. 3 minutes and 39 seconds more than I should have.
Thank you. Thanks. Alex Irving from Bernstein. Two from me, please. First of all, over the last five years, you've done time critical, you've done Transpac, you're doing semis. What other verticals or geographies would you like to expand in? Secondly, further on semis, if you do start to do a bit more nearshoring of manufacturing, e.g. with fabs being built in the U.S. or in the U.S. Chip Act, does that mean less air and more road in the semiconductor vertical? How are you approaching that from air freight perspective?
Okay. From semiconductor perspective, as I said, this is a company-wide initiative, it's not just air freight initiative. When we build this, it is for the total KN group, for all business units. Will it change air freight? i don't think so. Because they're moving the production from Asia to Western Europe countries, but still the move from the fabrics will still take place. There is going to be a huge build-up on these fabrics, and it's going to take 3 to 5 years before this is done. Yes. First question was?
Any other verticals or-
Any verticals. Semiconductor is the main focus. Renewable energy, we're going to be focusing on. Healthcare, we're going to expand our customer segments. There will be no major move into any verticals because we still haven't taken out the full potential where we are today.
Thanks, Chris. Nicholas with Kepler Cheuvreux. A set of questions surrounding the M&A topic, please. Firstly, on the contribution to the 2026 target, is it about buying a mixed beneficial company or is it about raising efficiencies from whatever you've bought? If Apex is any guide, it's the first thing, not the second.
On Apex, 2 on them, please. Firstly, you've sold a minority stake to Partners Group. What are your expectations for the outcome of this cooperation? What's to come there? Finally, I understand that there are still incentive schemes for Apex management in place. What are your expectations for what happens once these run out? Thank you.
Interesting. Let's go for the first one, the M&A and what are we looking for? As I said, either we close a white spot to increase our capabilities, or we create scale and capacity. We will not go for efficiency. It's going to be your point number one. We don't believe in destroying value. We believe in creating value. On Apex, I saw now that Mr. Finance is going to help me.
Let me introduce myself. I'm Mr. Finance.
Yes.
I think I also mentioned it in my presentation, sorry to take the question straight. I think our cooperation with Partners Group has a very clear focus. Partners Group has access to different targets that probably would not be on our radar, neither would it be for the large investment banks. I think we have made that experience for a long period of time. They are excellent experts in the Asian arena, that is very beneficial to us. Last but not least, Partners Group brings a mindset, you know, of PEs into our mindset. I mean, we are freight forwarding operators, right? We are the people that actually know how to move cargo. In the financial world, we are a little bit less, let's say, experienced.
It does help when somebody joins you in board meetings that actually has a different experience on that level and has a top-level view to that and brings different angles of conversation. It's very fruitful. It's very helpful. We learn a lot. I hope they also learn a little bit from our side. I'm not sure if they are 100% interested in that, but there is a lot of operational, let's say, details they get bothered with when they listen to us. I think it's one of the most interesting combinations of mindsets and knowledge that we have ever entered. Thank you.
You're welcome.
It's Marc from Stifel. Just on the slide that you showed with the different contributions from those four pillars to the conversion rate. On M&A, since the base year is 2019, is it fair to say that with the Apex acquisition, most of this contribution is already done? Or was Apex conversion rate neutral, so to say? Then second, the technology part, I guess, is then eTouch. I guess here again, like, most of this should already been done, no? I mean, just from a 2019 base, now 2023, and eTouch more or less implemented, I guess most of the contribution here has been done. The major uplift is then from the two other pillars, the KN experience and the market expansion.
Did I get that right?
No, you didn't.
Okay.
That's good. eTouch, we have just started the journey. We have done a tremendous work. We have taken out 2 million man-hours per year in 2022, but we still don't have a fully eTouch-implemented shipment. There's still human intervention working on the shipment. If you fast-forward 3 years, 4 years from now, the concept is that we have people working on exceptions and not on keying in or correcting data. Because it's automated with the correct data coming in, it's automated or auto-completed by the system, and we can work on exceptions. As we know, exceptions in our industry is happening. When I can have my people working on a shipment, calling the customers, says, "Dear Mr. Customer, the shipment is delayed. It's stuck here.
This is the solution that I created for you, and I will be on time anyway." That's where the big change is gonna come. When you have 40% of these shipments executed eTouch, the conversion rate, and Markus showed that slide 5 years ago, is not gonna be 40%. It's gonna be completely different because the human effort in that shipment to execute it is next to nothing. When I show the percentage of the Digital Ecosystem here, in my mind, it's very, very conservative. M&A, when it comes to the Apex has driven an increased conversion rate with their focused, specialized model on Transpacific.
Hi. Marco Limite from Barclays. You've been mentioning customer service as the key to reduce customer churn. Can you just provide a few example where you think Kuehne + Nagel and the world industry is poor on customer service? Secondly, you have been saying that the local freight forwarders, you know, offer very high quality of service, but I assume that local freight forwarders give good quality of service because, you know, they are heavy on people and customer service while your strategy is to digitalize. If you can just help us understand the difference between the two approaches, how. Yeah, what's the difference in the strategy, basically? How they can offer better quality of service with more a lot of people on the customer service team, and you guys digitalizing. Yeah. Thank you.
Okay. First question I answered with an example. Second question is the difference between Sea Logistics and Air Logistics. Our customer base is multinationals. They look for global reach. They look for consistent, scalable solution. Our SME offering is online offering. I need the SMEs to book online to go through to take out all the effort to execute the small shipments of 50 kilo, which is, in our model, is clogging the system. We have 80% of our customers ship 10 tons, 50 tons, 100 tons per batch air freight from a small and medium account has to go online. I need all the data, I need all the paperwork ready to execute this in a very efficient manner.
