00:03 Good morning, everybody and thank you all for listening into our Earnings Call for the Third Quarter of twenty twenty one. My name is Soren Skou. I'm the CEO of A.P. Moller-Maersk and I'm joined today by our CFO, Patrick Jany; and Vincent Clerc, the CEO of Ocean and Logistics. Vincent will provide some details and insights into the acquisition within logistics and services that we have also announced today. 00:30 Now the third quarter of twenty twenty one was again a quarter where we saw a significant impact to our business and performance by the continuation of the exceptional market situation in Ocean and across the supply chain. High demand by consumers, particularly in the U.S., combined with lack of labor in Ports and Warehouses and particularly lack of truckers in many markets have led to congestion and bottlenecks across the world. And ship capacity is today tied up waiting outside ports at a time when demand is very strong. This has led to record high freight rates, but also increased cost and complexity for us. 01:12 Our customers supply chains have been heavily disrupted in many cases, and in response, we have taken several initiatives to alleviate these disruptions and the impact they have on our customers’ business. This includes expanding our capacity in Ocean to an all-time high level. Frankly, anything that can sail is outsailing today, and we have increased also the average speed of our vessels. 01:39 In terminals, we have expanded gate capacity significantly, in some cases, doubled it. We have established express truck lanes and the utilization of our Terminals is at a record level of seventy eight percent for this quarter. In Logistics & Services, as an example, we have opened sixty one new warehouses during twenty twenty one so far, to expand our geographical footprint and to be able to service our customers even better. 02:10 Many of you listening in today, I'm sure focused on the market situation and when things will revert to normal, but it is also important for us to take note of the significant progress on the strategic transformation that we have achieved, especially in Logistics & Services, even if the transformational progress is being overshadowed by the very high freight rates in Ocean. I will shortly come back to the strategic progress made in the quarter. 02:39 Now the financial numbers that you see on this slide, they speak for themselves. So, I will not elaborate much, except to say that we are delivering the thirteenth quarter in a row with year-on-year earnings progress, and the quarter is the best ever quarter in the history of the company. With the net result of five point five billion dollars U.S. in Q3, we actually delivering a quarter which is better than the best year ever for the company and -- but it's also very important for me to underline, we are delivering record results in Ocean and in Logistics and in Terminal, so across the business. 03:18 We will guide for the full year twenty twenty two when we come to February as we always do. However, we are today reiterating the twenty twenty one guidance we gave in September, meaning that we expect Q4 more or less in line with Q3. And we also say today that we now expect Q1 more or less in line with Q4 as demand remains strong as far out as we can see in our booking data. 03:45 Now turning to slide five. We continue to deliver strongly on the transformation of A.P. Moller-Maersk, and we are well on track in terms of executing on the roadmap for twenty twenty one to twenty twenty five that we introduced back in May at the Capital Markets Day. In fact, I would say that the pandemic is helping us accelerate the integrated strategy. 04:10 The importance of integrated logistics, the importance of having asset control, of having committed capacity, of being able to affect and control outcomes, of being digitally connected. All of this is front and center with our customers today as they are struggling to manage their global supply chains. 04:28 And that is frankly, why we continue to rapidly grow revenue in Logistics & Services. Organically, thirty three percent year-to-date, which is significantly above the market growth and the majority of the growth is related to strong commercial synergies, with our top two hundred Ocean customers accounting for sixty four percent of the organic growth in the first nine months. As we are getting bigger in Logistics, we are also getting better at managing the business and the profitability has improved significantly. We now have very healthy margins in Logistics. 05:08 There are really three things that I'm particularly proud of in this quarter as the CEO of A.P. Moller-Maersk. The first is the development in Ocean contracts -- in our contract portfolio in Ocean. A key pillar in building a more stable, higher quality Ocean business is to develop a stronger long-term customer relationships. 05:35 We want to develop more long term partnerships where we provide value for our customers by offering differentiated value propositions, cadence to the specific needs of each customer and tying the whole thing together with integrated end-to-end Logistics Solutions. And we also want to reduce our exposure to the transactional and commoditized short term port to port market where we are price taker and where we are subject to wild swings in spot rates. 06:03 We have continued, as you can see, to grow our contract portfolio, our long-term contract portfolio during the pandemic from twenty nineteen and until twenty twenty two. We expect that we will have grown the long term contracted volumes in absolute terms by more than forty percent. 06:25 In the long haul trades, we expect that around seven million FFE or more than sixty five percent of the total long haul volumes will be served through long-term contracts in twenty twenty two. And in addition, we also have one million FFE under long term contracts in the regional trade, so in total of eight million FFE. 06:49 While we have grown the volumes on the contract substantially over the last two years, we have also increased the freight rates on the long term contracts with around a one thousand dollars U.S. in twenty twenty one or about fifty percent. 