ZIM Integrated Shipping Services Ltd. Price & Performance (ZIM)

And ZYN is prepared to take a long term approach as we consider the future of our fleet. We also intend to preserve flexibility with respect to our operated capacity which we regained in 2025. We have approximately 94,000 TEU and 80,000 TEU which we could redeliver to vessel owner in '25 and '26 respectively. If we choose to do so, due to the market conditions or shift in our commercial strategy, Commercially, our present in the Trans Pacific trade is strong and growing. We've also been successful in ensuring that ZIM is involved in trade from China to diverse end markets. Not just The U. S, In the contents of uncertainty around the tariff, and ZIM impact on global trade, we've expanded ZYN presence in other gross market, I mean, Asia, such as Vietnam, Thailand and India, as well as Asia to South America. We believe these are trade that will see further growth in future years and from which ZIM stands to benefit. Our customer centric approach remains a core element of our strategy. We are committed to providing best in class customer experience and continuously look for new ways to address customer evolving needs. We're pleased that our recent annual customer saver has underscored our success in meeting this objective.

The same result highlight a consistently high level of service provided across all customer interaction. The server also reaffirmed improvement related to customer satisfaction, customer loyalty and ZYN offering versus competitors. As part of this customer centric approach, ZIM continued to invest in technology, and digital tools to differentiate our offering and enhance our operational excellence. For example, we recently accelerated the rollout of advanced tracker on our dry containers making them smart containers. [indiscernible] ZIM is a leader in this area with the most technological advanced dry container tracker from Hoopo. Giving customers access to critical real time data. Enabling tracking visibility while their cargo is in transit and supporting better decision making across the supply chains. [indiscernible] On our reefer fleets, we offer ZMonitor a best in class [indiscernible] [indiscernible] solution to secure sensitive and high value cargo. We also continue to believe there is significant value investing in growth engines. Our approach is to selectively invest in companies developing disruptive technologies related to our cross shipping activities or border logistics ecosystem as well as sustainability related technology. Most recently, Zee made an investment in Zeeptaco, which falls in the latter category. Zuteco develops a unique, more sustainable alternative the conventional air and water cooling of data centers.

Their waterless direct to chip liquid cooling solution can help connect data centers cut their carbon footprint and drive the development of more energy efficient and environmentally friendly AI data centers. On this note, I will turn the call over to Xavier, our CFO, for more detailed discussion of our financial results Update 25 guidance, as well as additional comments on the market environment. Xavier, please. Thank you, Eli. And again, on my behalf, welcome to everyone.

On this slide, we present our key financial and operational highlights.

Our strong full year results are indicative of a robust market with elevated freight rates and resilient demand. TIN generated revenue of $8,400,000,000 in 2024, a 63% increase compared to last year. During the year, our average Freight rate per TEU was $18.88 dollars fifty seven percent higher than in 2023. As we benefited from solid freight rate throughout the year. In Q4, our average freight rate per TEU was $18.86 dollars a 71% increase year over year. [indiscernible] though 24% lower than the Q3 average freight rate of $2,480 Freight revenue from non containerized cargo, which reflects mostly our car carrier services, totaled $497,000,000 for the full year of 2024. Compared to $535,000,000 in 2023. The decline resulted from a partial reclassification in 2024 within revenue types. I would also note that in November, we delivered one of our car carrier and are now operating 15 ships And we may opt to redeliver additional vessels in 2025, depending on market conditions. Our free cash flow in the fourth quarter totaled $1,100,000,000 compared to $128,000,000 in the fourth quarter of twenty twenty three. Free cash flow in 2024 totaled $3,600,000,000 compared to $919,000,000 in 2023. Turning now to the balance sheet.

Total debt increased by $1,000,000,000 since prior year end. Mainly due to the net effect of the incoming larger vessels with longer term charter durations attached. The newbuild capacity we have received especially the LNG vessels, are chartered for a period of eight to twelve years creating a predictability in our cost structure with respect to this core capacity. Furthermore, we hold options to extend the charter period on 25 out of 28 as well as purchase options. Giving us de facto full control over the destiny of these vessels very much as if we were the actual vessel owners. Moving to our fleet, we currently currently operate 143 vessels, including 128 container ships, with total capacity of approximately 784,000 TEUs. And 15 car carriers. [indiscernible] compares to 145 vessels in November 2024 as we delivered seven container ships and one car carrier and received six vessels including the last four remaining new builds, that is the three eight thousand TEU LNG vessels and one five thousand three hundred TEU whitebead vessel. Having now received all 46 newbuilds we secured in 2021 and twenty twenty twenty two, this phase of our fleet transformation is complete. In 2025 and 2026, we have regained flexibility with respect to our operative tonnage.

