ZIM Integrated Shipping Services Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 15, 2023

Key Takeaways

  • ZIM ended Q3 with a strong $3.1 billion cash balance, reflecting robust liquidity despite market weakness.
  • The company recorded a $2.1 billion non-cash impairment on container shipping assets and reported a net loss of $2.3 billion for Q3.
  • Full-year 2023 guidance was cut, with adjusted EBITDA now expected at $400 million to $600 million versus a prior range of $900 million to $1.1 billion.
  • ZIM’s strategic fleet renewal secures 46 newbuild container ships (including LNG-powered vessels), aiming to lower carbon intensity and unit costs by end-2024.
  • Q3 average freight rates plunged 66% year-over-year to $11.39 per TEU, driving revenues down to $1.3 billion and pressuring margins.
AI Generated. May Contain Errors.
Earnings Conference Call
ZIM Integrated Shipping Services Q3 2023
00:00 / 00:00

There are 8 speakers on the call.

Operator

Hello. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Zim Thank you. I would now like to turn the conference over to Elena Holdman, Head of Investor Relations. Elena, you may begin your conference.

Speaker 1

Thank you, operator, and welcome to Zim's 3rd quarter 2023 Financial Results Conference Call. Joining me on the call today are Eli Glickman, ZIM's President and CEO and Saviye Desilio, ZIM's CFO. Before we begin, I would like to remind you that during the course of this call, We will make forward looking statements regarding expectations, predictions, projections of future events or results. We believe that our expectations and assumptions are reasonable. We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ, including materials.

Speaker 1

You are kindly referred to consider the risk factors and cautionary language information described in the documents the company filed with the Securities and Exchange Commission, including our 2022 Annual Report filed on Form 20 F in March 2023. We undertake no obligation to update these forward looking statements. At this time, I would like to turn the call over to ZIM's CEO, Eli Glickman. Eli?

Speaker 2

Thank you, And welcome everyone to today's call. Before we turn to our call today, I would like to address the ongoing war situation in Israel. During these time times, held hostage by Hamas in Gaza. Our priority is assisting our employees in Israel Despite war related challenges, ZIM operation and services everywhere, including to and from Israel, I'll continue without interruptions. As a global company, our employees over 4,500 around the world Turning to our financial results, I will discuss ZIM's 3rd quarter and our path forward.

Speaker 2

Strategic transformation launch back in 2017, which involved every aspect of our Company InterContinental and the way we do business, delivered 2.5 years of historic financial results This period of exceptional profitability as today led to a significant cash balance, Which at quarter end stood at over $3,000,000,000 While market weakness As extended longer than we had originally anticipated, it is important to note that our strong liquidity Specifically, we leverage our successful IPO and capitalize on the extended period of historic profitability to best prepare ZIM for the years to come. First, we executed our fleet renewal program and secure through a series of charter agreements a total of 46 new build container ships, 1 of the lowest carbon intensity operators in the industry. As such, But even already today, ZIM is the only carriers to operate LNG vessels from Asia to the U. S. East Coast.

Speaker 2

By the end of 2024, we will have 2 different services operating with only LNG vessels into the 15,000 TEU LNG vessels deployed on ZCP service, our premier Asia to U. S. East Coast Service. 2nd, to complement our fleet renewal program, we purchased almost $1,000,000,000 and Company. 3rd, we entered into a strategic supply agreement with Shell to secure LNG supply at competitive pricing.

Speaker 2

And last, we invested in customer facing and back end digital tools and are currently in the process of planning an extensive project to install on our entire dry van container fleet Zim will be one of the first carriers in the container shipping industry to have its entire fleet equipped with tracking device. This will enable us to better manage our fleet, but also offer customer value added services As we consider ZIM's strategic direction back in 2021, we anticipated that the subsequent years twenty InterContinental 20 3 and 2024 were going to be a transition period. The goal was to shift ZIM's reliance InterContinental cost and fuel efficient LNG powered newbuild fleet. We understood that steps were needed to make ZIM of the shipping industry and drive long term profitable growth. During this 2 years transition period, Zim's cost base will gradually improve as we continue to make to take delivery of the cost effective new build tonnage and redeliver the expensive COVID era charter.

Speaker 2

Our cost per TEU is declining, and we expect further improvement moving forward. At the remaining 33 of the 46 new builds we secured and 39,000 TEU LNG vessels we have already deployed on our strategic Asia to use East Coast, ZCP service, We expect the initiative we began to undertake 2 years ago will deliver that result in 2025 and beyond. And expect to redeliver another 5 vessels back to owner by year end. We also have another 34 vessels with current demand levels. We also continue to review our services and reallocate resources to adapt our network.

