Hapag-Lloyd Aktien

Ladies and gentlemen, welcome to the Havoc Lloyd Analyst and Investors 9 Months 2025 Results Conference Call and Live Webcast. I'm Iruna, the course call operator. Havoc Lloyd is represented by Rolls-Royce Nielsen, CEO, and Mark Fraser, CFO. I'd like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rodha Mnjancin. Please go ahead, sir.

Thank you very much and welcome, everyone, and thanks for taking the time to be with us today. Yeah, short presentation as always before we jump into the questions that you may have. I would say that when we look at the first nine months, a couple of things to mention. I think good, strong volume growth over the first nine months, again, a decent quarter in Q3. On the back of that, good revenue growth. When we look at Q3, I think earnings improved sequentially, but of course, yesterday's performance remained below last year. When looking at Q3 in isolation, I think that was actually a fairly solid result. I think we start to see that that the first cost savings from Gemini are starting to come in. We see the network running smoother and smoother, so that gives us a lot of confidence that we'll see further improvement as we go towards the end of the year and moving into 2026. We will continue to invest into the future. We will commit to a number of smaller ships that will come into our fleet to renew some aging fleet. We also have some things, we also continue to work on our terminal division, but nothing specifically announced there at the moment. I think we have narrowed our outlook a little bit going forward, and when you look at the midpoint on EBIT, then you see that we have slightly raised that compared to what we had a couple of months ago. Switching to market, let's still say it's a fairly robust market. When you recall all the forecasts that there were for the container trade in the beginning of this year, but also in fairness in the beginning of last year, then certainly over the last seven quarters, we have seen a stronger market than many people had expected. In 2024, the market grew over 6%. The first nine months now, we are again looking at close to 5%. That's a lot more than people had anticipated, and I think that's pretty encouraging and shows also that global trade is quite resilient. We still expected the last quarter to be somewhat weaker, but of course, that remains to be seen. Sport rates under pressure after the relatively early peak season. Seen a bit of an uptake in the last couple of weeks, but last week again a bit weaker. But I think we also see that demand still remains fairly strong and utilizations remain high. So hopefully we'll see some further recovery of those sport rates as we move forward. Switching briefly to Gemini. Gemini. I think it is fair to say that we have set a new benchmark for reliability in the industry, I think with very consistent performance, even in very volatile markets and under difficult market positions. I think the network has delivered on its promise pretty much consistently. every month i also believe that drives our above market growth we also see customer feedback very positive with with our net promoter score that we measure twice a year at the moment at a an all-time high and we also still see as i mentioned before quite a lot of things that we can still do better and we will continue to implement those smaller improvements month after month after month, and that will allow us to get to our anticipated cost-saving run rate in the course of 2026. Next steps, make sure that we continue to grow volume on the back of an excellent product, and also make sure we get... adequately paid for that because if we are able to help our customers to run their supply chains a lot better then that must be more efficient for them as it allows them for example to take out inventory and of course we would like also to be adequately paid for that. We will also come with the introduction of a new quality promise for on-time delivery on box level because that's in the end the ultimate promise to customers that we make that we deliver their box on time. A little bit on investments before I hand it over to Mark. We have announced also this morning a decision to invest in up to 22 new ships in smaller vessel classes as we have a significant amount of tonnage in those vessel classes that is going out of service in the second half of this decade. That means we need to replace them. We also have to reduce our exposure to the highly elevated time chart at the moment, market at the moment, and of course, that also helps us to reduce our operational cost base, and it helps us also on our decarbonization journey. The shifts that we will order will probably be in a couple of different classes, one around 1,800 TUs, one class around 3,500, and one class around 4,500 TUs. With that, let me for now first hand it over to Mark.

