Ladies and gentlemen, welcome to the Q1 2022 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would 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 one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Dr. Detlef Trefzger, CEO of Kuehne + Nagel. Please go ahead, sir. Thank you, Sandra. Good morning, good day, good afternoon, and good evening to all of you, and welcome to the Analyst Conference on the Q1 2022 results of Kuehne + Nagel International AG. Our CFO, Markus Blanka-Graff, and I welcome you to our today's call. As always, let's get started on slide three of the slide deck that we have published early this morning. The strong development of quarters three and four last year has continued throughout the first quarter this year. We are roughly in line with the Q4 performance with our Q1 performance, while net turnover increased by 68% on the previous year and results more than doubled. This is clearly a confirmation of our strategy, which is relevant for our customers and all the trade lanes we are active in. We closed the first quarter with a gross profit close to CHF 3 billion, exactly CHF 2.942 billion, a growth of 46% or 34%, organically, excluding any foreign exchange effects. We posted a strong increase in free cash flow from operations. You will hear more details on that from Markus later. We have increased our earnings per share versus previous year by CHF 3.88. Please follow me on the next slide with a short overview on the strong performance of the Kuehne + Nagel Group in the Q1, 2022. We closed the first quarter with an EBIT, group EBIT, of CHF 1.12 billion and a group conversion rate of 38%. In Sea Logistics, the chaotic and unpredictable markets continue until today, and it's ongoing. At the end of the presentation, we will give some flavor on of what we expect for the next couple of weeks or months. We closed Sea Logistics with an EBIT of CHF 621 million, a continuation and a result of the high service intensity due to the challenging market environment. Air Logistics posted an EBIT of CHF 425 million, result of a strong volume increase and yield increase. The acquisition effect to the EBIT is CHF 130 million. We have a strong contribution both to volume and EBIT from acquisitions, and also a strong contribution to EBIT from our KN standalone business. Road Logistics posted an EBIT of CHF 30 million. Volume growth in all networks, Europe, North America, and our platforms. I will come to this later on. We have seen a very sound and growing operations throughout the last three months or the first quarter. Contract Logistics had posted an EBIT of CHF 44 million, an expansion of the service offering in pharma and e-commerce ongoingly, and a high capacity utilization. Also here, you will get some details later on. Most importantly, in Contract Logistics, all the new projects were flawlessly implemented and we have seen an expansion in our core industries in both Road Logistics and Contract Logistics. That is part of the strategy that I alluded to in the beginning. Some details on the business unit Sea Logistics and Air Logistics volume development you will find on slide SIX. Sea Logistics, nominal volume decrease of 4%, -4% in the Q1, 2022, or 8%, -8% organic. It's in line from our point of view with the market, which is contracting in the mid-single digit range at the moment. A market that is deteriorating and reflecting a couple of effects that has been discussed earlier. We have seen also the SeaExplorer indicator showing the peak of the disruption index in the middle of February, so in the middle of the Q1 this year. This has eased up until maybe two weeks ago, and now it's increasing again. But we can discuss this later on. We also on purpose have a continuation of the low yield erosion as we focus on strong growth in where it matters most in on the Transpacific, on the Transatlantic, partly on Intra-Asia, Reefer and LCL. For all our services, we see our focus is on services that demand a high service degree and have the complexity which we are able to solve on behalf of our customers. The carrier reliability remains extremely low. You have heard me saying this a couple of times. At the moment, we are on a level of 30%-35% on-time delivery. I was already blaming a low quality when we were at 65%-70% prior to the pandemic. But now it's really a very, very low reliability. Our focus, part of our strategy in Sea Logistics is customer service, end-to-end reliability and visibility, and managing the cargo mix towards high-yielding, complex transports, mainly. Air Logistics. Volume growth of 33% nominal. Organic growth, 3%-4%. A market growth that is flattish, maybe 1% growth in the Q1 2022. We have seen double-digit growth in pharma and aerospace again, and clearly automotive lagging in the first quarter 2022. A reflection of the manufacturing bottlenecks in the automotive industry, for example, with regards to chips. Apex is continuing exceeding expectations. With that, I would like you to follow me on slide eight, where we have the KPIs of the Sea Logistics business segment. A strong yield development that we have seen in quarters three and four is continuing in quarter 1, 2022, reflecting the favorable portfolio mix, blue chip customers, small and medium-sized enterprises, complex requirements, service orientation, reefer and LCL shipments. High service intensity. A lot of manual work needs to be done. A lot of pressure in our operations in order to make shipments go through the network as seamless as possible. We have a focus, as what I mentioned before, Transpacific, Transatlantic, LCL and reefer and renewable energy, where we see a lot of pickup and volume growth throughout the last couple of months. The yield expansion more than compensated for sequential unit cost increase. As mentioned, there's no relaxation at all in the very intensified workforce and workload that we see in our networks. EBIT for the first quarter was at or we closed the first quarter at CHF 621 million. A great performance of our operations and our teams throughout the world. On slide 10, we see the Air Logistics KPIs, unit KPIs. Air Logistics, a very strong performance. Organic yields in the first quarter were up 26% sequentially versus 9% in quarter four. We have caught up here. All-in yields of CHF 142 per unit, per 100 kilo, down by 7% sequentially as the Apex yields, and you see this clearly on that slide, normalized slightly versus the very exceptional fourth quarter, 2022. Apex, and I mentioned that before, is clearly outperforming our expectations and our targets, and