Speaker 2

We are attentive to our customers' evolving needs and focus on taking advantage of new commercial opportunities In early 2023, we opened our Colibri service connecting the West Coast of South America to U. S. East Coast. While market conditions remain challenging in this region, as has elsewhere, we believe no South trades During this Q3, we also announced a new collaboration with MSC, Furthermore, we believe that our new cost and fuel efficient newbuild fleet will better position us and Company to reach similar operational arrangements in the future. In parallel, we are This cost control initiatives include, among others, a strict HR hiring program to continue generating measurable and sustainable savings.

Speaker 2

Moving forward, we will continue to seek opportunities Turning to our Q3 results. Our results in the Q3 and performance reflect the persistent weakness In Q3 2023, we generated adjusted EBITDA of $211,000,000 and adjusted EBIT As already mentioned, we maintained strong total liquidity with a cash position of approximately and Company's Investor Relations. Based on our 9 months results InterContinental Investor Relations. During this remainder of the year, we have lowered financial results. We now expect to generate adjusted EBITDA of $600,000,000 to $400,000,000 Given this negative outlook InterContinental.

Speaker 2

In the near term, we recorded a non cash impairment of $2,100,000,000 this quarter. Despite the losses incurred in 2023, ZIM is a resilient company. Our strong cash balance enterprise. On this note, I will turn the call over to Xavier, our CFO, for a more detailed discussion of our financial results, the impairment and our revised guidance as well as additional comments on the market environment. Xavier, please.

Speaker 3

Thank you, Billy, and again, welcome everyone. On the Slide 5, we present key financial and operational results. As Eli mentioned, our Q3 financial performance reflected the ongoing weakness of the current market. Our Q3 average freight rate per TEU was $11.39 that is a 66% decline year over year. During the 1st 9 months of the year, our average freight rate of $12.35 was similarly 66% lower Q3.

Speaker 3

This compared to market growth of approximately 5%. And looking sequentially, our current volume also increased Revenues for the Q3 were again adversely impacted by the continued decline in freight rates. Q3 revenues were $1,300,000,000 Our revenues for the 1st 9 months of 2023 of 4,000,000,000 Free cash flow in the Q3 totaled $328,000,000 compared to $1,600,000,000 in the Q3 of 2022. Turning now to the balance sheet, total debt increased by €401,000,000 since prior year end, Mainly due to the net effect of the incoming vessels with longer term charter durations. As previously mentioned, we also recorded a non cash impairment of $2,100,000,000 this quarter, mainly driven by Our negative outlook for container shipping in the near term, namely the deterioration in freight rates observed in recent weeks [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] In addition, we also needed to consider the increase in interest rates, which in turn increased our average cost of capital.

Speaker 3

As a result, the expected discounted cash flows the company may generate going forward are lower than previously projected, into our container shipping related assets, primarily container vessels, but also equipment, boxes and other related assets. You can find additional information on the impairment test in the Note 7 of our Q3 2023 interim financial statements. And I would note that this non cash impairment is excluded from our adjusted EBIT and also from our adjusted EBITDA results. Our net loss of $2,300,000,000 this quarter includes the impairment charge for $2,100,000,000 Regarding our fleet, we currently operate 145 vessels, 129 container ships and 16 car carriers. Excluding the newbuild capacity, the average remaining duration of our current chartered tonnage continues to trend down Of the 46 newbuild vessels ZIM committed to, 13 have been delivered to date, including 6 LNG Powered 15,000 TEU Vessels and also the first 7,000 TEU LNG Ship.

Speaker 3

Year to date, we redelivered 20 chartered vessels and we have another 5 vessels whose charter periods end before the end of the year. And in addition, 34 vessels have charter periods concluding next year in 2024. So in total, these 39 vessels, which we could be delivered to the owners or renew at lower rates, compares Again, I would like to reiterate here the delivery of these modern, cost efficient vessels will replace smaller, less cost effective tonnage, Therefore contributing to lowering our carried unit cost base. On slide 7, we present Zim's Q3 9 months 2023 financial results compared to Q3 and the 1st 9 months of last year. The decline in revenue based on the lower freight rate environment impacted all of our metrics.