The small and medium freight forwarders in our market, where we play on the multi-global customers, they're not existing. They don't have the capacity, they don't have the financial strength to buy a charter for CHF 1 million upfront, and they don't have the capability from an IT solution when it comes to providing global access and visibility. It's completely different environment that we're playing in because we are with the big ones, and we like the big ones, and the big ones like us.
Hi, it's Sam Bland, JPMorgan. I'm looking at the sort of components up to the 2026 building blocks. I think market expansion was air freight. at the same time, I think we just said that SMEs are not such a big part of air freight. i think you also said that there wasn't gonna be that much change between industry verticals. What's behind this big market expansion uplift if it's not those sorts of areas of customer mix?
The market potential and the percentage you saw is the increased conversion rate. If we grow with the market, and the market for the last 20 years has been air freight, iata project it's gonna grow another 4% until 2032. If you have that 2% growth, and we're gonna grow with the market or a bit above the market, with the mix we have today, meaning our high-yield verticals like healthcare, which is the yield is just a part, small part air freight, and the bigger part is the value-added services we're giving.
If you take that mix and project that forward with a 5 years projection, you will see that our yield and conversion rate will increase because of the higher amount of the high-yield commodity. We use the perishable as the scale and the counterbalance if the market for a certain carrier is slow.
We have time maybe for one more question, if there are any. Otherwise, last chance. Okay. Oh, Alex.
Can I ask one follow-up?
Sure. Quickly, yeah.
Thanks. Regarding eTouch, I think it's one of the components of that carrier and supplier communication, we don't have any cost savings on that yet. When do you expect to make meaningful progress here, and how much upside are we playing for, please?
The carrier communication is something we are been driving very hard for the last five years, but it takes two to tango. We are supporting, and we are doing everything we can to ensure that the carriers, that we make the life easier for carriers to communicate with us. We have a great upside on a carrier communication. Customer communication, I said, is there already. That's where from a supplier communication, not only to the airline but also to the truckers, to the terminal handling, that's where the biggest upside. That's where sensor's gonna play a big part as well, when we can start to follow shipment in real time and get...
The sensor is not only from visibility, but it's sensors that give active feedback into the system, so we can trigger the next status, the next task in our system.
Thank you, Yngve.
Okay.
We have a 30-minute break.
Good. Thank you.
We'll be back to pick up with Road. Thank you.
Okay, welcome back. We're in the home stretch. Next 45 minutes, we're gonna hear from Hansjoerg Rodi, Head of Road Logistics. Over to you.
Thank you, Chris. Welcome everybody, also from my side to the afternoon session of the Capital Markets Day. It's a pleasure for me to introduce you into the Roadmap 2026 for KN Road Logistics. Road Logistics is the foundation of everything we are doing in freight forwarding because there's hardly any transport that doesn't start or end on wheels. Yngve, Otto, Gianfranco are all my customers, and I like them very much. Agenda is for my colleagues as well. We will have a look on where do we stand in Road Logistics today, our business, our financials, and a very short snapshot on the global road market as well.
The Roadmap 2026, which is the logical consequence out of what we see in our business in the financials. And in the market and within the Roadmap 26, I will then highlight as well our approach into customs brokerage as a standalone business, which is one of the, growth areas we have identified as being beneficial for Kuehne + Nagel entirely. All business units will benefit from our approach into customs brokerage as a standalone business. Where do we stand today? Kuehne + Nagel is as active as Road Logistics in 4 out of the 5 management regions we do have. The only region we don't cover is Southern Central America. The biggest part of operation though is Europe, where we operate our own Pan-European network that is built on own managed cross-hub operations.
We display it here as around 150 own cross-hub operations we have across Europe. We connect these dots in the network by approximately 3,000 international weekly departures. Otto has shown the weekly sea freight as well. It's by far less than what we operate only in Europe on a weekly base. Connected through hubs. We have two hubs. One is our Eurohub in Bad Hersfeld, and the other one is the East Hub. That really allows a very seamless and good customer experience in shipping through Pan-European shipments from everywhere in Europe to everywhere in Europe. In all other regions, our product offering is asset light, we don't have the consolidation through our networks or even partly in Europe through own cartage operations that we are operating here.
That is true for Middle East and Africa, for North America, as well as for Middle East and Africa. We have two product offering that are completing our offering in Road Logistics is expo and events. That is the business where we operate in big trade fairs or where we organize big sport events everywhere in the world. Customs brokerage as a standalone offering. I will come back to that more specifically later in my presentation. 2022 was the most successful year of Road Logistics ever. Our turnover has reached CHF 4 billion, which is a significant size already. Our GP margin is very stable at 33% approximately. The GP margin, that is where we really steer our success in optimizing really on the yield.
By applying a very strict cost management, our conversion rates had meanwhile reached approximately 11%. The EBIT margin to net turnover, which is a very important KPI for us in Road Logistics as well, is 3.7%, which is a very good achievement in the last year and is industry-leading. We have created a very solid foundation, and we have built our strategic plan on this very solid foundation. Sustainable profitability, growth, especially if we compare 2021 to 2022 on turnover and on GP. Cost management that has allowed that conversion rate increase even or EBIT increase over proportionally to the increase we have seen on the top line. Our turnover split per region is indicated here as well.
I mentioned Europe with 75% of our business, so that is still in Europe. 15% is North America. We are very small in Asia-Pac. We are very small still in Middle East and Africa, both of them approximately 2.5%. This is why we have brought them here together. 5% is customs brokerage already today as a standalone business. Let's have a look at the market then. First key takeaway is there is no global market for Road Logistics. It does not exist. The reason is very simple. Trucks are awesome. We like them because they are so flexible. They can't cross continents because they can't swim and hardly fly. The global sea freight markets.