Thank you, Rolf. Good morning also from my side, and thank you for joining us today for our nine-month result presentation, which will show that in a complex and volatile market environment, we have delivered a solid operational performance. Our strong volume growth, which is well above the market average, demonstrates the benefits of our strategic positioning, particularly the successful implementation of our Gemini East-West network. In the coming quarters, we aim to sustain this growth momentum. and still keeping the flat capacity stable. As anticipated, earnings are lower than last year's exceptional performance, and that is primarily due to softer freight rates and continued cost pressure. And to address this, we are intensifying our cost discipline and further optimizing our network to enhance efficiency and competitiveness. At the same time, we maintain a robust balance sheet with ample liquidity and a moderate leverage, providing the flexibility to pursue whatever strategic priorities we focus on or opportunities come up and we navigate market volatility effectively with that. Let's now take a closer look at our financial performance. Revenue and earnings in the third quarter improved sequentially, driven by a temporarily higher cost spot rate, resulting from front-loading effects in the U.S. EBIT increased from $189 million in Q2 to $228 million in Q3. However, compared to last year's exceptional result, earnings were lower due to the significantly weaker overall trade rate environment. Looking at the first nine months, revenue grew by 5%, supported by strong volume growth across both operating segments, which had offset partially the lower freight rate environment. At the same time, persistent cost pressure weighed on operating performance. For the period, group EBIT reached $905 million, and group profit totaled to $946 million. Looking now at the performance of the Liner segment, we can see that revenue in the business segment increased to $15.7 billion in the first nine months. This development was driven by above-market volume growth, particularly in the Gemini trades. EBIT amounted to $858 million in the first nine months, and that is compared to $1.9 billion during the same period of previous year. In Q3, EBIT improved sequentially to 219 million U.S. dollars as temporarily higher spot rates out of Asia lifted our average rate by around about 5 percent compared to the quarter before. After the nine months of 25, we transported, or in the months 25, we transported 10.2 million boxes, representing a volume growth of 9%. That's well above market rate. This strong performance reflects our sustained investment in efficient fleet capacity and the successful transition to the new Gemini East-West network. particularly noteworthy given the tariff-related demand fluctuations we have navigated through. So growth was especially strong on the Pacific and Asia-Europe trade routes. In contrast, Atlantic volumes improved only modestly due to the soft demand between Europe and North America, while transport volumes between Latin and Europe, Latin America and Europe, were constrained by operational disruptions in ports. Following a persistent decline in the average rate rate, which improved 5% in Q3 2025, quarter over quarter, driven by front-loading effects. However, the first nine months of 25, the average rate rate stood at $1,397 per TU, almost 5% lower compared to the prior year. Having a look on the unit costs in the first nine months of 25, they increased by 5% to $1,338 per year, and this increase was driven by higher storage costs due to port congestion and operational delays, increased hinterland transportation costs from the growing share of door-to-door business, and planned startup investment associated with the Gemini network. In addition, external factors such as rising trade imbalances, higher regulatory compliance costs, and for sure, as we all know, the FX effects which we have experienced generally elevated the cost base. To mitigate these external factors, you can assume we structured and we are executing already a comprehensive cost program. I would also like to provide more context on the Gemini startup cost, as these are likely more pronounced for Hapag-Lloyd than for our Gemini partner, as well as on the initial cost savings that are already becoming visible. For us, the new network represents a more significant transformation, which is temporarily associated with higher unit costs, We have not only redesigned the network, but also changed the terminals we call at the capacity we operate. While we already see clear cost benefits per available slot right now, such as reduced ship system cost and lower bunker consumption, the unit cost per transport box are still elevated for now. But when we look ahead, growing volumes at stable capacity and further network optimizations will drive unit costs down, resulting in tangible positive impacts on our P&L in the coming quarters. Let's now have a closer look on the T&I segment. Revenue in the terminal business increased, as you can see here, by 15% to $375 million in the first nine months. This growth was supported by encouraging throughput developments we have seen and the acquisition of our terminal in Le Havre in France this year in March. EBIT amounted to 46 million U.S. dollars, which is below the prior year level, primarily due to weaker performance at Latin America terminals. This was driven by U.S. tariff-related market volatilities And we have seen strong unfavorable weather conditions there. Additionally, we continue to ramp up this relatively new business segment, which is quite normal that is associated with temporarily higher cost base. Turning to our cash flow development on the next chart, operating cash flow for the first nine months. As you can see here, 25 amounted to $2.6 billion. We invested around about $1.5 billion, mostly investment in containers, as well as in the modernization of our fleet under our fleet upgrade program. These investments are designed to enhance the cost efficiency and reduce CO2 emissions across our operations, including income from interest, Dividends and divestments of $309 million in net cash outflow from investments totaled to $1.2 billion, resulting in a robust free cash flow of $1.4 billion. Financing cash outflows amounted to $2.5 billion, primarily reflecting the dividend payment of more than $1.6 billion to our shareholders, along with debt redemptions and interest payments. Overall, the cash position decreased by $1.1 billion, resulting in a still robust cash balance of $4.6 billion at the end of Q3. For sure, we continue to maintain a very resilient balance sheet with ample liquidity and moderate leverage. Strong liquidity reserves still there, which includes cash fixed income investments, undrawn revolving credit facilities, which totals to $7.5 billion. This provides us with significant flexibility to fund strategic initiatives and for sure navigate effectively through difficult market periods and volatility. And with that, I will hand it back to Rolf now for the market update and our outlook. Thank you.