Speaker 3

Adjusted EBITDA in the quarter was $211,000,000 and the adjusted EBIT loss was $213,000,000 Adjusted EBITDA and EBIT margins for the Q3 were 17% and minus 17% respectively, For the 1st 9 months of 2023, adjusted EBITDA margin was 22% and adjusted EBIT margin was minus 9%. This quarter net loss was $2,300,000,000 and as already mentioned includes the impairment charge of 2,100,000,000 Moving on to Slide 8, as I mentioned, we saw a slight uptick in our carried volume compared to the Q3 of last year. The increase was driven by growth in transpacific and Latin America. We also saw a small increase in carried volume versus the prior quarter Turning now to the next couple of slides, I'll review our cash flow bridge for the quarter 9 months period. We ended the Q3 with a total liquidity position of $3,100,000,000 which includes cash, cash equivalents and also investments in bank deposits and other investment instruments.

Speaker 3

During the Q3 of 2023, our adjusted EBITDA of $211,000,000 coupled with a positive effect from For the 9 months period, adjusted EBITDA of CAD 859,000,000 into the Q3 of 2020. Other cash flow items for the 9 months period included Dividend payment of $769,000,000 $1,500,000,000 of debt service, mostly related into our lease liability repayments. Moving now to our revised guidance. In light 2023 adjusted EBITDA of $900,000,000 to $1,100,000,000 and adjusted EBIT loss of $600,000,000 to $400,000,000 This revised forecast is based on our assumption that freight rates will not recover Our assumptions also include inflation in bunker prices for the remainder of 2023. I would highlight that our adjusted EBIT forecast is positively impacted by the impairment Moving to our market section.

Speaker 3

I believe it is clear that our current view of the market for the remainder of 2020 into 2024 is one of the continued headwinds oversupply meeting weak demand with limited impact in 2024, which you can see on the left remains unchanged, pointing to clear oversupply in the market. At the same time, freight rates remain depressed as you can see on the right. Here we show the SEFI for the U. S. East Coast, We also excluded here 2021 2022 rates from the graph to provide better granularity as to where rates InterContinental segment.

Speaker 3

You can see the decline in rates from August When we saw a short lived improvement in freight rates following broader blanking and that rates today are lower as compared to 2019, when costs today are clearly significantly higher versus that same year 2019. On the demand side, while retailers are working through high levels of inventories and we have seen some market growth in the Q3, Inventory levels are not declining and there are no clear data points that a restocking cycle will begin anytime soon. At the same time, while the carriers have employed some management capacity, These have not been sufficient to sustain higher rates. Slow steaming remains the only continued meaningful action taken by carriers. Blanking has also been employed, but for limited periods of time with limited lasting impact on rates.

Speaker 3

Scrapping on the other end has remained negligible with approximately only 107,000 TEU worth of capacity Alfa Liner's scrapping projection for 20242025 are for 450,000 TEU in each of the next 2 coming years compared to expected delivery of almost 5,000,000 TEUs of capacity in 2024 and 2025 combined. Finally, idling While idle tonnage has increased over the course of 2023, it is currently lower when compared to a 2023 peak of 3.3 percent that was achieved in February. And just as a reference point, idle capacity in mid-twenty 20

Operator

Your first question comes from the line of Omar Khanna from Jefferies. Please go ahead.

Speaker 4

Hi, thank you. Good afternoon, Gili and Xavier and Alana. Thanks for the update. Got some good detail here. Just wanted to ask perhaps I had a couple of questions, but you've got the $3,000,000,000 of cash on the balance sheet.

Speaker 4

You've got the liquidity there. Just regarding the $2,000,000,000 write down, obviously, it's non cash. And Xavier, you just mentioned how On an ongoing basis, depreciation is going to come down. But just in general, how should we think about what this now means for actual running costs on a cash basis?

Speaker 3

Look, as far as the cost is concerned on a cash basis, like you said rightly, the impairment has no effect. So in terms of lease liability repayment profile that is being unaffected by the impairment that we are booking now in the Q3. What will be affected is indeed our depreciation and amortization, so our P and L and our EBIT in the quarter in Q4 and this is also what we reflected in our guidance. Now if you look the difference between EBIT and EBITDA,

Speaker 4

Okay. Thank you. And then I guess just in general, as I think about or we look on the balance sheet and we see kind of a bit of Inter No mismatch between the book value of the ships and then the remaining lease liability. I guess how should we think about that in the long term Medium term perhaps, you mentioned the 5 ships rolling off charter here before year end, another 34 next year, that's 39. I guess, Can we think perhaps that or is ZIM maybe telegraphing an approach to ship owners for an amendment or early termination of the charters for beyond just these 39 ships, but the additional perhaps maybe 70, 80 that are that remain on charter beyond next year.