If we really talk about global, Road Logistics markets are extremely local to a very high extreme. Domestic from A to B will always exist. What we see, however, is more and more a tendency and a trend that the markets become more and more regional. For Europe, that is traditionally and has always been the case. Pan-European groupage, LTL, FTL networks exist. We see this coming as well in the smaller regions where we operate. Our market's becoming cross-border. For example, connecting China with Singapore via a land bridge is connecting South Africa with the neighboring countries, traffics from Turkey to Iraq. More the industry is becoming regional, more our markets are becoming cross-border as Road Logistics. They will always remain within the region.
Our go-to-market strategy We'll always be extremely dedicated to customer needs in specific markets and to the way how in these specific market, Road Logistics is operated. Our Roadmap, and I can't go into each in any detail because it's so diverse in country to country and region to region. Our Roadmap is from a go-to-market strategy, a very regionalized, even country-specific market. A high market share is not even existing. The market is big. I mean, the global market, we even don't know how we could estimate it, but what we can estimate is that in each region, the number of market players, 2PLs and 3PLs, is more than 1 million. It's scattered, it's extremely fragmented, and we have not seen any 2PL that managed to gain significant market share in all the regions.
We have very dominant European players. We have dominant North American players, but we have nobody that really reached a significant market position globally, logically, because our markets are so regional. High market shares, we believe, is not really driving success. Out of the view onto the market, if I want you to remember only two things: the first is in Road Logistics, global market share does not matter at all. The second point is the markets, even the regional markets are so big. If we are not focused on what we are doing, there is a high risk that we are lost in complexity. These are the two key challenges we are in when defining our way, our Roadmap as Kuehne + Nagel.
The answers to it we have given in our Roadmap 2026 are, first of all, in the choice of becoming an asset heavy provider, so own trucks, own trailers, big fleets that we operate, versus staying asset light wherever asset light is a good option. Our choice as Kuehne + Nagel is very clear. We will remain asset light. Our strength is not operating equipment. Our strength is being flexible and finding good customer solutions. In order to be successful with such a strategic choice, it is extremely important that we put our suppliers, so our truck drivers that we work with every day, into our strategic focus as well.
Our answer to the complexity of the market is we will create a KN Road ecosystem that allows to connect suppliers as easily as possible into our system, that allows our employees to work with the suppliers to define the best possible product offering to our customers. Our suppliers will be considered as part of the KN Road community as well. KN experience in Road Logistics is customer experience, is employee experience, and is a supplier experience that goes with it. Build on this ecosystem that connects suppliers to Kuehne + Nagel, that allows our employees to be fully, continue to be fully engaged. We will deliver solutions that meet complex customer demands and that are tailor-made to the demands that we find in the specific markets.
We will go fully digital into Middle East and Africa and Asia-Pac because our firm belief is it's 2PL markets, predominantly Africa, Middle East, and Asia-Pac. Our product offering based on eTruck now, Stefan was already alluding to it, is we will be the digital freight forwarder in these two regions, connecting neighboring countries with seamless experiences. We will, in North America, be the provider of choice for everything that needs more than only finding a truck to be brokered as an FTL from A to B. FTL product offering, cross-border offering in the U.S., a total logistics management. taking over even the freight forwarding departments of our customers and doing this there. Europe, of course, will remain the heart of our operation.
We will more invest into a true Pan-European product offering in future in order to allow very seamless shipping entirely in Europe from A to B. Cross-border in Europe, in all the other countries on the clear solutions, backed up with a platform solutions that allow suppliers to connect easily with Kuehne + Nagel. That will allow customers to have clear visibility along the entire supply chain if the cargo is shipped with Kuehne + Nagel. In order to be successful on that journey, we will continue our investment into the Digital Ecosystem in order to allow that our people can take their decision based on IT and data. Our vision for our people is that we augment our intelligence by making good use of data.
What does that precisely mean? First of all, even though our markets are extremely local and different from a customer requirement point of view, at the end of the day, Road Logistics as well, the underlying operational topics that we deal with are the same. We pick up cargo, we ship it, and we deliver it. The base for everything in Road Logistics in order to be most efficient, is that we standardize our transport management landscape. We have invested into our own solution, which is RoadLOG. We have implemented it meanwhile in 42 countries. It's highly efficient. The user feedback is extremely positive. We will further deploy it fast in all in most of the countries in Kuehne + Nagel.
Based on the TMSs, we have, we connect everything that we have, so all our TMSs into a cloud-based business intelligence solution that allows fast decision-making based on real-time data. Every day, every moment, we load all our shipments data into the cloud, and we analyze the data and in order for our people then to take the right decision based on that. Thirdly, we will continue to put high efforts into building state-of-the-art platforms, so possibility to connect from a customer side as well as from a supplier side with Kuehne + Nagel as seamlessly as ever possible. Already today, in Road Logistics, we operate 85% of our shipments, and the orders are processed fully digital, either through EDI API or the digital customer self-entry portal. 85%. I think seafreight was at 30-something, right?
Of course, our business is more transactional and faster, so that is 85%. Still more to come. We will continue investing on the entire order-to-cash process in becoming completely paperless in the first step, and then as eTouch as ever possible. As a base for having our people concentrating on, first of all, exception management as well, but secondly, on serving the customers in the best possible way. Technology is an enabler. The driver to success will be our people. My approximately 10,000 Road Logistics colleagues and myself that every day serve the customer, that understand the customer needs, that understand the supplier needs, that integrate the suppliers, and that work then with the state-of-the-art technology.