Thank you, Mark. Yeah, maybe just a few words on supply and demand. I think we see here the trend that we have seen over the last years. I would say a remarkably strong growth in 24. Personally, I would also expect that the 25 is going to come in a little bit stronger than we anticipated. That's a better picture we have seen over the last couple of years. Of course, it's uncertain what's going to happen in It's, however, quite encouraging that over the last two years, if you add them up, I think 6-plus percent in 24, I think we're going to be close to 4 percent in 25. That's accumulated close to 11 percent in two years, which is well above what everybody expected. For next year, the expectations for now are a little bit lower, but also fleet growth will be a little bit lower. For now, we anticipate an environment where there is going to be somewhat lower growth. But when we look at the last couple of years, there's certainly also a scenario thinkable where things remain fairly robust. Because also when we look around the globe these years, then we certainly see that trades to and from the U.S. have been under pressure. But quite a few other trades have actually done fairly well. Looking at the order book, order book's still quite big, yeah? Could that be lower? Yes, could be. On the other hand, let's also not forget that we still expect that until the end of the decade, overall growth will be 15% to 20%. And we also expect that there's quite a bit of the capacity that is going to be taken out as toward the end of this decade, more than 4 million TU of capacity. will actually have to be replaced by newer tonnage, which is also the background of the order that we just earlier on talked about. And on the back of the demands that are being put upon us to work on decarbonization, also that is certainly an incentive to sail a little bit slower, which normally would require a bit more capacity. So all in all, no... Very significant change in the order book. It definitely remains on the high side, but in the meantime also covers a much longer period. When people order ships today, you can get them in 28, 29, or sometimes also only in 2030. So contrary to what we used to look at in the past, when you had an order book typically covering two and a half years, today it covers more four to even four, four and a half, sometimes even five years. Moving to the outlook before we wrap it up and then hand it over to you, we made some slight adjustments to the outlook. As you can see here, mainly on Group EBITDA and Group EBIT, where we narrowed the range, which one would also expect if we get closer towards the end of the year, and we also raised the midpoint a bit. Then when we look at priorities, I would say make sure that we leverage the Gemini performance to continue to grow our business at adequate pricing, but also make sure that we get all the savings into the book. Make sure that we continue to focus on high customer satisfaction. We've been doing that now quite consistently over the last number of years, and we need to make sure that it stays like that. try to further expand our terminal division through acquisitions and potentially also investments here and there, also because it drives quite a lot of changes with the line of business. We also will invest in the expertise and resilience of our team amongst others through a large leadership program. And then finally, we have to ensure that we maintain strict cost discipline as costs are currently definitely at an elevated level. We already mentioned Ventus, and we need to ensure that over the next 12 to 18 months, we see the planned improvement in unit costs. And with that, I would hand it over to the operator, as I think we now go to Q&A.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You'll hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question from the phone comes from Omar Nocta with Jefferies. Please go ahead.