07:05 For twenty twenty two, we currently expect to see further freight rate increases in long term contracts as part of the yearly contract renegotiations, but for the whole portfolio at a more moderate level than seen in twenty twenty one as many contracts have been renegotiated early already and are reflected in the Q3 numbers. 07:30 The increasing rates on long term contracts obviously will help mitigate some of the financial impact of any weakness in the short term freight rates when such weakness will occur at a point in the future. 07:42 The second thing that I'm particularly proud of it is the growth in logistics. It ties together with the first, of course, as growing the long-term contract portfolio is a facilitator for the organic growth in logistics services as part of the end-to-end service offering. 08:02 Since Q4 twenty nineteen, we have grown logistics revenue quarter-on-quarter at a CAGR of eight percent, while at the same time we have increased EBITDA from thirty one million dollars U.S. to -- in the fourth quarter of twenty nineteen to two hundred and sixty seven million dollars U.S. this quarter. That is a quarter-on-quarter CAGR of thirty six percent. 08:25 Most of the growth is organic, but we also made a number of successful acquisitions-based on the thinking that we are buying quality companies with strong capabilities. Companies that are profitable and well managed with good technology and good facilities and most importantly, with products we can sell directly to our most customers. This allows us to pay for these acquisitions by supercharging the growth of the acquired companies and we have quite a track record now of doing that. 09:01 In Logistics, we are now having -- if we look at third quarter and probably that, we now have an annualized run rate of revenue above ten billion dollars U.S. and EBITDA above one billion dollars U.S. and an EBIT around eight hundred million dollars U.S. And that is of course before the acquisition that we announced earlier today. 09:27 Our Logistics & Services business has and will become an important contributor to the financials of this company. And most importantly, I want to underline that the growth that we're seeing in Logistics today is driven by commercial synergies and large Ocean customers wins. In other words, it's volume driven growth, it's not price driven growth, and it's not inflated by high ocean freight rates. 09:57 Finally, the third thing, I'm particularly proud of this quarter is the development in Terminals. In twenty seventeen, we set out to restore profitability and returns in our Terminals business and we can now conclude we have succeeded. Last twelve months, return on invested capital in Terminals hit ten percent in this quarter, driven by hard core focus on cost and efficiency over the last four years, and we are well placed to continue to deliver strong earnings in Terminals in the coming years. 10:28 Now on slide seven, we have shown an illustration of the historical cash returns to shareholders since twenty seventeen, where we started this transformation journey. The strong financial performance enables us to invest in CapEx to support strong organic growth of the business, as well as to acquire companies to support the transformation, particularly in Logistics and Services. 10:57 And at the same time, we returned substantial cash to shareholders through dividends and share buybacks. This year, we have -- so far this year, we have distributed fifteen point seven billion DDK around two point five billion dollars U.S. in dividends and share buybacks to shareholders. With the final tranche of our latest share buyback program concluded during this quarter. 11:22 During early November, the first tranche of the five billion dollars U.S. share buyback program that was announced in May twenty twenty one for twenty twenty two and twenty twenty three will commence. 11:35 In addition, we are announcing today that the Board of Directors have approved an extra share buyback program of thirty two billion DDK or around five billion dollars U.S. to be executed in twenty twenty four and twenty twenty five, bringing the total committed share buyback program to sixty four billion DDK or ten billion dollars U.S., which is equal to close to twenty percent of the current market cap. 11:58 In addition to the extraordinary cash distribution from share buybacks, the ordinary dividend will be paid out to shareholders based on the dividend policy of thirty percent to fifty percent of underlying net profit. 12:11 On the right hand side of this graph, we have tried to illustrate the dividend level based on consensus estimates for net profit and at a payout ratio of thirty percent. Our aim is to create a stable dividend every year, but of course exceptional high earnings is expected in twenty twenty one will positively influence the level of dividend that we pay out in twenty twenty two. 12:35 Interestingly, the illustrative distribution to shareholders that we show here based on thirty percent dividend for twenty twenty two to twenty twenty five is equal to forty percent of the market cap of the company. And the numbers are based -- the numbers are based on, as I said, the net profit consensus for twenty twenty one to twenty twenty four, a total of two hundred and forty three billion DDK or about two-thirds of the market cap of the company. 13:08 Now to summarize my initial comments here, we are very satisfied with the strategic progress in the quarter. We expect to continue to accelerate the development of the company, and a key driver for that is in Logistics & Services will come from acquisitions. This morning, we have announced an acquisition and as it purchased within the airfreight space and that will enable us to further expand the service offering to our customers. 13:42 And to give more insight and details, I now hand over to Vincent. Vincent, please.