We will design and implement regional specific Road Logistics solutions tailor-made to the regional customer needs based on a very consistent TMS landscape, business intelligence through data and platforms wherever possible in order to better integrate. We have grown last year our top line by 8%. We will continue with this growth pace. We expect a CAGR for the years to come of 8%. Higher growth rates in North America, Middle East and Africa, and Asia-Pac due to two reasons. Market dynamics are extremely high here, and we are so small, so there is a lot of potential to even further grow. We will continue growing Europe as well. In 2026, we expect Europe on a turnover spread to be at 60%.
We expect North America at 20%, Asia-Pac and Middle East Africa each at 5%. Finally, customs brokerage as a standalone business at 10% top-line contribution, turnover contribution as well. Why do we believe it's worth digging into customs brokerage as a standalone business? First of all, we are already a significant market player in customs brokerage, especially in North America and Europe. We have a very solid base that we can start our growth path on. What is standalone? Standalone is defined as the outsourcing of all import and export customs declaration, regardless of the mode of transport and who does the transport.
In a world where international trade is increasing, but regulations are becoming more and more complex, outsourced customs is creating long-term, trustworthy partnerships that often can be used as an entry door for transport as well. It's a very powerful tool to already connect with customers, gain the visibility of all their import and export flows, and then use that as an opening door into Road Logistics, into Contract Logistics, Sea Logistics, and Air Logistics as well. The challenge in customs is even more local than Road Logistics is because you have different regulation from country to country. You have different IT systems that can be used to be connected with the respective customs authorities. From a customer perspective, our aim is to offer a seamless and a consistent service globally.
In order to do so, we will roll out, invest into and roll out a customs brokerage platform that will serve as the base for all customs transaction globally in Kuehne + Nagel. Nobody has done so so far, so we are really a pioneer in this development. We are extremely convinced that once we have created this operational model, we have a very solid foundation to grow our customer base on the standalone business significantly in the year to come. The more complex customs operations and international trade will become in future, the better for us once we have the platform implemented. This is a short overview on what we are doing and what we are aiming for in Road Logistics in Kuehne + Nagel in the years to come.
Don't forget, we are the foundation of everything that is related to trade forwarding business. We have a very clear vision, and this is we want to become the most trusted Road Logistics supply chain partner, supporting a sustainable future. Thank you very much.
Great. Please raise your hand if you have a question.
Hi. Just a couple of questions from me. The first one, a general question. Could you maybe just comment on what you're seeing in terms of just general trucking rates in Europe at the moment? Are they normalizing in the same way we're seeing in Air and Sea or any thoughts on that? Then the second question a bit more specific. If we look at volumes coming between continental Europe and the U.K., are you kind of seeing an increasing shift towards customers who are kind of aware of the benefits of shipping on the sea by ferry as opposed to kinda driving trucks through the tunnel or using the short straits? Thank you.
We have not been in that dimension affected by the disruptions of the supply chains or the volatility that my colleagues in Air Logistics and Sea Logistics have been in. The business was more stable. The challenges, however, remain. This is especially in Europe, the regulatory framework that is becoming more and more complex. Mobility Package and everything that is adding to it. We need to manage it carefully. We have a driver shortage in the market. It's not a Kuehne + Nagel phenomenon. The one that is best in engaging with the suppliers is the one who will win the race at the end of the day because driver shortage will remain. It's nothing that we can change short-term.
It even increased in the aftermath of what happened to the Russian war with Ukraine. It's not an easy environment that we are in. That will stay and remain, and it's our task to find the best solution in this framework. We are investing together with our suppliers a lot in attracting potential candidates to become a truck driver as well because it's still a very attractive job, we believe. We need to make much more in order to attract good talents into it. It's not with Kuehne + Nagel, it's with our suppliers, but we do work together with them in order to have access to the best talent pool possible. More specific, your question more specifically on how to provide the U.K. market.
Most of it goes by truck, but whether it goes on through the tunnel or on the ferry, I mean, you know this is the complexity here. U.K. specifically was then suffering even more than the continent from the driver shortage in the aftermath of the Brexit situation. That is normalizing more and more. We, however, have seen that on from a market perspective, the traffic has tremendously decreased from Europe into U.K..
Thanks. Alex Irving from Bernstein. Two from me, please. First of all, can you comment on your split between your FTL and LTL businesses and how do you see that evolving? What's the like-for-like impact on your economics, both at a gross and operating level? Secondly, regarding your customs service. I saw some news recently about Kuehne + Nagel taking a customs service from WiseTech. Is that this? And if so, what's unique to Kuehne + Nagel about the implementation you're doing for customers, please?
Second question, the answer is yes. That is the cooperation we have signed together with WiseTech, you know, Nagel and WiseTech to create this platform. Your first question was?
FTL versus LTL.
FTL versus LTL. Today, from our yearly shipments, approximately 85% is cross-docked, so either FTL, LTL or groupage. We don't differentiate too much into groupage, LTL and FTL. We differentiate into we have a customer order coming in and then we decide how we operate, yeah. I think that is the way how we should look into our markets as well, because our business model is we take everything that a customer produces and then we find the best and most efficient way to produce it, be it in LTL and FTL or groupage.
Nicholas?
Thank you. In your presentation, you haven't mentioned rail at all, even though I'm pretty sure it forms part of your service catalog. I can imagine why. Yeah, because you love trucks. You also said that. Rail is complicated.
I've not said I love trucks. I said trucks are awesome.
Right. All right. Don't know about locomotives then. What's holding rail back? It's an obvious ESG improver over a truck, I guess, as long as they're not battery.
Absolutely, yes. Of course, I mean, from an ESG perspective, on the long haul, truck is always, rail is always a solution. It needs long-term planned volumes. Our business is we are not in what we would call big FTL. Yeah, big volumes that we operate, we are consolidator, and we need flexibility. This is what we are really focused on, and that is why rail comes into play wherever possible but is not one of our strategic initiatives today.