During the remainder of 2025, have a total of 26 vessels up for charter renewal and another 23 vessels up for renewal in 2026. While our plan is to maintain in 2025 constant operating capacity when compared to 2024, we do have the optionality to scale back. This flexibility is important and will allow Zoom to adjust its fleet size depending on the operating environment and depending on our commercial strategy. As we consider renewal opportunities for this capacity, the typical charter durations are expected to extend between one to five years therefore much shorter than the eight to twelve year charter periods of our core LNG capacity. Our focus going forward is to ensure that we maintain and continue to enhance the competitive position of our fleet we have recently done when we secured four additional 8,000 TEU vessels to be delivered in late twenty twenty six and 2027. We also recently capitalized on an attractive opportunity to acquire two eight thousand five hundred TEU vessels which we were already chartering. Turning to our fourth quarter compared to €190,000,000 in Q4 to '23. For the full year, net income was $2,200,000,000 compared to a net loss of $2,700,000,000 in 2023.

And to remind you here, the full year 2023 net loss included a $2,100,000,000 non cash impairment charge that we recorded in the third quarter. Adjusted EBITDA in 2024 was $3,700,000,000 compared to $1,100,000,000 in 2023. Adjusted EBITDA and EBIT margins for 2024 forty four percent significantly higher than last year. [indiscernible] Turning now to Slide 12, we carried 980,000 TEUs in the fourth quarter compared to 786,000 TEUs during the same period of last year. An increase of 25% compared to market growth for the quarter of 5.3%. For the full year, we carried 3,800,000 TEUs a 14% increase compared to 2023. And compared to the overall market that only grew by 5.6%. Importantly, our Trans Pacific volume grew 27% in 2024. And we expect to maintain our market share gains in 2025 with our upsized capacity. We opened new services serving Latin America and achieved a 77% year over year volume growth in that region. In 2024. Next, we present our cash flow bridge. For the full year, our adjusted EBITDA was $3,690,000,000 converted into $3,750,000,000 of cash flow generated from operating activities. Other cash flow items include 2024, dividend payments of $579,000,000 and $2,550,000,000 of debt service.

Mostly related to our lease liability repayments. Five guidance, As Eddie mentioned, expect to generate adjusted EBITDA between $1,600,000,000 and $2,200,000,000 Adjusted EBIT between $350,000,000 and $950,000,000 With better performance expected in the first half of the year, versus the second half. This range reflects the high degree uncertainty related to global trade, geopolitical issues and particularly the timing of the Red Sea opening. Overall, we assume a significant decline in freight rates in 2025 as compared to 2024. Our base scenario assumes that the Red Sea will not open earlier than the second half of the year. Meaning again that we expect a better first half of twenty twenty five while rerouting continues to absorb significant capacity. Our guidance is assumes that we will maintain constant operating capacity as compared to 2024, as we renew sub of the existing capacity or at least similar tonnage though at lower rates than the ones incurred in 2021 and 2022. As such, we expect to continue to see an improvement in our cost structure. With respect to volume, we expect to deliver single digit volume growth in 2025. Slightly better than expected market growth. As for bunker cost, we expect similar cost per tonne in 2025 versus 2024.

Now before opening the call to question, a few comments on the market. The risk of oversupply in the near future remains unchanged. The current order book to fleet ratio is approximately 27%, or 8,500,000 TEUs of which approximately 2,000,000 are scheduled for delivery in 2025. And the remaining spread out until 2029. The disruption caused by the Red Sea closure absorbed significant capacity in 2024. And it remains a key unknown in 2025. While there is no indication of the imminent reopening of the canal, once that happens, the capacity now absorbed by the rerouting around the Cape Of Good Hope will be freed. And will likely put additional pressure on freight rates. The external environment, which Ellie already discussed, is creating an unusually high degree of uncertainty for industry players [indiscernible] ZIM, it is important to remember that carriers have tools at their disposal to manage overcapacity as needed. [indiscernible] In the short term, carriers can go back to slow steaming, which was used extensively in 2023 and which also has cost and environmental benefits. Tires can also opt to execute blank savings or put vessels on idle. [indiscernible] Scrapping is another important tool, which has been underutilized in recent years.