Speaker 4

Is that what this means, this write down?

Speaker 3

Look, I think we need to disconnect a little bit What we did for the purpose of the impairment test that we needed to run at the end of the quarter From at the end of the day, the overall impact vis a vis our commitment with the vessel load. We are committed To honoring our charter commitment vis a vis the owner and we are and we are not hiding from that looking at potentially redelivering early some of the vessels for which We have potentially not an employment going forward. So that is still happening and is to be looked at What I would say It's critical to us is, as I think Eli mentioned, we are clearly today in a transition phase when it comes to the profiling of the fleet that we've ordered back in 2020, 2021. These vessels are going to come and are going to replace the existing charter. So the message, if there was one, is that it is very likely from ZIM perspective that we will redeliver All the vessels as they come up for renewal in terms of their charter period to make room for the brand new ships more efficient that we've ordered between now and the end of next year.

Speaker 3

So yes, we have 5 vessels up for redelivery between now and the end of the year. We have another 34 vessels that we cover for redelivery between 1st January 24 to the end interconnectivity of the December 2024 and it is very likely that the vast majority of this capacity would be redelivered.

Speaker 4

Got it. Thanks, Javier. And then maybe just one final one, just kind of on the revised guidance. It makes sense. Clearly, Yes.

Speaker 4

I wouldn't necessarily say there's a surprise there. But just in general, as we think about the Q4 relative to the Q3, it looks like the updated range For 4Q to be similar to 3Q, I guess just in general, I guess from a say EBITDA perspective, if we just think about On the margin, as we look here into the next quarter, marginally, do you think 4Q is going to be better than 3Q Or kind of on the margins, it could be worse. Anything you're willing to share on that front?

Speaker 3

Look, really, Our outlook for the remainder of the year and also I think as we try to convey today is going into 2024 Is that maybe very little will change in the sense that the freight rates today are at very low level And very challenging for the industry. We don't see many catalysts for that to change in the immediate future. There is [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Clearly the looming threat of overcapacity that is still ahead of us. We've seen that very little retirement of old Scrapping is very limited. Even idling is very limited.

Speaker 3

So the excess supply seems to be here to stay for a while, Therefore, reducing the optimism for the rates to meaningfully recover. So that's the the ZIM Inter. The future years may see the recovery in our industry. But clearly for us today, we're taking a very cautious view We'll obviously guide in more detail our view for 2024 in a few calls from now. It's It's a little bit early for us to guide the market.

Speaker 3

But by and large, we expect that the industry will be under severe

Operator

Your next question comes from the line of Sam Bland from JPMorgan. Please go ahead.

Speaker 5

Thanks for taking the question. I have 2, please. The first one is sort of the same point on these the sort of timing of the charter renewals. I guess we've done 25 more this year, 34 next. It's similar to the last question.

Speaker 5

Does that sort of mean that there's, I don't know, 50, 60 or something in 2025. Are those also sort of high COVID era And is there anything you can do to maybe bring them forward? Obviously, you got to do that with agreement from the tonnage provider. And the second question is, if you look at the where rates are today, you said they're obviously The newbuilds are quite cost competitive. How would you sort of characterize Whether sort of current spot rates are profitable or not for the new build ships with their cost base.

Speaker 5

Thank you.

Speaker 3

Thank you, Sam. So to your first question, in terms of you're right in saying that we have 34 vessels that come in for renewal in 2024. We have close to 40, not 50, but close to 40 that will for renewal in 2025 as well. So, and those could be characterized potentially as well So that will continue to unwind in the year subsequent to 2024, but we will already have we delivered in combination 59 vessels by the end of 2024. When you asked the second question in terms of do the rates today would cover the cost of the new capacity That's a difficult question to answer because it is also very much a function of our ability to Obviously, so if we are in a situation where the ship do sail because the capacity the feeding factor satisfactory, then we are in a better in a much better position with the new capacity.

Speaker 3

To give an indication, I think I already used this illustration on a couple of occasions, but the 15,000 TEU LNG ships that we are now Gradually deploying on our Asia to the U. S. East Coast trade lane. A run cost the same to operate than the 10,000 TEU ship that they come and replace. So we get a 50% additional intake at the same more or less the same cost So that illustrates the magnitude of the benefit that we expect to get to get additional savings by running them on LNG, which today is a source of fuel, which is More cost effective than even Harry Shulone.