Hey, it's Marc from Stifel I can see your colleagues talked a lot about different verticals and growth opportunities in semis versus pharma and then SMEs versus large companies. It didn't feature quite heavily in your presentation. So is there a, let's say, strategy on these verticals versus the different customer groups that you talked about, or is road just too complex to regional to give a strategy here?
I haven't mentioned it because it was covered by my colleagues. So in all the growth areas the colleagues have presented, road has a significant part into it as well. Where needed, we invest into specific solutions then as well. So even though we say we stay asset light, we operate one of the biggest pharma data centers in Europe in order to serve the full heads, the customers on road. As well, the same will be true on the renewable energy part then as well. Ideally, we take it where we can operate it with our normal systems, so to speak. If we need dedicated, we are absolutely open to invest then into more dedicated solutions. So we are into the part of everything that we do on the vertical solutions. We cover exactly the same verticals as well that we cover them from a big company perspective.
Any more questions for Hansjoerg ? Okay, in that case, thank you very much, Hansjoerg. And we hand over to Gianfranco.
Thank you. Hansjoerg . Definitely last, hopefully not the least. Thank you very much for being here today. I just learned that the last runner in a relay is called Chris, you said it's called a finisher, right?
Anchor.
The anchor. Right. Good. Thank you very much. I would like also to thank the probably 700 people that are following the event online and from all around the world. It's a great honor for all of us to be here today, to have you here today, and also all these great amount of people following the event. Today we will go through the Roadmap for Contract Logistics, of course, and I will have also the pleasure to give you a little bit more of insight regarding one of the so-called growth area called e-commerce. That is definitely one of the most vibrant dynamic into the logistic concepts. A lot has changed, and Markus mentioned in his speech a little bit regarding Contract Logistics.
It's important also to say as a starting point that all our ambitious target that we set for Contract Logistics regarding 2022 have been completely met or overachieved. This thanks to the passion, professionalism and commitment of all our colleagues. We tend to forget the bad stuff usually, but it's almost 24 months ago, where our 40,000 colleagues in Contract Logistics continue to work in our centers, putting their mental and physical health at test in order to ensure the delivery of what our customer and all what we need in the time, including mentioned by Yngve, 4 billion doses of vaccines. Also, it's not more than 12 months ago, was also mentioned by Stefan this morning, when our contract logistic colleagues in Kyiv saw our main facility bombed and completely destroyed at the beginning.
Also in this case, we kept our colleagues safe and supported. My utmost gratitude goes to all of them. Today we will go through two main topics. One is, of course, to show you what was the transformation of Contract Logistics, as being mentioned this morning as well in some of your questions. While we achieve a profound and important transformation, the market also change. We will talk about the new market dynamics that we face in Contract Logistics, and also about our positioning and how today we represent a unique value proposition to our customers. Right after that, we will talk about the Roadmap 2026, and how the Roadmap presented by Stefan will shape the future of Contract Logistics. In this Roadmap, I will go through four strategic strands of our plan.
Let's start when we say that a lot has been changed in transforming Contract Logistics. I think it's, without any doubt, the most profound and important transformation of Contract Logistics and is being successfully completed, and you are all aware about the financials regarding to that. Let me talk about the top line perspective. From a top line perspective, we have been able to recover in less than two years, the impact coming out of the sale of the UK drinks business. I'm talking about the recovery of a top line perspective. This event happened in March 2020, two weeks before the explosion of the pandemic, and account for almost CHF 800 million reduction in our top line. We fully recovered that in less than two years. Let me also put a little bit the numbers in a perspective of a competitive environment.
If you look at our growth, 7% year-on-year or 13% before effects, that is a very important numbers also show our ability to grow above market and the successful implementation rate. It also gives Kuehne + Nagel a leading position in organic growth, so without any M&A effect when we compare that versus our handful of competitors with a global presence as we do. Let me jump now to the other two important element, EBITDA and return on capital employed, very important in our industry. Our number are twice as high as those of our direct competitor. Again, thank you, Markus. Where are you? He's not here. Really we continue to lead also from a conversion perspective and return on capital employed. Every year we sign new contracts with customer with a annualized revenue of roughly CHF 400 million.
I know the number, of course, is very relevant, but I would like to also give you a view about the brands that continue to entrust major strategic contract to us. For example, in the last two years only, we signed major relevant contracts with luxury brands like Louis Vuitton, LVMH Group. Not only that, we open to very iconic brands for the new generation Y, generation Z. Brands like probably not known to all of us, Jacquemus, Sézane, On Running. We sign major contracts with the big consumer brands like Adidas, like Shimano, like Swarovski. Back to the renewable energy initiative. Someone asked before, we signed the two global agreement for global distribution of spare parts for Vestas and Siemens Gamesa, number one and number two in renewable energy.
To support the healthcare development, we sign strategic contract with Pfizer, with J&J, with Bayer, with Sanofi, among the others. A very vibrant pipeline of opportunity and very successful win rate into the market. If we look at the, what I call it, the silent revolution as well, and this is supporting the transformation of the financial, is also our operational and commercial footprint. Today, more than 10% of our fulfillment center have what we call high level of automation. That means where robots perform the vast majority of the operational task within very complex system. Most of these installation are digital- native contract. Keep this terminology because we will use it later, digital- native contract. We also use automation, of course, in order to retrofit existing operation to gain productivity and throughput.