13:46 Thank you, Soren. As communicated at the Capital Markets Day this year, inorganic investments within Logistics & Services have a high priority in our capital allocation to further expand and improve the capabilities and services to our customers. 14:04 You have all seen this slide before when we announced two e-commerce acquisition last quarter. It is taken from our Capital Market Day deck. So I won't spend much time on this, but instead move onto the next slide and talk about the acquisition we announced today. 14:19 As part of expanding our capabilities today, we announced the acquisition of Senator and the purchase of two -- two 777 new build aircraft which adds to our air business and existing fleet. I would like to talk a bit about why air freight and the two acquisitions are important and critical to accelerating the growth in Logistics & Services and our ability to provide an end-to-end offering for our customers. 14:47 Firstly, our vision to become the global integrator of container logistics is predicated upon the ability to provide a one stop shop for our customers. Airfreight is considered a key service offering to achieve that vision as part of a multi-modal service offering. We currently operate a fleet of fifteen aircraft through Star Air, and with the acquisition of Senator and the purchase of two new builds, we expand the air freight network and build on the Star Air's fleet by developing the capabilities reach and platform for our air offering and expanding our controlled air capacity status. 15:25 This improves our ability to respond to our customers demand for higher reliability, speed and accountability. This is therefore an important milestone in terms of accelerating the integrator strategy and filling a capability gap without our logistics -- within our logistics and service product portfolio, while doubling our overall tonnage. 15:47 On the next slide, we have shortly summarized the background of Senator. Senator is a company that was founded in nineteen eighty four and is leading a well renowned air-based freight forwarding company. At present, the company has more than twenty own controlled flights per week and a sizable network out of Europe and into the U.S. and Asia. 16:09 Further, they have a very experienced front line organization and operations expertise which enables sizable commercial and operational synergies of approximately one hundred and forty one million dollars U.S. on a cumulative EBITDA basis by twenty twenty five, excluding transaction and integration costs. 16:31 Based in twenty twenty one forecast, the revenue is estimated to be around nine hundred seventy three million dollars U.S. with an EBITDA of around eighty eight million dollars U.S., reflecting a margin of approximately nine percent. The acquisition will contribute to close a significant gap in our logistics and service offering and add strong capabilities and geographical reach which further enables our integrator vision and is expected to close in the first quarter of twenty twenty two. 16:59 And with that, I hand over the word to Patrick.