It can be expected to catch up at some point. Particularly as older capacity, which was charted during the COVID period, is finally redelivered back to the vessel owners. [indiscernible] The industry's decarbonization agenda and the need to meet the IMO's carbon emission targets or customers' expectations, we also require a higher pace of fleet renewal and could spur further scrapping. And on this note, we will open the call for questions. Thank you.

Thank you.

We are now opening the floor for question and answer session. Your first question comes from the line of Muneeba Kayeani from Bank of America. Your line is now open. Thank you for taking my questions. So firstly on your guidance, I want to to just clarify. It's clear you said it's a second half earliest Red Sea reopening, but does the top end assume no reopening this year? And kind of the low end assume early the timeline you've assumed in that range, that would be helpful. Secondly, just kind of on The U. S. TR that you'd mentioned, was I right in thinking that you would consider moving capacity to other trade lanes in this scenario? It is important implemented? And can you tell us what's your exposure to Chinese build ships in the Resources suggest it's 34%. Is that correct? And if I may ask a third question, press articles last week suggested a potential management light buyout. Can you please comment on that? Thank you.

Thank you, Moniba. So maybe taking your questions in the orders you raised them. The first one, when we refer to our guidance range, today, I mean, as we speak, we are still thinking it is more likely than not that the Red Sea will reopen sometime this year. So both of our guidance extreme numbers do include the scenario according to which the Red Sea would reopen, albeit at the lower end of the guidance with early reopening, and the higher range of the guidance with a later reopening towards the end of twenty twenty five. Which obviously remains to be seen. Second question with respect to the questions around the potential additional levy that could be imposed on the Chinese built tonnage that would call at a port in The US. It is clearly a development that we are monitoring very closely. I think we are today still in the early days We are still under the consultation period, which we lost up until, as you know, March 24. It's a little bit early to jump into conclusion as to whether they will be enforced or not. But clearly, we are looking into that. You're correct. When we look at the capacity that we operate we operate a mixture of Chinese built tonnage and non Chinese built, mostly Korean.

And then our Chinese built capacity ranges within the within the 25%, 50% mark that is also referred to in terms of potential threshold for additional levy on the port calls in The U. S. So I think like I said, very early days to conclude what if they were to be enforced, would be the effect on ZIM and on the overall industry. I think it would be very significant. The first thing that we would want to do is try to make sure that we limit the maximum extent possible our exposure to those additional costs that would require potentially shifting, as you suggested vessels from trades to other trades. It will also potentially require us to be shuffling a little bit the lines and the networks that we currently operate If I take an example, today one of our service that move cargo between Asia to the U. S. East Coast ZXB line has four port of calls in The U. S. With Boston, Baltimore, New York and and missing the last one. Which is which has Boston, New York, Baltimore and Norfolk. So, we might want to to reduce, you know, limit the amount of calls and and move more cargo into less port, and then we would need to rearrange moving cargo inland or have a feedering service.

So, there is a lot of potential options that would need to be But clearly, at some point, we would be left with some extra cost after having tried our best to limit the effect. And question will remain who will absorb that extra cost. We will need to find ways to to recover this incremental incremental impact. Lastly, your last question with respect to the rumor of NBO. Our policy has been since we went public in 2021 to not comment on market rumors. So we are not going to start today. I can say is that management clearly continues to be focused on executing the strategy that we laid out for ourselves already since quite some time, which aims at ensuring that we build resiliency within the company for the longer term. That we unlock shareholder value and that we continue hopefully reward or return significant capital to shareholders as we've just announced today with the additional dividend of $3.17 per share.