Thank you. Morning, Ralph, Mark. Thanks for the update. I have a couple of questions. Maybe just first on the new buildings, can you give a sense of what kind of capital expenditure you're anticipating for these vessels when you expect to take delivery of them? And also, where do you plan to deploy them? Are these going to be in that sort of, you know, the ideal workhorse for the Gemini network? Thank you.

Okay, if I take that, maybe, Mark, you can say probably something around the CapEx, but I think if we look at delivery, most of that will come in 28 and 29. And when we look at where we can deploy them, those are many places across our network, but it would not be unlogical to expect quite a few of them to be deployed in our shuttle or feeder networks in Europe or Asia, but certainly some of them will also be used in IOT America or in Africa or in Latin America.

Thank you. And in terms of cost, any sense?

I mean, I think in the end, we will commit to those shifts. I think we're still figuring out what will be the exact split between the various categories, and some of it will be time shorter, and some of it we will own. So it's a bit too early to say something about what the overall capex will be. Okay.

Thank you. And then just a final one for me, just on the operational costs. I know you mentioned that, you know, 2026 is when we'll start to see the benefits of Gemini. Are you able to give any kind of, maybe quantify the type of cost savings you anticipate to show next year? You mean what the type or the, sorry, I didn't hear the type or size. Oh, yeah, just like the dollar amount to anticipate or percentage change versus this year, any kind of range you're able to share.

I think when you look at the cost savings that we expect from Gemini, we have, I think, earlier on gave an indication that we expect that to be net 350 to 400 million. And, you know, at the moment, I have no reason to put out a different number.

Very good. Thank you. I appreciate it. I'll turn it back.

The next question from the phone comes from Alexia Dogani with J.P. Morgan. Please go ahead.

Yeah, good morning, gentlemen. Thanks for taking my questions. I have three, please. Just firstly, on the 4Q outlook, clearly the low end of the range is very negative, and we're only six weeks away from the end. How should we interpret that low end that you've provided today, and should we see this as the potential exit rate into 2026? That's my first question. Rolf, you made some comments about the Gemini pricing. Can you elaborate a little bit on what the Alliance wants to do in terms of kind of capturing the value of this new operating model? Is it really about pricing or is it about volume gains? And there has been in the press some discussion around Maersk considering an on-time surcharge. This is slightly counterintuitive because obviously you operate a scheduled business. Customers should expect you to be on time. Otherwise the schedule kind of point is missed. And I think at the 2030 strategy presentation, you showed that actually the top thing that customers want is low price. Has that actually changed given your experience over the past 12 months? And then my final question is, you helpfully show that the market expects container volumes to grow 15 to 20% by 2030. That implies a 45% per annum volume CAGR and suggests a multiple of one and a half to two times real GDP based on kind of current global forecast, what gives you confidence the multiple can be sustained at these higher levels? Because clearly in 24 and here today, 25, we've had a lot of, let's say, external events affecting demand, you know, be it disruption and tariff front loading, is that

your feeling and if not isn't it slightly counterintuitive that tariffs have no impact on trade thank you let me maybe try and take them one by one and then mark you may want to add something on the on the outlook maybe start from the bottom uh to be honest i can't really reconcile your math yeah because when i look at 15 growth until 2030 that's five years um so that's a roughly 3% a year growth, which is roughly a multiplier of one of GDP when you look at the long-term average of 3%. So personally, I think that's actually not looking at 1.5 times GDP, but more looking at just one time GDP, which I think also when you look at the last number of years, it will not come every year, but on average, we're actually not so far from that. Then when we look at Gemini pricing, I think there is definitely value to be captured from a difference in reliability and a difference in OTD between one and the other, whether you should call that a separate charge for being on time. I think I can relate to your comment that putting a separate charge for being on time is probably odd, but I would also say that if I can choose between two carriers where one of them is going to be on time and the other one is very unpredictable, that I am willing to pay a little bit more for people that are on time because it allows me to take money out of my supply chain. And we have clearly seen in discussions also with customers that they see that and that they do see real opportunities to take one or two weeks inventory out of their supply chain, which clearly has value. And, of course, we need to make sure that we sell that value as well. And part of that, to your point, will come in terms of – hopefully higher prices or adequate prices, and the other one may also be above market growth. I agree with you that there's those two value components in there. And then maybe, Mark, you want to comment on the outlook?