17:04 Thank you, Vincent and good morning to all from my side as well. Turning to the financial highlights of the quarter. Starting with slide twelve, we have as usual illustrated the development in the net result. And as you can see, profitability in Q3 significantly improved as net result reached five point five billion dollars U.S., which is another record quarter in terms of financial results. 17:28 The improvement came mainly from Ocean, with EBITDA more than doubling, but also with positive contributions from Logistics & Services and Terminals & Towage. Overall, our EBITDA increased by four point six billion dollars U.S., reaching six point nine billion dollars U.S. and the EBITDA margin reached forty one point eight percent compared to twenty three point two percent last year. 17:50 Consequently, EBIT increased by nearly a factor five to five point nine billion dollars U.S. compared to one point three billion dollars U.S. in Q3 twenty twenty leading to an EBIT margin of thirty five point three percent compared to thirteen percent last year. The other positions had a fairly small impact on profitability, with the main impact coming from the increase in depreciation, which was mostly due to the IFRS-16 effect of vessel charters, partly offset by the change in depreciation policy earlier this year. 18:22 As a consequence of the increase of operation profitability, the net result in the quarter reached five point five billion dollars U.S., nearly double of the net result for the whole year twenty twenty in one single quarter, clearly a reflection of the continuation of the exceptional circumstances. 18:41 Now turning to slide thirteen, our cash flow from operations remained exceptionally strong by a factor three compared to last year to reach six point six billion dollars U.S. on the back of an increase in EBITDA. Cash conversion was still high at ninety five percent on par with last year. 18:59 Free cash flow in the quarter was five point three billion dollars U.S. after considering capitalized lease installments, gross CapEx, net financial expenses and received dividends. The capitalized lease installments and CapEx was still relatively low this quarter and will increase in the coming quarters due to the higher charter instalments and more investments. 19:22 For leases, this is already partially reflected in the one billion dollars U.S. increase in capital leases in the balance sheet. And for CapEx, the spend will increase in Q4 and into next year as investments ramp up in line with our existing guidance. 19:40 From the free cash flow, we're quite visible, bought back shares and repaid debt. Our net-interest bearing debt is now only three point one billion dollars U.S., down six point one dollars U.S. billion since the end of last year. Excluding these liabilities, which amount to ten point one billion dollars U.S., we actually have a net cash position of seven billion dollars U.S. 20:03 Now let us turn to the development in each of our segments, starting with Ocean on slide fourteen. This quarter, our Ocean business was still impacted by the continuation of the exceptional market conditions, leading to network disruptions, congestions, adding up as well additional costs caused by shortages across the supply chain. This in combination with a surge in demand also drove a freight rate. Additional capacity was deployed versus last quarter to service our customers and support demand. 20:33 Revenue in Ocean grew eighty four percent on the back of steep increases in freight rates, with volumes remaining flat. EBITDA more than tripled from one point eight billion dollars U.S. to six point three dollars U.S. billion with a margin of forty seven point seven percent, offsetting a cost increase of twenty eight percent, driven by handling and network cost increases and higher price of bunker fuel. EBIT increased by four point four billion dollars U.S. to five point three billion dollars U.S., reflecting an EBIT margin of forty point eight percent. 21:08 On slide fifteen, we can see that the EBITDA increase in Q3 was again and like in the previous quarter, mainly driven by the extraordinary environment of capacity constraints and mainly in landside transportation, which impacted rates significantly and contributed to a five point five billion dollars U.S. increase in EBITDA alone. 21:31 The increase in bunker prices had a negative impact on EBITDA of six hundred million dollars U.S., as average bunker price per ton increased from two hundred and ninety dollars U.S. per ton to five hundred and four dollars U.S. equivalent to a seventy four percent increase. This, of course, gets compensated on our revenue, although with a time lag through the BAF closures. 21:54 Container handling cost and network costs including an increase in bunker consumption of seven percent impacted by higher deployed capacity and increase in average speed, went up by more than five hundred million dollars U.S. in Q3 due to disruption across the supply chain. SG&A, net foreign exchange, and others, had a positive impact of one hundred forty two million dollars U.S., mainly impacted by an increase in other revenue and demurrage revenue. 