Thank you. [indiscernible] Your next question comes from the line of Marco Limite from Barclays. Your line is now open. [indiscernible] The first question is just a follow-up on the outlook. You have mentioned that you expect the first half to be quite stronger compared to the second half depending on the reopening of the Red Sea. Are we I mean, my back end of the envelope calculation takes me to assuming an early reopening at the beginning of the first half, basically to first half EBIT positive and then second half EBIT being negative at the low end of the range. Will you agree with that? My second question is on CapEx. So could you please explain a a little bit more about the phasing of the renewals? So are those renewals more back end loaded or are just throughout the year And what is the CapEx range including lease for 2025 assuming none of those charter agreements are renewed or all of them are renewed. Thank you.

Thank you for the question. On the first part of your question with respect to the guidance, we do not really communicate on quarterly guidance. What we really wanted to say this time around is that there is a lot of uncertainties ahead in 2025 clearly. As we tried to list some of them. But we have, as we see today, with mid March, a pretty clear visibility on the first quarter, obviously, and to some extent as well on the second. So we can say that the first half is going to be, in our outlook, better than the second half. That is also mostly driven by the fact that the good market condition that prevailed throughout 2024 and as we entered into the early months or weeks of 2025, continued to be extremely strong. We had a very strong volume pre Chinese New Year with a very strong resilience on the rate environment that indeed contributed to a very strong start of 2025. Now as we speak, we are just after Chinese New Year, So the after the Slack period of a Chinese New Year, we see the volume coming back but maybe not as quickly as what would have happened in prior in prior years.

I think there is a lot of anxiety clearly still from the market with respect to what will be the ultimate effect on the tariff policies between The U. S. And China. Everybody is a little bit still on the wait and wait and see mode. So So we'll see how that pans out.

But I think this is why we felt confident that we could say the beginning of the year looks good. Then there are so many factors of uncertainty thereafter that we want to remain more prudent. When it comes to the second half the year. Now talking about your second question, which is, I think, if I understand correctly, what is the strategy of the company when it comes to the fleet management, the strategy around the tonnage that we currently operate. So just to give and reemphasize a few numbers, as we start 2025, the 128 containers ships that we operate represent altogether seven zero eight eighty thousand TEUs of capacity. Important to say that two thirds of this capacity so 520,000 TEUs is a tonnage that is either locked in for long term charter duration or owned tonnage by the company. So the exposure that we have on the short term charter if you will, is a third of the capacity that we operate today, so give or take. 260,000 TEU. Out of those 260,000 TEU, we have a bit less than 100,000 TEUs worth of capacity that come up for renewal in the coming months into remainder of 2025.

And today, our objective is to renew some of them, let go some of them, pretty much 50% split between what we would renew, what we would let go might be the correct assumption for our base scenario. Again, we will have the flexibility to change that along the way if we believe that it is a better alternative. So I think it is not really CapEx in a way. This is just going back to the charter market from a short term charter perspective for the non core, less strategic capacity that we operate today, again, having now already since the end of twenty twenty four having finalized our fleet transformation program, secured for the longer term the core strategic tonnage that we intend to deploy for the for the foreseeable future.

Thank you. And if I may, just a follow-up on this. So are you willing to provide a range for CapEx plus debt service basically for $25,000,000 based on whether you renew or not the expiring capacity? Thank you.

So CapEx wise, what we have in 2024, what we had in 2024 is limited, it's containers, equipment mostly and some also IT related capital expenditure. We have two in terms of vessels we have two eight thousand five hundred TEU ships that we announced recently we would acquire that those would be for less than $100,000,000 transaction combined. And apart from that, from a vessel perspective, what will what will happen is whether we do or do not recharter some of the capacity that comes up for renewal. In terms of debt service, or lease liability repayment, if you look at what was the situation or if you look at our cash flow statements for 2024, the total amount reached between $2,500,000,000 to $2,600,000,000 altogether. That included the down payment that we paid for the newbuild capacity that was delivered to us, 29 ships altogether in in 2024 and also included the option that we exercise on five vessels earlier in 2024. So that combined represented $440,000,000 of one off amount paid and reported in our cash flow statement as a lease liability repayment because from an accounting perspective, this is what it is. So those will not be repeated in 2025.