that we have seen again in the first quarter. It's fun and pleasure to have Apex as part of our group. Organic unit costs are up 9% sequentially in quarter one versus quarter four and 15% year-over-year. Clear effects of our digitalization and eTouch efforts as the volume has organically been growing much faster than the unit cost development. EBIT first quarter in Air Logistics, CHF 425 million, and an impact from acquisitions within those CHF 425 million of CHF 130 million during the first quarter. On slide 12, you will see the details of Road Logistics. We have seen very strong volume growth in the core European network. A high demand for our digital solutions. What we have seen in third and fourth quarter was continuing, even growing further. The eTrucknow visibility and software as a service solution sees a very high demand. We have seen a significant increase in volumes in domestic U.S. Having said that, we have seen a net turnover increase of 13% in the first quarter versus first quarter last year, and a clear EBIT improvement of 25%, resulting in an EBIT in Road Logistics of CHF 30 million. The Road Logistics business sees continued demand and growth. We will come to outlook later. That should not change too soon as of our today's perspective. Contract Logistics, our fourth business unit, where we do a bit of a deep dive during today's presentation on slide 14. Contract Logistics showed a very strong operational performance with an organic quarter one net turnover growth of 8%. Once again, centered on pharma and e-commerce, which both contributed to 80% of all newly signed contracts. The growth of trade in Asia and North America is two times that of Europe, and that's part of our strategy, the geographic focus, and the interlink with our network development. Over 80% of the lease obligations are backed by customer contracts with nearly 100% expiring beyond 2025, so we have a very long and robust customer relationship here with renewals clearly above 90-95%. The idle space on an extremely low level at the moment of 2.1% versus 2.3% end of last year. The capacity of 10.2 million sq m, end of Q1 2022, showed almost no idle space. Just some pallet places. All this resulted into an EBIT in Q1 2022 for Contract Logistics of CHF 44 million, which is 16% above prior year. With that said, I am handing over to my colleague, Markus, to give you some details on the financial performance. Thank you, Detlef. Ladies and gentlemen, welcome also from my side, and thank you for taking the time listening to us. Indeed, it was an outstanding quarter, certainly in relation to Q1 2021, so from a year-over-year perspective, but it has also been a solid and strong continuation of our Q4, 2021, performance. Group conversion rate, as Detlef briefly commented on, 38%. When you look at the profit and loss income statement here on page 16 of our presentation. When you look at it on an incremental basis, the incremental conversion rate is 75% on a year-over-year basis. Again, on a sequential, I think we have been well-performing and continuing the pace that we have started in the last quarter, 2021. Seven hundred million, roughly, additional earnings before tax. Also here, a bit of split into organic and inorganic growth. Growth through acquisitions, and that is in all business units, together is around CHF 175 million. Organic growth year-over-year, CHF 525 million. Third item I want to mention here is non-controlling interest. You know, for many years, that never has been a large number, but now it becomes a relevant amount. That would indicate that going forward, a number around the CHF 50 million should be our run rate also for this income statement line item. What has changed on the balance sheet? Not much. I think that's the good news. Page 17 of our presentation. The three topics or the three items on the balance sheet I always look at receivables, payables, and cash. You see from the starting point at the beginning of the year, until now, trade receivables are remaining relatively stable around CHF 6.3 billion-CHF 6.4 billion. At the same time, trade payables in the same range, CHF 2.8 billion-CHF 2.9 billion. Cash increased around CHF 800 million from the starting point of the year, which leads me already to the interesting development on the cash and the free cash flow, page 18. You will see, I want to highlight that one line here, changes in working capital. You see here in Q1 2022, we have the number of CHF 41 million. What it actually means is we have been able to contain and to limit our working capital that we started with into the year at the same level and operate the business with no further extension of working capital. That translates in our world of our balance sheet and how it works, that basically the net profit after tax is pretty much equivalent to the free cash flow generated. We've generated another CHF 800 million additional profit. Another CHF 800 million has been inflowing as free cash flow. That results into the roughly CHF 1 billion free cash flow in the first quarter. Again, here, my expectation would be going forward that our net working capital as it stands today, and you can see that on this page number 19, is around CHF 2 billion should remain at that level until or unless the business is changing significantly. Page number 19, I refer to it. When you compare the number we have here, working capital intensity of 4.6%, arguably that is a notch above our corridor that we have given ourselves until up to 4.5%. I think for a Q1, that is still tolerable. We have to see how it's gonna develop in future. DSO is 52.6, so around 52% in range where we want to be. DPO, 58%, same here. Basically no news, stable business, stable receivables, payables, it's the way to go. That translates, obviously, when we run the models and the analysis on page 20, return on capital employed. You see here on one page all of the story that I have I told you over the last three minutes, you see that on one slide, return on capital employed increased around 120%-130% on a reported level and is at that level continuing. It is remarkable and to a large extent, a sustainable performance. With that current high level of performance and our ongoing ambitions, obviously, to keep it at that level, I hand back to Detlef to give you some perspective on current market developments. Thank you very much, Markus. Ladies and gentlemen, let me comment on market development, but before I do so, let me also comment what we have read again this morning in some of the papers and media and so on. We are not giving any