22:25 Turning to slide sixteen. Our average freight rate increased by eighty seven percent in the quarter, driven by the previously mentioned higher demand across all regions, in combination with bottlenecks and congestions also driving up both long and short term freight rates. The increase was driven by oil trades, with North-South taking the lead on year-on-year development, by an increase of eighty six percent. Comparing to last quarter, rates increased by seventeen percent. 22:56 As mentioned previously, total volumes for the quarter remained flat at minus zero point six percent, mainly driven by lower East-West volumes and offset by the intra-regional volume increase of two point nine percent. Comparing to last quarter, volumes were actually down two percent, and versus the third quarter of twenty nineteen that is pre-COVID, volumes were down by four percent. We want to stress that the decrease in volumes is not a lack of demand, but rather the current market situation with congestions and bottlenecks across the supply chain. 23:35 If we then turn to slide seventeen and look at the right side -- right hand side of the slide, it becomes clear that we continue to focus on building long term relationships with our customers. For the quarter, the volumes on long term contracts on long-haul trades increased by twenty five percent, resulting in an estimated split of sixty three percent or close to six point five million FFEs on the long-haul volumes being on long-term contracts for the full year of twenty twenty one. 24:07 As Soren mentioned in his introduction, part of the increase in freight rates seen in this quarter are due to the effect from early renegotiations of long term contracts for twenty twenty two. Adding to this, an increased share of those long term contracts is actually now on multi-year contracts, currently around one point four million FFEs compared to one million FFEs in the previous quarter. This helps ensure predictability and stability, both in earnings and in the service to our customers. 24:40 Our operating costs increased for the quarter, mainly driven by congestions, particularly in the Terminals. The increase was also heavily impacted by higher bunker price and increased vessel speed in an attempt to mitigate impacts to reliability from the congestions. 24:55 Total bunker cost increased by eighty seven percent, driven therefore by seventy four percent increase in bunker price on the one hand, but also a seven percent increase in bunker consumption from increased deployed capacity and higher average speed of vessels. This drove an increase in unit cost at fixed bunker of fourteen percent. The sequential increase of this unit cost was only four point eight percent. It is important to note that this increases are of course also impacted by the fact that volumes were down, both versus last quarter and year-on-year. 25:32 When we talk about our cost for the quarter, it is important to keep in mind that some of those costs will come down once the market normalizes. We expect that as consumer demand and freight rates come down, container handling costs will follow, including lower terminal costs and fuel consumption will diminish. Some network costs are however expected to remain at a higher level in the coming years, driven by higher chartering costs and cost inflation. 26:00 Let us now turn our attention to Logistics & Services where we once again in Q3 have performed strongly and the positive momentum seen in the previous quarters continued with a revenue growth of thirty eight percent, the majority of which was organic revenue growth at thirty three percent. This is well above our target of ten percent communicated at the Capital Markets Day earlier this year. All three product families contributed positively to the growth. 26:31 Gross profit increased significantly by thirty seven percent to six hundred and forty one million dollars U.S., reflecting a gross profit margin of twenty four point seven percent, and EBITDA nearly doubled to two hundred and sixty seven million dollars U.S. reflecting a margin of ten point three percent. As a result, the EBIT margin for the quarter was seven point five percent, which is above the target set at the Capital Markets Day of six percent. 26:54 The organic growth rates are once again a validation of our strategy of growing with our Ocean customers and building capabilities to service more of their needs in terms of logistics and end-to-end solutions. This is reflected in sixty four percent of organic revenue growth in the first nine months coming from our top two hundred Ocean customers in line with our strategic objectives. 27:18 Slide twenty shows the continued progress in terms of growth and earnings quality of the Logistics business. We spoke already about revenue growth and gross profit. So let us turn our attention to the EBIT conversion, which continues to improve hitting thirty percent for the quarter and thus lifting the long term the last twelve months basis to twenty six percent, confirming the leverage effect to our profitability from the increase in activity. 27:46 The acquisition of Visible that was closed earlier August contributed with the inorganic growth in revenue of five percent to the overall revenue growth, while EBITDA was negatively impacted by transaction and integration costs of ten million dollars U.S. 28:04 Diving deeper into the three product families on slide twenty one, we see that all three main segments contributed to the growth in EBITDA, which nearly doubled to two hundred and nine million dollars U.S., reflecting eight percent margin. 