Speaker 5

Okay, understood. Thank you.

Operator

Your next question comes from the line of Alexa Dogani from Barclays. Please go ahead.

Speaker 6

Yes. Thank you for taking my questions. I had 3 as well. Just firstly, obviously, I appreciate the $3,000,000,000 liquidity you currently have on your balance sheet. What do you think is the minimum liquidity you are able or want to operate the company at?

Speaker 6

That will be helpful. Secondly, can you remind us the down payment for the new vessels in 2023 and 2024 as part of the ZIM long term agreements. I think you mentioned the number in Q1. It would be great if we can just double check that. And then finally, in terms of the depreciation run rate in Q4, I And if I annualize the number, I think it's around €1,000,000,000 now.

Speaker 6

Should we still assume though the kind of rough annual charter costs in terms of cash to be around $1,400,000,000 Thanks.

Speaker 3

Thank you for the question. So your first question, which is in relation to what is the minimum cash that we would want to be keeping, it's difficult to answer that question today because [SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Clearly, we are and the industry is in a transition phase, is not has not stabilized yet. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Clearly, on some of the trades, the rates are unsustainable for the longer term. So we wish to be very cautious here. And And I don't think we have a right amount for us to provide at this stage.

Speaker 3

We want to make sure that we navigate the ZIM Interim. The current turmoil in our industry is a strong balance sheet. And I think this is the case today with the $3,000,000,000 that we have sitting on our balance sheet. But with Claus on the horizon, we need to be very mindful of our liquidity position. With respect to the down payment that we intend to make Per delivery of the vessels, we will be making $350,000,000 worth of down payment in 2024 Where we take the deliveries of 15,000 TEU Ship for which we agreed to pay $20,000,000 per ship upfront And the reminder of the 15,000 TEU ships for which we are committed to paying $13,000,000 So precisely, it's $300,000,000 plus $339,000,000 of upfront payments that we will be making in 2024 after having been having made sorry in 2023 close to $140,000,000 Depreciation going forward The situation or the model that you had pre impairment, I did guide that the Q4, the effect of the impairment would be in the Q3.

Speaker 3

And in terms of cash payment of lease liability repayment, there should be no difference between the situation before impairment or after impairment as this is a non cash item and the lease liability

Speaker 6

Understood. Thank you.

Operator

Your next question comes from the line of Patrick Crousset from Goldman Sachs. Please go ahead.

Speaker 7

Hey, Elai, it looks like you managed to limit the cash burn somewhat in the Q3. And perhaps we just start with the lease payments. It looks like they're down EUR 100,000,000 quarter on quarter. And just trying to understand what's driving that. I mean, how much of that is coming from the redelivery of about 20 vessels?

Speaker 7

How much of it is maybe down to sort of one off timing effects and perhaps also some costs flowing back above EBITDA? With the extension of the duration of some of these charters has been just transferred from above EBITDA to below EBITDA and some of these payments. And then related to that, net net between into the Q3. Redeliveries and new vessels next year, what do you think is the right quarterly run rate on these charter payments, I mean, from the sort of 3.50 level in the Q3.

Speaker 3

Thank you, Patrick. So you're right that there's been some of the timing effect in the Q3 That I will explain. Nothing has changed in terms of the reallocation of cost between above EBITDA or below. No. All of our vessel costs today or 99% of our vessel costs today still are being registered Again, beside the effect of the impairment in depreciation and amortization From a cash perspective, if we look at the Q3, What happened in our lease liability timing repayment, what our lease liabilities is mainly the charter that we pay back to the vessel load.

Speaker 3

The payments are made every 2 weeks. That's the way it works in the chartering market, The first of the month and 15th of the month. And if the 1st of the month is or isn't a banking day, then the payments are being pushed or delayed. So we had 1 payment run less in Q3 compared to Q2. So we had 5 out of 6 That contributed to $100,000,000 less payments versus the prior quarter.

Speaker 3

So that's just one timing effect. We also had a positive impact in our Q3 of working capital improvement, Mainly driven by less receivable on the balance sheet that also contributed to increasing our cash flow from operation. This is going to be most probably a one off hopefully, because this is the result of the lower freight rates that we are able to invest To our customer.

Speaker 7

Okay. I mean, you sort of preempted my follow-up question on the working capital. So it sounds like you don't see more opportunities to optimize working capital. Do you think that's the year to the 9 months?