outlook at the moment because it would be very much speculative, whatever outlook you would get from us. We have a view, and I can share that view, that for the time being, I am talking this current quarter as we speak, there will be no major changes in consumer behavior nor in the volume trends that we have seen. How this then continues in the second semester 2022 would be very speculative. Our assumption is no major additional disruption. That's the assumption for our own planning, our own forecasting. Whatever figure or whatever hint we would give you, we have the feeling would be more speculative, and we don't wanna end up speculating about the future. We are driving our future. We plan well as far as we can, and we react in a very agile manner on any changes that we experience. Having said that, let me comment on the market. You know that the global GDP growth consensus has been decreased a couple of times at the moment. It's expected to grow only by 3.5% globally. We see that inflationary pressures are clearly triggered by the war in Ukraine, mainly driven by the energy prices, the huge increase in energy prices. We have seen a continuation of the inefficient supply chains, which have led to network disruption and congestion, mainly an infrastructure topic, centered around ports and airports, and sometimes also capacity availability, not only in vessels, but also in trailers and truck drivers in certain markets or railway engineers. We see a stabilization not happening at the moment, but no massive deterioration either. While the overall stabilization, now I'm talking second semester, depends on the consumption patterns and the infrastructure investments that might kick in. How are we reacting? How are we addressing those topics? I mentioned that very agile organization. Agility is something that is based on our digital platforms and the talents of our logistics experts all over the world. We focus on high service quality and network reliability in the given circumstances. Our investments are ongoing in sustainable logistics solutions. We forget a bit with pandemic and the war in Ukraine that sustainability is the major topic of societies globally at the moment, and we have to address it. We have to be active. We have to reduce carbon footprints. Transport and logistics is good for only 8% of the global carbon footprint, but we can impact it. We can reduce it. As you know, Kuehne + Nagel is working on this very actively and has been continuing its work and activities throughout the last couple of quarters. We focus on profitability and the leverage of our acquired companies. We are very selective with acquisitions. As you know, wherever we conduct an acquisition, this is our focus. We accelerated and continue accelerating our digital transformation. We have started already quarters 3 and 4 last year, but also this year, especially, specifically with Air Logistics, to harvest from our digital platforms and our newest technologies that we have deployed throughout our networks. With that said, I thank you for listening and I hand back to the operator, Sandra, to open the Q&A session. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from from Bernstein. Please go ahead. Hi. Good afternoon. I have three questions. First, what's your assessment on the loss of air freight capacity from both the Ukraine war and the Chinese lockdowns? I know you've talked about it, but could you give us some numbers around how that differs per trade lane, maybe? Second question, Apex, you mentioned that Q4 was an exceptional quarter, and now yields are normalizing. Where does this difference come from, and how do you think that looks in the normalized world, especially on GP and OPEX per ton basis? Final question. Certain shipping lines have been expanding more and more beyond shipping into Air Logistics, Road Logistics, Contract Logistics. It is going to increase competition by diluting GP yields, and if not, why not? That's it for me. Thank you very much. Thank you, Clementine. Let me answer or let us answer your questions. First of all, airfreight capacity, yes. As the Russian as well as the Ukrainian territories cannot be flown over, there is an implicit reduction of available airfreight capacity because flying to Northeast Asia, especially Korea and others, is affected by a longer travel time of 2-4 hours, depending on where you go to. In total, approximately 30% of the Asia-Europe trade and vice versa is affected by this blockage of the territories. In addition, Russian aircraft cannot be used and Ukrainian, but all this leads to the 30% that I've just mentioned. Q4 and Apex, I'm not sure I was understood right. I think the run rate you have seen in quarter one this year is the run rate you would expect from Apex moving forward. Don't underestimate the seasonality of the business. The seasonality of that business is a trans-PAC focus very much. It's also a Chinese New Year effect, which you see in February usually. That's the reason why the Q1 and the Q4 differ from our point of view. The run rate and the performance of Apex has not changed at all. I mentioned that, I think, in the call explicitly. We are extremely happy and proud to have the Apex team as part of the Kuehne+Nagel group, and also that they over-perform their budget and their strong and ambitious targets. Competition. I mean, this question is as old as forwarders and carriers, I would say. It's not a new dimension. Is competition changing? I think you have to look into the details and maybe two or three levels into those details. The carriers have always had logistics arms, many of them. By the way, you have railway carriers that have logistics arms as well. They have more or less leading roles in their certain national markets as well. It doesn't harm us. Whatever has happened so far in the carrier market has not changed the competitive situation because we are talking to the same companies and competitors that have been bought and now are owned by a different owner. We don't see any change because the carrier business as such and the forwarding business is in two separate buckets with the carriers, which is harder. There is no change in the competitive landscape. I think our focus is less on competition, but more on our customers and how we can serve our customers best in the current circumstances and the transformational needs of our customers in the current market environment. I hope that answers your questions, Clementine. It was very clear. Thank you very much. The next question comes from Robert Joynson from Exane BNP