With aside the $90,000,000 or $100,000,000 that I talked about on the two vessels that we've announced we would purchase from the from the vessel owner that is chartering those ships to us today. And we will see so you should expect to see in 2025 a reduction from this $2,500,000,000 to $2,600,000,000 that we incurred in 2024, both because of the one off that is not happening and two, an additional incremental cash saving from a cash flow or cash outflow perspective due to the fact that we are letting go in a way the more expensive the more expensive tonnage. And if we do replace some of the 28 ships that we have up for renewal in 2025, it is more likely than not that the rates that we would secure would be lower than the one we are currently paying as most of those charters were secured in twenty twenty one-twenty twenty two during the high of the COVID days. And the high of the charter markets. So by and large, you will see in 2025, when compared to 2024, a reduction on our lease liability repayment. Coming from two elements, the one offs in '24 that are not going to repeat themselves in '25 and also the fact that we continue to benefit from the lower chartering rates of our new tonnage and possibly of the tonnage that we will renew in the period.

Okay. Thank you very much.

Your next question comes from the line of Amar Nokta from Jefferies. Your line is now open.

Thank you. Hi, good afternoon and Helane and Xavier. Just maybe wanted to follow-up. I have a couple of questions. So maybe just first on the last point Xavier, you were just making in terms of the lease payments for 25 Does that mean if it was $2,500,000,000 to $2,600,000,000 last year, does that come out to something like $1.71.0.8 this year assuming maybe half of those vessels rolling off, do you extend them at today's market rates? Does that sound in the ballpark?

That would be clearly below the $2,000,000,000 mark, that's for sure. Whether we're going to be $1,800,000,000 $1,700,000,000 remains to be seen. But clearly below €2,000,000,000 yes.

Okay.

All right. Thank you. And then you had mentioned in your opening comments just that you're approaching that four million TEU run rate per year. At In terms of and you mentioned being able to maintain that What is behind that in terms of the vessels coming up for renewal? Is that a assuming that of those 26 ships that roll off this year, that half will be extended and the other half return?

Yes. Maybe Omar, what to help understand that, let's look at what happened in 2024. In 2024, we increased our operating tonnage from 640,000 TEUs at the beginning of the year to close at 780,000 TEU at the end of year. And we added capacity months after months throughout 2024 as we received more tonnage than we delivered existing tonnage. So 140,000 TEUs of incremental tonnage between the beginning of operating cap capacity, between the beginning of twenty twenty four and the end. Of 2024. And that allowed us to come to deliver on the volume story that you rightly highlight. That allowed us to allow the company to move 14% more boxes in 2024 compared to the prior year 2023. So now when we look at 2025, our starting point is 780,000 TEUs worth of capacity. And with those 90 give or take, thousand TEUs of tonnage that are up for renewal. If we were to let go all of that tonnage, we would end the year with an operating capacity that would be close to 700,000 TEUs. So still quite significantly more than what we started 2024 with. So that's why we're saying that we feel confident that we will be able to continue to grow our carried quantities.

With the capacity that we intend to operate in 2025, even though as of yet, we still maybe have not made final decisions when it comes to the renewal of all or some of these 28 ships that are coming up for renewal in 2025.

Thank you. That's actually that's quite helpful. And then just final one and this is a bit more big picture and strategically maybe just about the business. You were discussing the USTR proposal and still early in terms of figuring what that all means, but you did mention that some of the complexity that's now involved, if it were to go through in terms of servicing different ports and different customers in various areas How are you thinking about ZIM I guess going forward, you've operated obviously long term as an independent ocean shipping company. Any plans or thoughts in terms of diversifying interrelated businesses that are either tend gentle or within logistics? As a result, especially given how significant your cash position is?

Look, I think the number one priority of the company longer term ZIM. As a very highly competitive ocean player. So we've done a series of we've taken a series of decisions and implemented a series of actions throughout the past four, five years, starting with the renewal of our fleets starting also with the collaboration with the 2M back in 2018 with MSC now as the 2M did got dismantled. So we are very well positioned. We are commanding a significant market share on the key trade where we decided to focus our attention. Just also to emphasize here or reemphasize on the Asia U. S. East Coast, we command a market share close to 12%. And despite the fact that ZIM globally only commands 2.5% of the global shipping market. On the trade where we compete, we are strong and we are a big competitor. The partnership with MSC on the US East Coast trade is a pure swap agreement. So we're bringing as much capacity as MSC and we both enjoy from sharing slots on board each other vessels. We've been very active in showing also that we differentiate ourselves with our LNG proposition. We were one of the first shipping line to aggressively, I think, order newbuild LNG tonnage.