Yeah, thank you. Yeah, on the outlook, you might call it a cautious view. It's maybe true, but it's due to The seen short-term volatility, which is more attributed not only to the general shipping volatility, but also due to the geopolitical uncertainties we are facing. And we are looking at a freight rate environment, which is under pressure right now. Volume growth is slightly slowing down. So let's see what the last weeks are bringing for this year. But I think that is the character of our outlook overall.

Thank you for clarifying the growth rate. Can I just do a little follow-up on the Gemini pricing? When you're competing or when you are on the same route and you're offering your customers a contract price, should we expect much differentiation between you and your partner? Or given you operate the same network, you're on the same alliance, the pricing opportunity is equally spread? Just trying to understand the potential divergence or not.

Thank you. I think a pricing differential you should mainly see with those that have a different product. So I would expect, but I don't know, and we operate completely independently from that perspective, but I would assume that the Gemini partners are able to get a price premium for being on time compared to those that are not on time. So that's where I think the delta that you will see, and that will not come from one day to another, and it will not come in every customer segment, but I think the delta that you will see will be more between Gemini and the other networks than between the partners within Gemini.

Thank you very much. The next question from the phone comes from Cristiano Delco with UBS. Please go ahead.

Hi. Thank you very much for taking my questions. If I can please come back on the cost savings. Could you help us a bit? What was the run rate in million dollars that you would expect in terms of cost savings in Q4? And what is the timeline to get to the one billion cost savings that you were flagging in the past? The second one on Gemini, could you remind us, looking at your ocean volumes, what's the percentage split between BCOs and forwarders? And within your customer base, what proportion do you believe are the time-sensitive BCOs that most likely will find on-time proposition as very appealing? Thank you.

Maybe start with the cost savings. I think what we have said is that we expect that in 2026, well over half of that 1.3 billion that we are targeting is going to be affected. We expect to get to full run rate in 2027, and we will see some effects already in the fourth quarter, but Those will be limited. In terms of ocean volume, our split, traditionally we have been a bit more focused on the forwarder side. I think at some point in time we were like 70-30 forwarders versus BCOs. Today we are closer to 60-40. And as far as it's around what's the percentage of the customer base who are time sensitive, I would say that probably the majority of the BCO businesses.

Understood. And could I please add one question, if you allow me? Coming back on the very strong volumes from China to the rest of the world, so leaving aside the US for a second, the last four or five months we've been seeing China, Europe up 10%, 12% and so on. Do you have any data from your customers? What are the inventory levels in Europe or other Latam or other countries? I'm just thinking to what extent... part of this growth has been just an export push that is currently leading to higher inventories and we actually might see the consequences of that over the next months. I'm asking this because the value of Chinese exports in October was down 1% year-over-year and there was a steep deceleration in the exports from China to Europe from double digit to low single digit growth year-over-year. Thank you.

I think what we saw in In October, it's definitely a slower return to work if you want after golden week than we have seen in previous years. Some years that's good. Some years that's a little bit worse. I think you shouldn't look. I don't think we should read too much into that. If I look at the last couple of weeks, demand has really been, again, quite strong. We just were a little bit slow coming out of the gate after golden week. So I don't. see too much into that. In terms of inventory, I think that speculation is always out there. I think I'm now hearing since a year and a half that we are front-loading. At some point in time, one would argue that it has to stop. I think listening to and speaking to customers, I do not think that there are many of them that sit on very excessive inventory. What will be critical is what consumer demand will be towards the end of the year, which typically for retail is a peak season. That will probably drive what's going to happen post-Christmas. But I don't see a... huge amount of front-loading. And yes, you hear, you speak to one or the other that has high inventories. We also speak to people that have actually fairly low inventories. So difficult to judge, and there's only a limited amount of really reliable data on that out there. Thank you very much.

The next question from the phone comes from Marco Limite with Barclays. Please go ahead.