Paribas. Please go ahead. Good afternoon, Detlef and Markus. Just three questions from me, please. First of all, on road logistics, we've seen a few changes recently that have had a negative impact on European trucking capacity. I'm thinking of the introduction of the mobility package and then some Ukrainian drivers returning home. Then, a week or so ago, we saw Russian, Belarusian trucks having to cross back over the border. Could you maybe just talk about the extent to which you estimate those factors are having a negative impact on the overall industry capacity, please? So that's question number one. Then a couple on sea freight. First of all, if we exclude Apex, volumes were down by around 8.5% in Q1 year-over-year. Could you maybe just talk about the drivers behind that change? In particular, the extent to which you think that reduction was driven by a softening of underlying demand relative to other issues such as the Chinese lockdowns, Russia effects, et cetera, et cetera. Then the final one, just a quick question on Chinese exports specifically. Could you just comment on the extent to which you're seeing Chinese export volumes down in recent weeks impacted by the lockdown restrictions? Thank you. Sure. Robert, let me start answering. Road and trucking capacity, we read and hear about that as well. At the moment, Kuehne+Nagel is not affected. We have long-term partnerships with our trucking companies, and we cope with all the requirements, obligations, new legislation and rules and so on, operating rules, and we don't see any topic here. The driver shortage in the market in general is very old. Well, it's something that we had also pre-pandemic. It was discussed very heavily, and it affected the British market very much directly after the Brexit. From that point of view, at the moment, yes, there is certain changes, but for our groupage and full truckload and less-than-truckload network in Europe, it has no significant or, yeah, no impact at the moment. Sea volume's down. What's driving this? I think you have a market that is down. There were some first indications of the market. I think it's 4 weeks too early before, because the carriers will post their results in the next couple of weeks. We will see their expectation. We will see a market that is maybe 7%, 8, 10% down, and we are in line with the market growth organically. You know that with the Apex acquisition effect, we are down 4% only. The main driver of this is Chinese New Year in the first quarter. Don't forget it. We had virtually no Chinese New Year last year from a volume perspective because there was a big demand after the pandemic and the opening up a year ago. This year we had a seasonal effect due to Chinese New Year, which is always a two-week effect on average. Yes, the lockdowns in China have shown their effect. It's a market effect. That leads to the third question, the Chinese exports. China is still exporting, but it's less exports, and it's more selective, and it depends on the production capacity more than the port capacity and trucking capacity. We would expect at the moment, and it's our guess, that we see an export reduction in China of 15%. That would be my answers to your question, Robert. That's great. Many thanks, Detlef. You're welcome. The next question comes from Sathish Sivakumar from Citi. Please go ahead. Yes, thanks, Detlef, and thanks, Markus, for taking questions. I got three. Firstly, on the visibility in terms of volumes. Given the, as you mentioned, the production cut out of China is, like, down 50%, of the export. How this has actually impacted your booking visibility across both air and sea today versus, say, start of Q1. Have you seen, like, four weeks visibility versus, say, eight weeks that was there, like, at the start of this year? Secondly, on the Contract Logistics, what is actually driving the high utilization? Do you think this trend to continue for the rest of the year, or is there anything very specific that has actually driven this, high utilization in Q1? The third one around free cash flow. Given the strong start to the quarter, to the year, what are the expectations for 2022 compared to 2021? Is it fair to say that free cash flow likely to be significantly above 2021 levels? Hello, Satish. Let me just answer the third one. I think, as I said, during our presentation, when we can assume that network and capital remains at the level that we currently see, I think your assumption should turn out to be true that our free cash flow generation will be significantly above last year. Last year, you may remember, the first quarter continued in the second and third quarter, we put into the expansion of the network and capital quite some cash flow. That's why if that is not there, it stays the same. Yes, the answer is I do expect a significantly higher free cash flow in 2022. Right. Let me answer the other two, your other two questions. Visibility, Sathish, has not changed. I mean, we can forecast demand and volume expectation or volume demand and so on very much, and we are in close contact with all our customers. That has not changed. I think it's more, what is the next wave of decisions the Chinese government will take and how does it affect manufacturing? As long as we understand manufacturing, we can plan the volume demand and capacity requirements of our customers, which we do. It's a daily business, nothing spectacular. Contract Logistics idle space, clear answer. I would expect the idle space to be staying below 3%, whether that is now 2.1%, 2.3% or 2.6%, it's not really material. An idle space of 3% is cool, I have to say. I've been in Contract Logistics before, as you know, many years and 3% is, or below 3% is, a very good figure. We need a bit of idle space to breathe with the volume, demand and spikes and requirements of our customers. I think we are in a good shape with 2.1%-2.5% throughout the whole year. Thank you. Yeah. Thanks, Detlef. Thanks, Markus. Sure. Thank you. The next question comes from Muneeba Kayani from Bank of America. Please go ahead. Hi, Detlef and Markus. Just going back to China. You've seen the decline in Chinese export volumes. Whenever these restrictions ease, do you expect a surge in volumes, and could that result in higher rates and yields? Kind of how do you see this coming, you know, following in the next couple of months, weeks? Is my first question. Secondly, Markus, I think in the last earnings call, you had said that you expected EBIT this year to exceed 2021. Given the strong performance in the Q1, how should we be thinking about