Leading this transformation for Kuehne + Nagel are an exceptional team of professional and state-of-the-art R&D, research and development department with more than 500 technicians that work on the most modern technologies. We have a collab, of course, also with five strategic partners in terms of automation in order to test the future applications. We discussed during the lunch break as well the huge heritage in automotive and industrial part of Kuehne + Nagel. This is something on which we are very proud, at the same time, in the last year, we decided to deliberately invest in two verticals. One is consumer e-commerce and healthcare. These two vertical represent today 65% of our business.
From a geographical standpoint as well, starting from absolutely undisputed leadership in Europe, we decide to grow mainly organically in the American and Asia continent that represent today 25% of the business each, and represent more than that the springboard on which we will develop the next part of our Roadmap. In 7 countries in the American continents and 8 selected countries in Asia. We said that we transform and hopefully I was able to share some of the indicators with you, but also the market moved in the last year, and we have today what I call the new market landscape.
Allow me just for the one that are not totally familiar with the Contract Logistics business, we talk always about or mainly about fulfillment and distribution services in a domestic scope, but with a fulfillment center, with a scope that could move from a national to a regional to a global range. Of course, the seamless integration with my colleagues, as mentioned also by them, is a fundamental part of the success of our proposition. Let's talk about some of the market dynamics, right? We talk about nearshoring, reshoring, and so forth. Even if we are not able to come to one single statement, it is clear and we know that the sourcing patterns are changing, dramatically changing. We talked about the semicon before. All of you are aware about what is happening in the fashion industry.
We have new models in sourcing, we have new strategy in go-to market, and you have new technology for what is concerning fulfillment and distribution activity. All these together generate a very rich pipeline of opportunity for company like us. Why I'm saying that? I would like, at the end of this page, to agree with you that we are in a market that is supported by very positive and structural tailwinds. One is this reconfiguration of networks that is happening with every single customer that we serve. You remember that I mentioned digital- native solution. I mentioned that before. This kind of solution, let me share what does it mean. Around 60% of the new contracts that we sign fall into this category, digital- native solution. What does it mean?
These are not solution that is an overtaking from an existing operator. These are completely new solution designed to fulfill new customer expectation with a high level of automation. You can also immediately imagine that within this framework, we can express much higher conversion rate. 70% of our projects require an extensive use of automation. Automation is not anymore a nice-to-have. It's a prerequisite in order to fulfill the market requirements. Not only that, it's the only weapon we have in order to cope with the usual constraints of Contract Logistics, namely space and people. A highly automated operation can run at the same speed and productivity with 50% less people versus a traditional solution and 30% less space utilization. You can imagine that from that perspective, it becomes extremely appealing.
More than 40% of the contracts that we sign have terms that go beyond the usual 5-year term. They cover a period that goes from 10 to 15 years of partnership, reflecting of course, the longer-term vision of our customer into these solutions. Around 60% of the contracts that we sign represent dedicated solution to our customer with back-to-back agreement on all our major liability, the rent, the lease, and the investments. Last but not least, specialization. Was probably mentioned by Yngve, if I'm not mistaken. Even in Contract Logistics, the centricity and the strategic solution and the strategy around the Contract Logistics solution is becoming so high that there is very little space left to improvisation and to a generalistic approach. What is being mentioned by Yngve on Semicon is the same application in the industry vertical where we operate.
The market continues to be extremely fragmented, as mentioned also by Hansjoerg before. Hopefully, at the end of this page, we understand that for a company like Kuehne + Nagel in Contract Logistics, is a very interesting environment where to play in the next years. Staying very humble, we also know what make us special in the marketplace. In all honesty, it's not always very easy to understand and to recognize what makes you special. In that perspective, I think our customers have been very helpful to do that. First of all, our people. I was also wondering, in an increasingly tech-dominated market, is saying that people makes the difference a contradiction? Obviously is not. Continue to be our first point of differentiation.
The engagement model that we have today with the customers scale up. Someone said Contract Logistics before pandemic and after pandemic, I don't remember, during the lunch break. The engagement model that we have today is at the C level in every single contract that we manage. Not only that, the effort that our people have to put into design and implementation today is as much or even higher that in running the operation. Also the evolution of competencies that we have in our center, what we call the digital dexterity, is one of the major challenge and one of the area where we excel. We master complexity. We invest more than 600,000 hours of training in the company from leadership and technical skill in order to continue to foster our team. Technology. Well, someone said we love trucks. No, you said what?
Trucks are awesome.
Trucks are awesome. We say in technology, we do not love robots. We love the best solution that we can offer to our customers that are sustainable today and tomorrow. Most of our solutions are so-called robot agnostic, meaning we have five global players specialized on different technology that play with us, and with them, we create the best solution for our customers. Now customer and people centricity. We were the first, and I think very courageous, to deliberately decide to import proven consumer metrics into the Contract Logistics environment. When we started in 2018, people looked at us saying, "Okay, probably will fail." At the beginning was not easy. We will talk about that, and you have a preview of the numbers this morning with Stefan. Today, we receive 15,000 active responses per year from both our customers and our people.
All these active response constantly feed our relentless focus in improving our service proposition and our working environment in Contract Logistics. I used to say to my IT colleagues that this is the most precious database that we have to take care of. The interesting part is that every year, we have 15,000 new refresh answers. Last but not least, I said the specialization as the last aspect of our uniqueness in the market. We continue to focus on three specific industry vertical with growing market dynamics and virtually unlimited possibilities for upscaling our services. Our ability to understand the market dynamics allow us to go above and beyond the pure logistics concept and the pure logistics service, and becoming an active part of the strategic decision process of our customers. Now, hopefully, we went a little bit about the transformation.