Hi, good morning. Thanks for taking my question. My first question is again on the 25 outlook. This time on the upper end of the guidance, because the upper end of the guidance basically implies Q4 EBITDA as strong as Q3, but Q4 is seasonally weaker from a volume perspective. So basically, I guess, implies spot rates up quarter to quarter. I mean, is that possible? Do you think that that sort of scenario? Second question is on your Gemini startup costs. If you can remind us how much startup costs you had in Q2, how much they have been in Q3, and how much you should expect in Q4. And the third question, if you allow me, I mean, if I look at the Q3 results, it feels like OPEX was a bit ahead of consensus. Is there a single factor or maybe among the many factors that you will point out for higher inflation? Could that be, for example, very strong head-all growth but back-haul growth and back-haul volumes not being that strong? And therefore, how really can you offset that going forward? Thank you.

Maybe I'll start with this. I think when you look at the Gemini cost, I think we overall once gave an indication that that was between 150 and 200 million. I think that prediction still holds. The majority of that we incurred in the first half of the year, and we have still a little bit in Q3 and Q4. When you look at OPEX, I think we already mentioned that we also started Ventos because we believe that OPEX needs to come down. We start seeing that also, so from that perspective, pretty comfortable that that is indeed going to happen. I think your point to back whole volume, I think we have certainly seen in the repositioning cost, we've seen a little bit of a spike. Some of that is catch-up and has still something to do with Gemini, but that's certainly a factor that plays a role. And then I'll leave the comments on the outlook to Mark.

Yeah. When we look at that right now, for sure that scenario is thinkable in the sense that what's reflected in the perspective. And that's why you can see it. But overall, it stays, I think, a cautious outlook.

OK. Just to follow up to that. Is it fair to assume that you still have got a lag in revenue booking, so the week, September, that in theory is Q3 actually goes into Q4, so basically you're applying a very strong October, which we've seen, but also November, remaining at a very strong line with October?

I'm not sure we fully understand the question. mentioned earlier that, and I think it was called out by the previous person that asked the question, that export volumes out of China have been a little bit slow following Golden Week, so that's why volume is not exceptionally strong in the month of October. In the last couple of weeks, we see demand picking up again. That's basically what the comment was that we made.

Okay, clear. Thank you. It's not a technical time shift in a sense when that

was your question too i i was referring to revenue recognition delay between spot and your revenues but anyway your answer was clear thank you the next question from the phone comes from lars heindorf with not there please go ahead

Yes, morning. Thank you for taking my questions. Also, a few on Gemini. I wonder if you could maybe quantify a bit more about the startup cost that you have. Maersk, on their call, said that Q3 was the first full quarter with Gemini up and running. So what is actually the difference there between you and them in terms of the startup cost? Why do you incur maybe later startup costs compared to Maersk? And then the second one on Gemini, which is the balance, again, between you and Maersk. Are you a net seller or net buyer of capacity? And maybe if you can, I don't know if you can say anything about the magnitude of that sort of balance in terms of the vessel sharing agreements that you have in the Gemini agreement. And then the last one is on the rates side. Ralph, I think you said you had a comment in your starting remarks that you said you hope that rates will rebound a bit here into the fourth quarter. Maybe just what is behind that. Are you seeing any signs of recovery? I know there has been a few FAK and GRI successful increases in October, and then you have seen a bit of weakness as of lately. But, yeah, just wondering exactly what is behind that comment. Thank you.