EBIT this year? I know you don't give guidance, but just if you could give some indication on your thoughts. I think I heard you say, Detlef, that you haven't seen any changes in customer behavior. Just wanted to follow up on that. Can you draw any differences between what you're seeing in terms of customer demand in Europe versus the U.S., and kind of is any region weaker? Sure, Muneeba. Thanks for your questions. I will answer one and three, and I'm happy you asked Markus for the EBIT outlook, which is great. China declining volumes. We have made experience, all of us globally, during the pandemic, a lockdown in Wuhan first and the Hubei province and then all over China, and a revamp within weeks. We shouldn't underestimate the power of China and the reincarnation of the trades in China. It depends on production and manufacturing capacity, raw material imports, but we would see that being or getting back to whatever is normal within weeks. I'm not exaggerating. The impact on yields depends on the availability of vessel and container capacity, trucking capacity, but that's not our topic. It's more sea. Do we see the export volumes coming in? We need to see that happening. We have the end of April now. In three months, we will have the winter and Christmas business to start. I'm not kidding, for the Sea Logistics network and for this, you need a production up and running again. I think that will be part of the focus activities of the Chinese government. Therefore, declining volumes at the moment. We talked for the second week now. It's from our point of view at the moment not concerning. It depends on how long and how extended the lockdown will continue, not only in Shanghai with 25 million people, but maybe also in Beijing or the greater region of Beijing. We have a lot of manufacturing sites in the greater region, but not in Beijing as a city. It depends. The customer behavior and details, and I think we said or gave some details when we posted our annual results, 2021, a couple of weeks ago. However, the topic is consumer behavior has changed already during the pandemic, and I called it home, garden, and individual sports assets at that time. Everybody was investing in refurbishing its home, bathroom, living room and so on, garden, or terrace or whatever, balcony, and individual sports. We have seen so many sports shoes, pairs of sports shoes being shipped to the U.S. You all must have, I don't know, 10 new pairs bought over the last two years. That consumption has changed with the slight opening up after the pandemic. I'm talking already middle of quarter three, we have seen a consumption pattern skewed towards service industries again, restaurants, perishable business, high-end restaurants and so on. This is at the moment continuing. Therefore, that was my message. At the moment, we don't see a big change. The only topic is will the purchasing power of the private households stay as strong worldwide, but especially in the U.S. and in Europe, to continue purchasing and consuming services and goods that are required to provide those services in order to drive a certain level of GDP growth. We are talking about a GDP growth of 3.5%, ladies and gentlemen. We are not talking about a depression. We are not talking about negative GDP growth. I think that's a very fair and reasonable assessment of the second semester at the moment, unless something more disruptive or more unpredictable is happening. I hope that answers your questions. Let me conclude then with the details that you have just mentioned, Detlef, on customer behavior, on the continuation of challenges in the supply chain and what's gonna happen in the next couple of months that we have some limited visibility to. I think with the good start that we have had in the first quarter and what we know a little bit on the second and what one of the scenarios that we work on the second half is, it seems feasible that the result for the full year is gonna be in line or above with what was the previous year. The next question comes from Sam Bland from J.P. Morgan. Please go ahead. Hi there. Thanks for taking the question. I've got two, please. First one again is on the China congestion. I guess, you know, that's sort of adding to disruption in the market. You know, disruptions tended to be things which have pushed up freight rates in recent quarters. But if anything at the moment, this kind of disruption is, you know, maybe bringing them down. Can we just talk a little bit about, you know, why that difference of effect on freight rates is happening? The second question, you know, this is again one that's come up from time to time, is sort of there's been talk recently around, you know, the level of globalization. We've got disruption in China and various geopolitical events. Have you got any more sort of updated thoughts on whether the world will continue to globalize, or could that basically go into reverse and see supply chains become a bit more regional? Thank you. Okay, Sam, let me start with the latter question, the degree of globalization. We are living in a globalized world, and you can't rewind that. What we will see, and we have given similar answers during the last 12, 18 months, we see that for certain industries and certain customers in these industries, not in general, but for specific companies. Second sourcing, so not one supplier for tier three supplies in the city of Wuhan only, but a second one maybe in Romania or Mexico. Increasing a minimum stock level from two days to five days or so has become an option and has been implemented or is in implementation. We don't see a general trend of changing globalization. Not at all, yeah. We see some shifts of certain goods moving from China, low margin, high carbon, low margin goods being produced now in Vietnam rather than in China, as part and a reflection of the Chinese five-year plan and their focus on high yielding technology savvy and sustainable production. We don't see any other trends at the moment. With regards to congestion, may I be careful, I'm picky with wording here. There is no China congestion. We have a congestion at the moment in the largest port of the world, which is Shanghai or Pudong. We do not have a China congestion. We have trade ongoing, and I said we have a volume reduction in the. We assess we don't know a volume reduction in the market at the moment of 15% lower exports for the last weeks. So therefore, we will see here maybe a continuation for another week or so, and then we will see. Yes, freight rates are slightly down, but we have to remind