We talk about the market evolution, we talk about our unique proposition in the market. I would like now, as the last part of my presentation, to highlight what we want to do as part of the Roadmap 26 and how we will make it. What we want to do, we want to continue to deliver an above market turnover growth and a conversion rate improvement. Very important statements on both our top line and bottom line. About the market, I mentioned already a lot of dynamics. Allow me to add two points. Fewer and fewer customers will be technically and financially ready to run their logistics. This will boost outsourcing rate across the entire world. Probably less visible in Europe, where we have already a very good level of outsourcing, more visible in Asia.
At the same time, very similar dynamic will reflect into our competitive environment, where the entry barrier of Contract Logistics are going up and up. The organic growth that we want to achieve at 8% is totally in our reach without any risk of jeopardizing implementation in our customer promises. This is above market and will allow us also to make a very interesting point, that is to choose the customer we want to develop and partner with.
This will be based on alignment of values, alignment of expectation and value generation, and also based on the fact to avoid to undertake unnecessary risk in Contract Logistics in our company, and we perfectly know what we mean with that. M&A as well, you remember the table presented by Markus as well, will play a role in our future development, and again, will be a strategic support to our geographical development, I mentioned before, where we want to grow faster than average, and also our vertical development. All these strategic action will not only provide top line growth, but also another structural improvement in our conversion rate, continue to strengthen our positioning of leadership, also in shareholder returns.
The last part of my presentation will be on 4 action that you see on the other part of the slide that are the greatest strengths of our plan. The first is on Kuehne + Nagel experience. I know that you heard a lot about that, but also our contribution to that as the clear metric to improve loyalty and win rate. A very organized approach to our mix and to our products. Last but not least, we will talk about future-ready operations. Let's move to the first one. I'm sure that you are already familiar with these slides, isn't it? You are? Correct. This is a very important slide that has been presented by Stefan this morning. Behind these numbers, there is a huge work of all the team across the last 5 years.
When we talk about customer experience, we talk about one of the most tangible parameter to support healthy and profitable growth of a company. As I mentioned, we pioneered the use of obsessive and rigorous measurement in the world of Contract Logistics. As you can immediately see, there is a strong correlation between NPS, retention, and operating margin. I don't think it's needed to add anything on that. As any service company, nothing is perfect. Also, out of these 15,000 feedback that we receive, we receive very clear indication in how to improve our product delivery, as mentioned also by Yngve. This is our responsibility, to constantly improve our product delivery.
Customer said, "You have to simplify, you have to be more agile, you have to be faster." Not a big news, but behind this indication, there are hundreds and hundreds of people working on our products and on our delivery in order to make indeed. I will be able to tell you we were the first in Contract Logistics to introduce this concept. In Contract Logistics, again, you have to imagine that the level of satisfaction of our customer is very high. We talk about 99 + % of customer satisfaction. Usually, when we operate with e-commerce player, we can receive, like, 30,000- 40,000 orders in a day, and we discuss if there is one missing. We discuss about that order because there is a customer, and there is an expectation that was missed.
In this environment, you can say, "What can you improve?" Of course, we said product delivery is a must. Where we see, again, a unique opportunity of development for us, is to move from a customer satisfaction to customer enablement. In other words, not only to focus our attention in do what our customer are expecting us to do, but moving our attention from a typical inside-out approach to outside-out. How can we become a driver of the success, commercial success of our customer? You can imagine if we are able to enter in this kind of discussion with our customer, and they are pushing us to do that, new value driver can be generated out of that. This is our major effort, and I'm sure that we will be again pioneer in this direction. Let's move now to our mix.
Relentless focus on premium industry. Consumer e-commerce and healthcare will continue to gain additional share in our portfolio. Thanks to the combined effect of new product offering, we will talk right after that, and new customer wins. We represent, today we are at 65%. We expect to reach 75%-80% by 2026. Why that? In this industry vertical, the so-called value-added customization, where we can express better margin, represent up to 20% of our sales. It is clear that for us, this represent our premium verticals. Asia was mentioned. Our organic growth in Asia that I mentioned at the beginning, generate a very rich pipeline of existing Asian-based customer that we will continue to follow, not only in their Asian development, but also supporting that in new market strategy for Europe and for the U.S.
I said potential M&A as well, focus on premium industry vertical, U.S., and selected Asian countries. Moving to the products. The product that we expect to launch in the market are very consistent with our strategy on the vertical. We will talk about the e-commerce products. In the last part of my presentation, where I will talk about the group development of e-commerce, and in healthcare as well, just to support what is being presented by Inga as well, we will continue to focus with the aim to double our presence in the healthcare sector, exactly in line with the group perspective. To do that, we will invest in a selected number of countries with new entry strategy, supported by M&A or by innovative agreement that we are discussing with customer. We will develop our services.
Focus on quality is a must, as we mentioned before. Our integrated logistics service today is the first product serving the healthcare industry, with 80% of the top 10 pharma working with us in integrated logistics. Of course, also you are all aware about the spin-off of the big pharma of the consumer health division. This is a trend. Interesting enough, you would say, what has to do with that? Imagine that for this big pharma, all the supply chain were run as one. Now they are splitting with two different needs, focus and application. For us it's, again, a very interesting opportunity or growth. Let me move to the last point, that is future-ready operation. Our operation must continue to demonstrate the strength needed to capitalize on market dynamics. We are leading operational excellence, and we will continue to do because we love that.
Automation is becoming omnipresent, in the next five years, we expect to reach a level in which automation is just what we do normally. We expect to double our number of fulfillment center. Another interesting number to share with you. In January 2024, we will put into operation probably our most advanced fulfillment center, where for the first time in our history, we will have a ratio between humans and robots one-to-one . We will have 700 humans and 700 robots working under the same roof. This will be a very interesting mark, and I'm sure that more will come in the years to come. Not only that, of course, our solution must be designed to work today and to be flexible for tomorrow.