Let me maybe start with the last one. On rates, of course, nobody can predict the rates, unfortunately. I think we saw a bit of a... We saw some seasonal weakness after Golden Week. Then I think we saw rates eroding, which was sort of logical because it took a little bit of time before volumes came back. We've had a couple of GRIs, as you rightfully point out, that have been that thick. Now we see actually fairly strong bookings. Last week was strong. The beginning of this week is very strong. So I think that gives us some momentum in the market to hopefully get some further rate increases on the short-term market because those rates are really very low. I think your second point on the balance, I mean, from all the mainline and capacity that we operate and that Maersk operates, I mean, we are balanced in terms of provision, yeah. I think we announced that also earlier. We have a 60-40 split roughly on the main line of capacity, and Maersk provides 60% of that, and we provide 40% of that. So from that perspective, we're not a net seller or buyer. I know there was a comment on the earnings call of Maersk, and that may have to do with the technical arrangement that we have made on the shuttle project. space, but I can't look into Maersk's book, so I don't know how they exactly treat it, but that's my hypothesis. On the Gemini startup cost, I think you are right. The start, the changes were probably a little bit bigger for us than for Maersk. because we changed a lot of terminal providers. Maersk was doing a little bit more of hub and spoke already. And whereas the cooperation runs really well, and I think we're also happy with network, I think it's also fair to say that there was in some processes, there's probably a little bit more learning for us than there is for Maersk, because, for example, in our case, also the empty flows change a lot, and that takes a little bit of time to stabilize that. And that's why I guess that some of those processes Of course, savings might come a little bit later in our case than what we see at most.

Can I just have another follow-up? It's on Suez. There have been a lot of talks lately. We've seen CMA having a few vessels going through Suez, also larger vessels. Also now, here this morning, some news about Maersk in talks with the authorities down there. Apparently, maybe... Of course, depending on the security situation that they will return. What's your view on that? I mean, and what will it take for you to return to Suez?

I mean, I think we've always said that, you know, as soon as it's, again, sufficiently stable and safe, then we'll consider a gradual return to Suez. I think we're talking very closely to our partners, which is Maersk, but also others in other services on when that is the case. We're following it closely, but at the moment, I do not see us returning very soon.

All right. Thank you.

For any further questions, please press star N1 on your telephone. The next question from the phone comes from Andy Chu with DP. Please go ahead.

Good morning, Ralph, Mark. Just one question for me. Just on the cost savings, there are quite a few numbers flying around this morning. I think you mentioned in the presentation the full run rate of savings expected by 2026. But just in terms of the net cost savings, what should we be putting in for 2026 and 2027? Thank you.

I think when you look at our, there's two or three things I think that were mentioned. One is What are the run rate savings we expect from Gemini? There we have previously indicated 350 to 400 million, and there is no reason to deviate from that number. Then we talk about the Ventus program, where we are targeting 1 billion plus in cost savings, and we expect the vast majority of that to be effective in 2026, and we expect the full amount to be effective in 2027.

Maybe just one strategic question. Obviously, Maersk has had a pretty good performance in terminals. So when I look at the weighting of Hapag's business, mainly being container shipping focused, does the current environment shift any kind of thinking in the mix of the business? Thank you.

No, not really. I think we've been, you know, we've of course been in a way, we entered the terminal space much later than some of our competitors. But we will continue to grow that business. I think if you take into account that we effectively only started somewhere in the beginning of this decade and today we are engaged in 22 terminals, I think that's actually a pretty good result and we will continue to grow that. But of course we are You know, APMT started, I think, in the last century or around 2000. So, of course, they have a lot more history and track record there than we have at this point in time. And that's something where we simply need to catch up.

And then just on logistics, you mentioned a sublate to the party in terminals. Is it a party that you'll never join with logistics?

We have no plan to go into logistics the way that others do it.

Thank you very much.

We have a follow-up question from the line of Mr. Nedeljko with UPS. Please go ahead.

Hi. Thank you very much. Two questions I wanted to add. The hub-and-spoke model, how are you thinking about potentially deploying it to other trade lanes, and what is the timeline there? And secondly, if we leave aside the cost savings initiatives that you mentioned earlier, what is the inherent cost inflation you would expect for 2026? Is it 2-3%? Is that reasonable or more or less? Thank you.

I think to take the last one first, I think when you look at cost inflation going into next year, if we would not take measures, then I think that would unfortunately definitely be more than 2%. I think that's a low-mid single-digit number that you realistically would have to have in mind. And then when you look at hub-and-spoke, we certainly see the hub-and-spoke model working. So will that also be used in other trades over time? Probably yes, but I don't see that tomorrow.

Thank you very much.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf-Heinz Janssen for any closing remarks.

Not much to add except to say thank you for your time. Really appreciate it. Also, hopefully we were able to give you some insight, and thanks also for the questions. Take care. Bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.