ourselves they are five times higher than pre-COVID. If I may reiterate a message that has been part of my prayer, so to say, in the last calls, you should and we all have to assume significantly higher average freight rates in this decade than during the previous decades. Because there's a lot of investments to be taken into port infrastructure, into railway, road, trucking, infrastructure, digitalization, connectivity, data connectivity, of course, blah, blah, airports and so on. This will require investments and costs that have to be covered, and they will be covered by the end consumer as always. Sustainability. I've mentioned that in our call. It's the top topic of society, and it will cost money, and whatever politicians are telling us, it will not happen for nothing. We have to face it, and we have to address it, and we have to tackle it. We do this in our organization, but this will become a trend. Freight rates at the moment might be slightly lower, but freight rates, you will most likely not see freight rates at the level of 2018 or 2019, this decade. Thank you. Yep, I got it. Thank you very much. Next question comes from Andy Chu from Deutsche Bank. Please go ahead. Hi, good afternoon. Two questions from me, please. The first one is around the sea freight rates and the jump into the 900 CHF per TEU. Detlef, if you kindly gave a sort of a list of sort of reasons for that happening. I just wondered if you could just break that down a bit to just help us out in terms of the moving component parts and what's actually driven that, you know, sequential sort of 20%+ movement in sea freight rates. On minority interest, Markus, you know, really helpful because I'm definitely struggling on that figure. Just wondered, in terms of the CHF 50 million run rate, is that sort of... I mean, I guess that figure should be quite seasonal on a quarterly basis, but is that sort of an average sort of figure that we should be using for minority interest in Apex? Or is there some sort of change potentially there in ownership? Thank you very much. Sure. Hi Andy. I think on the minority interest, to pick that up first, yes, there will be small changes going forward on the level of minority interest for sure. CHF 50 million, that's, I think it's a roundabout number that you could factor in on a quarterly basis. I don't expect that to jump to CHF 100 million or to disappear. That's why I gave some guidance on this, because we usually didn't have any of that in the past. Small variance is yes. I think as a guidance number, 50 is a good number. On the sea freight rates, just for me to understand, because you talked 900, do you mean margins or rates on this one? Sorry, just the GP per TEU Clearly, I mean, that increase has many drivers. You know, the most important driver is the value that we bring to customers by organizing through all what we've talked about the last 45 minutes to actually bring that service level towards the customer. That has a price. You see that also on the cost per unit. It's not only the GP per unit that goes up, it's also the cost per unit going up, because there's so much more effort in it. You will understand that we are not providing details on what comes out of the service part, what comes out of the purchasing power, what comes out of the trade mix, what comes out of the product mix. These are the four major components that are in there. As I said, product mix, trade lane mix, and the service component or the three are the more relevant parties to that, to that development than what somebody from the outside could actually assume is the freight rates, and this time I mean freight rates level on absolute terms. If I may add, we have disruption in all ports globally, also in Europe in the meantime. We are seeing our Sea Explorer disruption indicator increasing again after the peak in February or end of February where we had like 17 million container waiting days. We were on a low of maybe 6 million container waiting days a couple of weeks ago, two, three weeks ago, and now we are back to 7.5 million. It's increasing day by day. We are living and working in a very competitive market environment, so customers always have a choice. For them, it's most important that their cargo is shipped on time and full and undamaged rather than saving whatever on the cost or alternatively flying goods rather than shipping them with a container vessel. There are options, alternative options, but obviously we give them the strong service, especially in Sea Logistics and Air Logistics, but also in Road Logistics and Contract Logistics. They choose Kuehne+Nagel for good reasons. Thanks. Can I just congestion of disruption index, and obviously I have my own views on the movement, but maybe you could just sort of help us in terms of explanation. I guess it was a peak and then is the fall just seasonality driven mainly and the pickup is basically end of seasonality, a pickup? What sort of just maybe this is the shape of the sort of what's happening in your disruption index, just in terms of the reasons, thank you. We have to be careful not to give a disruption indicator lesson now, Andy. We monitor each and every port with disruption globally. We have visibility. We compute 250-300 million data points every day to come to that indicator. We see that the congestion or this disruption is increasing in all ports, yeah. While you didn't really wait in front of the port of Antwerp or Hamburg like three weeks ago, at the moment you have to wait 7-14 days. There is a certain disruption. This is dependent on a flow in a network that is, you know, has two or three bottlenecks, and one obviously is the largest port globally, which is the port of Shanghai or the Shanghai area. It's more than one port. Yeah. Okay. Previously it was coming down mainly because of seasonality. Is that the big driver, do you think, just easing up the congestion from the sort of February peak? I mean, that's how I would read it, but maybe I'm completely wrong. That was not my message. My message is it's increasing. It's 50% or 45% higher than three weeks ago, so it's increasing again. The reduction we have seen previously is that we have additional shifts and more automation, especially additional shifts in the West Coast ports and East Coast ports in the U.S. The main bottleneck started with the West Coast ports, L.A. and Long Beach, I don't know, a year ago, a bit longer than a year ago. It has a different input. Okay. Thank you very much. You're welcome. The next question comes from Alexia Dogani from Barclays. Please go