Today, we just talked about the composition of the fleet. Out of the 780,000 TEU of capacity that we operate, 40% of that capacity is LNG powered. Are the only shipping line having two services between Asia to The U. S. East Coast. So we've built believe, a strong brand. We get the recognition from our customers that transpires in our ability to capture additional volume as we just talked about generating more than 14% volume increase in 2024. Versus 2023. Now all the uncertainties that you are referring to ahead of us will affect the whole of the industry. We feel we feel strong about the fact that we now have the right tools and we are very well positioned to navigate those uncertainties the months and in the quarters to come. So I don't think that all those elements that we need to keep in mind and consider are of a nature to divert focus and attention away from our core shipping activity. We said that we on top of this core shipping ocean liner strategy that we have and execute on, we continue to look at investing and diversifying some of our activity towards digital initiatives, and we named a few in this respect.

We will continue also to do that. But, short answer, after maybe a long one, is we think that the foreseeable future, the focus should continue to be on our core shipping business.

Well said. Thank you, Xavier. Appreciate your comments.

Your next question comes from the line of Alexia DeGani from JPMorgan. Your line is now open. Just very firstly, you talked about the Anglietti that customers are first facing very near term. But can you talk a little bit more about the very current rates we're seeing in activity in February? Because we've noticed quite material drops in spot rates in February. And it's not very clear what is driving that given the Red Sea remains closed So any comment there would be great. And in that context, if you can give us a little bit of a rough evolution of rate over the next twelve months. Obviously, there's seasonality and kind of what your assumptions are on that basis. Secondly, on the fleet composition, remember when you came to market, one of the unique selling points was your agility and the fact that you had very few vessels or capacity on longer term charters. Obviously, [indiscernible] massively switched during COVID because of the constraints to secure capacity. Are you considering again to go back [indiscernible] to much shorter charter durations to bring back some of that agility. You had prior to COVID. And can you help us understand that at which scenario would you actually consider shrinking your asset base.

Obviously, you're telling us over the next two years, you have scope for a 20% reduction, assuming you don't renew any of these vessels that are coming up for renewal.

Is that a scenario you are considering as a team? And then just kind of a very quick one. It's good to see that you chose to buy some vessels. And why didn't you consider to buy more and instead kind of continue to pay the dividend that clearly is quite expensive if I think about the yield it trades on.

Just strengthens then kind of the capital allocation there? Thank you.

Thank you, Alexia. Quite a few questions here. I'm going to try to take them one after the other, if you allow me. So maybe starting with the third one. You were talking about the fleets and the agility that was one of the arguments that characterized the ZIM at the time of the IPO. And at the time of the IPO, you're right in saying that we were very much exposed to the short term charter market. We operated very little tonnage that we owned. And we were very, very not exposed to the long term charter. And that was an element of differentiation for ZIM. The agility of yesterday are the drivers for the agility of same for the agility of today and tomorrow. And our market and our industry landscape changed significantly with the COVID years of 2021 and 2022. And relying on the short term charter market was a strategy that could work up until and work pretty well by the way for Zim up until '21, including, by the way, '21, '22. After we felt that clearly we had to change this strategy and make sure that we locked for the longer term our core capacity because we would otherwise run the risk to no longer have access to the right vessels.

So as we also changed our commercial strategy and network strategy, opening up to partnering with other shipping companies with the 2M, as we discussed earlier on. We wanted to make sure that we could continue to upscale and generate economies of scale. And the higher in terms of size you go, in the charter market, the less you have availabilities in terms of in terms of vessels. So clearly, we changed that. And this what triggered the fleet transformation program that we initiated back in 2021 and '20 So we now are in a situation whereby, as I mentioned earlier on, a two third of the capacity that we operate is locked in for either because it's long term charter or it's owned tonnage. And that is for the better because it, first of all, gives us or guarantees access to tonnage. We are no longer subject to the fluctuation of the lithium charter market. And also, it provides cost visibility because the cost that we are paying on these two third of our fleet are known as certain and not subject to any potential change. And I would add that from a timing perspective, we went out in the market at the right time.