We do not know what will be the change of the go-to-market strategy, and we saw what happened in the e-commerce dynamic during the pandemic. Everybody thought everything will be digital, right? E-commerce will take 90% of the retail sales. It didn't happen. How many customers started working on that idea? We must maintain flexibility also when we talk about automation. Last but not least, we all know you can have the best car, but if you don't have a driver, it does not move. For us, the very big success is how we drive the automation, and this is because we will continue to rely on smart humans supported by the best artificial intelligence application. Let me come to the key takeaways of my presentation.
I think that we can all agree that we are in a quite interesting market with structural positive dynamics. We will continue to capitalize on our unique asset. We know what we have to do. Again, we are ready and extremely confident that also this time we will achieve the ambitious target. One of the ambitious target is exactly the growth in e-commerce, and allow me to complete my presentation on a couple of slides on that. We have a clear ambition by 2026 to achieve additional 500 million of business in e-commerce with a strong leverage on SME. What did we do? So far, we have been extremely active and extremely successful, focusing on specific product categories, the top categories in e-commerce.
You see clothing, shoes, consumer electronics, personal care, and also on very clear archetypes of customer, big brands, retailer, and marketplaces. On this specific area, we have been extremely successful, all business unit. We know that while some marketplace are suffering today, some dynamics, the brands continue to invest on e-commerce solution for the future. What are we gonna do? As mentioned by Otto, we have a capital of SME customer that we serve today already in all the inbound part. We leave them alone in the moment in which they reach destination, and we are not providing today any service for what is concerning fulfillment centers, last mile integration, and cross-border. This is the area on which we will focus in the next year. SME today represent the most dynamic area regarding e-commerce.
The growth 10 x in the last 5 years represent 15% of the e-commerce sales. They have an absolute high appetite to go international. Our product development will be to sustain our proposition and to complete the offer that we call From Origin to Couch. Thank you very much for your attention. I am at the end of the presentation. I leave space now to your questions. Thank you.
Thanks, Gianfranco. Any questions? Alex?
Hi. Thank you. Alex Irving from Bernstein. 2 from me, please. First of all, early on in your presentation, I think you said 70% of your projects require extensive automation. What about the other 30%? What sort of business is that?
Then secondly, how is your business split between single tenant and multi-tenant warehouses? How do you see that evolving, and what's the logic behind it?
Correct.
Thank you.
What happens to the other 30? When I say high utilization of automation means very complex systems together. I would say also under % of the contracts today have a level of automation, but when I talk about high level is exactly when I said robots perform the vast majority. It's not 1 single automation, it's a system that we put in place. This is the 70% I was focusing on. As I said, 60% of our contracts today are back-to-back. We will continue to focus on that because it's an environment, of course, that reduce our exposure. We expect this to continue and also represent probably our portfolio in the future.
Marc?
It's Marc from Stifel. We heard before that in ocean, Maersk is not, let's say, considered a serious threat in terms of moving into the freight forwarding space. I guess, Maersk's strategy includes some fulfillment centers and e-commerce and some business in logistics, Contract Logistics as well. Do you think that they will pose a threat to your business, or is also an explanation for your division why Maersk is not a serious competitor?
You should ask them.
Thank you.
Any other questions? 1 in the back.
Thank you. Michael, from Vontobel. You mentioned the conversion rating increasing 80 to 100 basis points, and I was wondering what is really driving that? How important is the increased level of highly automated warehouses contributing to that? Or is it the increased mix of SME customers? What is really driving that?
Of course it's a combination of the events. Allow me to be a little bit more specific. The automation on digital native contract is a new contract, and this starts like it starts. Where we retrofit existing operation, we have the major effect of productivity because we retrofit an operation and we have productivity improvement. That is 1 factor. Of course the focus on industry vertical that allow us to express a higher percent of value-added services. Just to share a number. With some premium brands, the time and the money attached just to the packaging moment, preparing the packaging for the final is more expensive than the picking and the stocking. These are all the value-added activity that generate areas of growth and better conversion rate as well.
Is a combination of product mix and of course automation. All the three that you mentioned before.
Any further questions? Okay. If not, thank you, Gianfranco.
Thank you very much.
I'm sorry, one last one.
one.
Marco.
Please. I'm sorry.
I think you've mentioned earlier that you're also thinking about adding last mile type of services within your e-commerce offering.
Yep.
Can you expand a little bit more on that? What's the strategy? What are you doing in the moment, and what's the plan for the future?
Absolutely. Just I think it's a very valid question because we are not planning to enter directly into investment in last mile network because this is not our business, as already mentioned by. When we talk about integration of last mile, particularly for SME, is when you put this service in an integrated platform, I said From Origin to Couch, it becomes a component of the service that we will offer. Where we will work is on the platform of visibility and integration of the providers, but definitely not in creating our own network of last mile. Is that clear? Good. Thank you.
Thanks again, Gianfranco.
Thank you.
We'll hand it over to Stefan for some closing remarks and finishing a few minutes early as well. Thanks.
Thank you very much to my leadership colleagues for these inspiring speeches. You see it was almost everything has been pretty much aligned. Thank you again. Thank you very much for the support team. Technology has worked properly yesterday in the rehearsal and as well today. Thank you very much to you for listening. Hopefully, you have learned how we are going to manage the future. More insights, we meet each other in 15 minutes from now at the reception. We have a little bit of, we say, get together, in a couple of minutes. Trust is important for us. Hopefully, as well you have learned and you understand that we will build even trust more with you and with the investor community. We are open for any questions in the next 30 or 60 minutes or so.
Thank you again for joining. Thank you very much as well for joining the webcast. See you in a couple of minutes.