ahead. Yeah, good afternoon. Thank you for taking my questions. I also had three. Just firstly, when you assess the market over the past two years of the pandemic, do you identify any kind of significant market share shifts between, let's say, yourself, the digital freight forwarders, the smaller freight forwarders and the asset owners that are of note? Or would you say pretty much the market has been stable and it's been driven by kind of industry wide changes? That's one. The second question is, sorry to get back to kind of the China lockdowns. I guess in your comments of 50% reduction in volumes near term, is your expectation then that should those lockdowns be lifted, this volume basically comes back? Is there a risk that demand is distracted because basically some of these products are no longer in need, the longer these lockdowns are in effect? Finally, just a question on succession planning. Clearly, Stefan Paul will take over in three months. Can you just give us an update on how the transition is going and, yeah, an update on that, please. Thank you. Sure. Alexia, market share changes, I think, we have clearly gained market share in Air Logistics, and we have mentioned that over the last couple of quarterly calls, both through organic growth as well as through acquisition, mainly Apex. We have maintained our market share in Sea Logistics. To be honest, market share in Sea Logistics is not the topic. The topic is more finding the right customer mix and getting access to capacity. Also your question related to digital forwarders and smaller and so on forwarders, there is no digital forwarder. It's about making physical transports happen. It's important to have goods. And whatever you call digital forwarder might be a nice booking platform. At the end of the day, it's about executing shipments. Here we are clearly market leader. There is no major shift at the moment, although market share is not our focus. At the moment, we focus on different topics. China volume, I can't judge what sort of goods are in the containers waiting at the Chinese ports or somewhere else in the world. To be honest, we have seen that during the pandemic, and I would assume we see a similar pattern. This volume will come back, it will spike, and the consumption still is robust. It has shifted its structure, that was my message before, more skewed towards services and related goods, service-related goods. Yeah. Simple example, scissors for a hairstylist. Yeah, simple things like that. It has not changed with regards to growing, and the growth expectation still is 3.5%. So that's our assumption moving forward. Succession planning, we will have a handover session during the analyst call when we post the semi-annual results for the first semester 2022, which will be on, I think July 25, if I'm not mistaken. There I will hand over to Stefan. Stefan has been part of the management board for nine years plus, so he is well aware of all the details of our strategy. He's agreed with the team. It's a superb choice. You will see a seamless continuation. He will be a new person, and he has maybe different ideas. Hopefully, he has different ideas and different focus topics, but he has to speak to you and give him a chance to get into the saddle, and most likely he will talk to you then in more detail during the quarter three call in October. Thank you. Thank you very much. You're welcome. The next question comes from Marc Zeck from Stifel. Please go ahead. Hello, and thank you for taking my question. I guess there's one and a half question left, and I really apologize for feeling like an octogenarian here. Could you just repeat the reduction in export capacity or export reduction from China? Is it 50 or 15? One-five. 15. Okay, thank you. That was the half question, right? Yeah, that was the half question. The other question relates to the U.S. trucking market. There were quite a lot of reports recently that the spot freight rates in U.S. trucking were, yeah, let's say, crashing quite hard. Some commentators think that this is like first or ultimate sign that the U.S. consumer is drawing back quite markedly. Would you agree with the assessment or do you see something else going on in the U.S. spot trucking market? That's the real question. Thank you. Mark, you have asked that question to Markus. Let me answer it. The U.S. trucking market is very difficult short-haul. All the short truck movements from a port to a terminal, which is like 30, 40 miles away, that's a bottleneck. We have to secure capacity, and we have proven suppliers and long-lasting relationships and so on. While the long-haul trucking is not affected, and truck drivers enjoyed crossing the country, the continent, so to say, and be on the road for one or two days. So that is not the bottleneck. For the long haul, you also have railway solutions, and we are strong in intermodal, as you know, in the U.S. So that is not affected. The opposite. We see intermodal increasing, especially given the At that time, it has eased up a bit, the diesel price or the fuel prices in all markets, but especially also in the U.S. The short haul is a topic, and if you didn't secure capacity and have a proven relationship with trucking companies, that might be causing delays or problems for one or the other 3PL. The next question comes from Christian Affolter from Zürcher Kantonalbank. Please go ahead. Mr. Affolter, your line is open. Maybe you are on mute. Sorry, yeah. You said that there's no China congestion. It's congestion just on Shanghai. Does that also mean that you can reorganize flows from Shanghai to other ports? If that is a question, yes, we do. Okay, yeah. The shipping lines do, and yeah, that's happening. Okay, thank you very much. The next question comes from Michael Foeth from Vontobel. Please go ahead. Yes, thank you. Good afternoon, gentlemen. Just two questions left for me, both related to the sea freight yield. So basically, you mentioned those different factors that influence and drive the yield. Now we've had disruption obviously for several quarters and still we are significantly up in terms of the sea freight yield still. My question is: Is there any reason why the figure that we've seen beyond CHF 900 shouldn't go further up in coming quarters? Conversely, the other question would be: Is there or what part of the yields that you are generating is really sustainable and comes from underlying improvements from digitalization, from things that will basically stay also after disruptions ease. Michael, it's Markus. I think I can answer the first question. Is