As we concluded those orders early on compared to today, and we benefited from very competitive pricing from the newbuild market that prevailed at the time that we would not be in a position to find, I believe today. So clearly, we changed our fleet strategy We believe this was the right decision for us to embark on and will allow for us to build resilience in our model going forward. Why did we not buy vessels as opposed to entering to long term chart The reason I think was very apparent at the time when we said that we wanted to make sure that we get towards the greener technology. At the time and still today, by the way, there was two options LNG, maybe in methanol, We believe LNG was the better one. But we don't want to take the residual value risk on the technology that you would be taking if you were the vessel owner. We are happy that the lessor, the vessel owner, keeps that residual value risk on the technology as we believe between now and the end of the charter period, it is possible that there will be an alternative technology, which will be a greener, more efficient and this will allow us to switch and transition to that prevailing technology easily.

When times come. That was really one of the driver for the decision making process. I would remind you that from a cash allocation perspective, we did also allocate some of our capital to those transactions and this was the way for us also to utilize the good earnings that we have generated back in 2021. And 2022. So the upfront payment that we've been paying for each of the ship at delivery that we presented for some of them more than 10%, 15% of the value of the of the new build itself was a way for us to clearly invest, make our cash work for us and contribute to reducing the daily cost that we are now paying on those ships. With respect to your first two questions, I think that are more linked to what is the current trading environment. And you were referring to the rate environment that is uncertain as of today. Clearly, I think we are just outside of the just after the Chinese New Year period, and colliding with this end of the slack season in a way, we have the tariff uncertainty that will at some point have some effect. It's still very difficult to say which, but we are still looking at what the what the how the market will develop in the weeks to come.

Clearly, we see volume coming back, not as quickly as one would have initially anticipated. Is that the beginning of a trend or is this something that we anticipate in the coming weeks? It's a little bit early to say. One thing that I would say or add is that we've started the negotiation with the long term customers for the contract cargo that we would allocate to some of our BCOs or freight forwarders [indiscernible] we have kicked out in LA a week ago. And what we are hearing from our customers is quite encouraging on that front. There is no at this stage no sign of a significant weakness in the potential demand. And the discussions are ongoing as we speak with very little disruption Everybody is talking about the tariff, but nobody seems to suggest the volume will be affected meaningfully, at least as part of those negotiation discussions that are just being initiated as we speak.

Thanks. And sorry, can I just ask a very short follow-up? In your guidance comments, you basically expect stable operating capacity. And therefore, we should expect all lease is up for renewal will be renewed to get to stable operating capacity. Is that right?

No. Maybe we were not clear enough here. What you should assume is that the capacity that we've operate throughout 2024 will be pretty much the same as the one we will operate throughout 2025. Maybe a bit less. So like I said, maybe Omar, I think had a question earlier on, we grew by 140,000 TEUs of capacity between over the twelve month period of 2024. If we were to let go all of the shifts in 2025, we would that we have available, those represent only 98,000 TEUs worth of tonnage. So de facto, we would be operating more tonnage in '25 than in '24. [indiscernible] All right. Thank you.

This concludes our Q and A session. I'd now like to hand the call back over to Ellie Glickman, President and CEO of ZIM.

Thank you.

In summary, '24 was outstanding year for ZIM. Highlighted by our best results ever excluding the extraordinary COVID period. Made important operational progress, upscaling our capacity which resulted in three consecutive quarter of record KRTU and 14% volume growth for the year. Far pacing the market. Our strong earnings in 2024 allowed us to share our success with several dividends paid to shareholders throughout the year. Including today's dividend [indiscernible] our total payout on account of '24 results is $7.98 per share or $961,000,000 representing approximately 45% of our net income. I want to thank our employees globally for their contributions in making this performance possible and the steadfast commitment to achieving the highest operational standards and delivering an exceptional level of service to our customers.

As we enter 2025, our business environment is fueled by usual unusual degree of risks and unknowns. Yet, with a transformed fleet of modern cost and fuel efficient capacity, 40% of which is energy powered, we are confident that we continue to leverage our agility and implement our differentiated strategy. We have the strong competitive position in our industry and are well positioned to navigate the external uncertainties. Thank you again for joining us today. We look forward to sharing our continued progress with you all.

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