Speaker 3

I think we've made some very good Progressive here. I mean, leave aside the fact that the value of the receivables are less, which is something that we are not too happy about. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] But in terms of collection efforts and past due, we are at a very low level. So our DSO is quite good. So we are pleased on that front.

Speaker 3

So this is why I'm saying that we should not expect unless There is a continued deterioration in the freight rate environment of a significant working capital improvement. On the AP side, We are maintaining pretty much the payment terms that we have agreed with our supplier base.

Speaker 7

Got it. And then last one, can you just give a quick update on how you see the PanamaxNOW situation evolving and how you are adapting your operations I mean, I guess you run probably slightly lower utilization, maybe get slightly higher rates. But any color on how you're rerouting and adapting would be interesting?

Speaker 3

It is true that the Panama Canal is a worrisome situation and evolving day after day with the draft limitation that is being imposed on the industry. So we do operate a few number of services that go through the Panama Canal, Namely our Asia U. S. East Coast service, ZCP and also our new service to Baltimore ZXB service. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So we are trying to optimize the utilization of the ship given the draft limitation and the draft limitation impose mainly on the weight Of the cargo that we're carrying and we're also taking actions to utilize our feedering service in Latin America to discharge Cargo before the Panama Canal and so that the vessel can go in full across the Pacific Before it has to cross the canal.

Speaker 3

Obviously, we are monitoring the situation day after day and we will evaluate If there are decisions that need to be made in terms of potential rerouting or this type of alternative. Also, I think maybe this is linked. This is maybe driving one of the reasons why We are now reopening the services between South China and LA, which we suspended a few months back. And as we also see some of the cargo being redirected now back from the East Coast to the West Coast and we see an opportunity here for us to resume a service, the ZDX line that had been quite successful for the company in the past.

Speaker 7

Clear. Thanks very much.

Operator

Your next question comes from the line of Alexa Daugheni from Barclays. Please go ahead.

Speaker 6

Thank you for taking the follow-up question. I just had a question on the size of your fleet for next year. Obviously, The size has gone down to 145 vessels. How should we think about the size of the company in 2024? And then Given your more fuel efficient vessels entering the fleet, how quickly do you think you can regain unit costs Atbar with 2019 levels.

Speaker 6

Thanks. [SPEAKER MARTIN PEREZ

Speaker 3

DE SOLAY:] With regards to the fleet size, If we look at or if we anticipate the vessel count, it might not be that very different from what we currently operate today. But you're right, We will operate larger ship on average as the ships that are coming in are replacing smaller vessels. So today, We operate an equivalent capacity of 600,000 TEUs for the 129 container vessel that we operate. And this should go nearer or closer to the 700,000 TEU mark by the end of 2024 When we have taken delivery of all of our fleet. So this is clearly something that is Important for us when we look into 2024 and the volume that we also need to capture in terms of filling those vessels.

Speaker 3

In terms of the fuel efficiency, transitioning [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Clearly towards LNG for the 28 vessels that we are coming our way today and up until the end of next year. This is allowing us to get significant savings. We also get savings from the chartering costs. When will we get back or if we will get back to 2019 is a difficult determination to make. There are a lot of Moving parameters, as you know.

Speaker 3

So we will provide again more guidance in 2024 Our capacity, the best way we think is the case with I just mentioned the ZDX line, the new service that we reopened, the 2 new lines that we've also announced in opening addressing Latin America trade lanes Partnering with MSC not so long ago on some of the key trades where we, by partnering with them, did manage to Lower our cost of operations. So maximizing and optimizing our network is clearly number 1 priority for the company. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Then next year, we will need to capture additional volume and we intend to do that with a stable workforce as well, therefore,

Operator

This concludes the Q and A session. I will now turn the call back over to Eli Kligman for closing remarks.

Speaker 2

Thank you. 2023 2024 transition period for ZIM. While these are challenging times, we expect the deliberate steps we have taken To announce our operational and commercial resilience to deliver positive outcomes, our fleet renewal program will improve our cost structure InterContinental Investor Relations. In the immediate trend, we are pursuing cost control initiatives and commercial opportunities that will best position us to weather this downturn. Strong total cash position of $3,100,000,000 InterContinental.

Speaker 2

We remain committed to leveraging technology and digitalization to best serve our customers and generate sustainable value for shareholders. Thank you all for joining us today new interest in ZIM. Hope everyone stays safe. Thank you.

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