there any reason why the margin per TEU should further go up? I would answer, I don't see a reason why it should go down again. It's always hard to predict something that is gonna change even upwards in the future. What I'm more comfortable with is saying that our GP margins per TEU, at least for the foreseeable future, can remain at the very same level. The second question is around the productivity efficiency part. This is where we of course have continued our digitalization, our eTouch initiatives all around that. Every single element that we can save on the execution of a shipment is 100% sustainable. Of course, whatever we are gonna automate or abandon in the best case is never gonna come back as manual work. We hope that once the situation that we're in right now, that everybody works a little bit on emergency mode to, you know, make shipments happen. If that eases up slightly, then more of the execution pieces will even benefit from the automation. But whatever we do here is gonna be sustainable for the rest of the time we are using the same execution patterns. That is a 3%-5% conversion ratio. Leave the GP per TEU out for a moment, you know, the improvement in the conversion rate of 3%-5% is what we are driving towards. Okay. Very good. Excellent. Thank you very much. Well done. Thank you. The last question for today's call come from Parash Jain from HSBC. Please go ahead. Thank you, and thank you for the opportunity. I have three questions, if I may. Firstly, can you share an update on the U.S. West Coast labor union negotiation with the port owners? We have seen a trend of capacity shifting to the East Coast, perhaps expecting some sort of chaos in the summer. Do you echo that view, or this time it could be different? Secondly, just with respect to the global demand, and as you rightly pointed out in your presentation that it's grinding lower at this point of time and the world GDP is hovering around 3.5%. I mean, whatever is the number that we take off from the global trade growth forecast because of Russia and Ukraine situation. The fact that Q1 started on a tough note, primarily because of the higher base, we entered into the second quarter where China's export is down double digits. Does it pretty much puts us into a situation where this year's peak season artificially, even if it may, will look stronger, even if we are entering into a kind of a flattish trade growth in 2022? Lastly, with your cash flow, assuming that there is no large ticket M&A around the corner, how should we think about deployment of that capital between growth, balance sheet, and shareholder? Thank you. Sure. Let me answer the first two questions and then maybe let's go through how to deploy capital best. The West Coast situation is much calmer than what we experienced five years ago. Everybody seems to prepare and tries to get into a good negotiation structure. That doesn't mean that we will not see shutdowns of the ports or strikes happening eventually. Hopefully not. Clearly not. Let's see. We had solutions in place during the big West Coast strike five years ago, or a bit more than five years ago, with going through the Panama Canal as well as more calls to the East Coast of the U.S. and a combination of sea and air. You ship into Dubai and then you fly, so to say, the last mile, which is a bit of an exaggeration, into the respective airports in the U.S. We will find a solution. But if people, as everybody's aware, there is a need to have efficient ports in very low productive ports at the West Coast, I think there's a good chance that this year we will see a rather moderate environment for the negotiations. Global demand, and that's the reason we don't give outlooks. You know, that's speculation. We all don't know. Nobody knows. I would be very surprised. If somebody knew then they have to invest into the respective areas where they see growth and margin. We see the 3.5% GDP growth. We see more demand for service-related goods transport, which is great. It's a different structure of goods in our network, which we believe is healthy and sustainable. We have no indication that that should not continue in the second semester. We have to abstract from the war in Ukraine. People are desperate to travel to enjoy a holiday again to enjoy a big rock concert or whatever it is, you know, to meet other people after two years and more of lockdowns. That will drive consumption. Maybe you can't spend $5,000 for your travel because you have to pay the energy bill of $1,000 extra, but then you spend $4,000. That is the behavior we expect to happen in the second semester. Whether that is the truth or rather accurate forecast of how demand is evolving throughout this year, we don't know. That's our view and our assumption, therefore I'm happy to share it. On the last question, the cash flow is. Okay. I think my first priority is always to generate the cash flow first. Of course, historically, I think we have been very prudent in terms of where we put our money from in terms of M&A. If there is nothing, assuming your question was leading to that, also historically, we have been very clear, excess cash on the balance sheet will find its way back to the shareholders. Ultimately, that decision, as you know, lies with the AGM and proposals from the board of directors. Perfect. That's, that's very, very clear and helpful. Thank you, and have a lovely day. You. You too. Thanks. Ladies and gentlemen, thanks for joining in. As you heard over the last 1+ hour, Kuehne+Nagel deployed its strategy and stayed on course, not only in 2020, 2021, but also in the last quarter or Q1 of 2022, and performed strongly in all business units and all geographies. That is maybe also worth mentioning, all trade lanes and geographies are doing very well. Thus far in the current year, the business outlook has been favorable, while geopolitical tensions and ongoing supply chain disruptions generate a certain uncertainty. I think we have covered that uncertainty in the call. We are not too concerned. We are a company that is agile, has the right network and people and expertise and energy to solve the problems on behalf of our customers. We are here to solve challenges and complexity on behalf of our customers. With that said, we are looking forward to talking to you on July 25 in order to give you a flavor of the second quarter, the first semester in total in 2022, and a short outlook of the second semester, 2022. Thanks for joining. Stay healthy, and we talk again in three months. 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.