28:20 In Managed by Maersk, which includes integrated management solutions, revenues reported a growth of forty eight percent to four hundred thirty three million dollars U.S., driven by an increase in volumes in Lead Logistics of eighteen percent. This increase, firstly, reflects a low base in Q3 twenty twenty impacted by COVID, and secondly, and perhaps more importantly, reflect strong demand for retail spending, particularly in the U.S. as well as new business wins. We see this as a positive development and a proof point for our integrator strategy. 28:53 For Fulfilled by Maersk, revenue grew by forty percent to six hundred and six million dollars U.S., driven by new activities in Contract Logistics, as well as higher volumes and a very strong footprint in warehousing and distribution in North America. Revenue growth was also impacted by the acquisition of Visible as well as EBITDA which we already covered. 29:15 Finally, revenue in Transported by Maersk was up thirty four percent to almost one point six billion dollars U.S., driven by an increase in Landside Transportation volumes from a higher penetration ratio into existing Ocean business. Further revenue growth was driven by increased air freight forwarding volumes. 29:34 On page twenty two, we turn to Terminals and Towage, where the strong momentum continued with an EBITDA increase of thirty two percent, which was mainly driven by gateway terminals. EBITDA in gateway terminals increased to three hundred and seventy nine million dollars U.S. and the EBITDA margin consequently increased to thirty five point nine percent. 29:56 When talking about the performance in our Terminals, it is important to note that the congestions was a significant issue still in this quarter as you all know. However, we have taken several steps to mitigate the impact on our customers and alleviate the situation. This includes expanding gate capacity significantly. For instance, in North America, we doubled the number of gate work shifts. 30:19 In many terminals, we have introduced express truck lanes to try and move boxes out of the congestions terminals even quicker. Consequently, the utilization of our gateway terminals is back at record levels of seventy eight percent. For our gateways, EBITDA margin increased to thirty six point nine percent, while ROIC was ten percent, which is four point eight percentage points higher than Q3 twenty twenty, and above our Capital Markets Day target. 30:48 Revenue in Switzerland was positively impacted by strong grain exports and increased RoRo activities in Australia and ramp-up activities in Morocco, partly offset by slower markets in Europe. Terminal towage revenue increased due to new charters in Angola, the UK and Belgium. Revenue increased therefore by eighteen million dollars U.S. to one hundred and eighty five million dollars U.S., while EBITDA was on par at fifty four million dollars U.S. 31:15 Turning to slide twenty three. We have reached the EBITDA increase in gateway terminals from two hundred and seventy four million dollars U.S. last year to three hundred and seventy nine million dollars U.S. in Q3 this year, showing the effects of volumes revenue and costs. Volumes increased well above market at nine point six percent on a like-for-like basis, mainly driven by strong volume growth in North America, Latin America and Asia, driving forty seven million dollars U.S. of the EBITDA impact. 31:44 Revenue per move increased thirteen percent to three hundred and forty dollars U.S. per move, driven mainly by higher storage income which was exacerbated by the congestion situation in North America. While cost per move increased three point nine percent to two hundred and thirty eight dollars U.S. per move, mainly as a result -- higher -- as a result of higher volume in high cost locations and higher variable concession fees. 32:06 In Terminals, we continue to focus on the profitable gateways in our portfolio which has led to an agreement to sell our thirty percent shareholding in Container Terminals Wilhelmshaven in Germany to Hapag-Lloyd subject to approval by the anti-trust authorities. 32:23 And finally turning to Manufacturing & Others. We concluded the strategic review of MCI as communicated on our Capital Markets Day, with the sale to China International Maritime Containers with closing subject to regulatory approvals. The revenue in MCI decreased this quarter to one hundred thirty four million dollars U.S., mainly as a result of prioritizations of volumes. 32:46 From our supply services, revenue grew by eighteen million dollars U.S. to eighty three million dollars U.S. as increased activity reflected the improved market conditions in Q3 twenty twenty, which was impacted by COVID. EBITDA decreased to seven million dollars U.S., mainly driven by postponement of repair and maintenance and lower cost in Q3 twenty twenty, which was therefore a low base. 33:13 With that, I will pass the word to Soren for the full year guidance.

33:16 Thank you, Patrick. And as I already said, we are reiterating the guidance that we provided, I think, about six weeks ago, of an EBITDA in the range of twenty two billion dollars U.S. to twenty three billion dollars U.S., EBIT in the range of eighteen billion dollars U.S. to nineteen billion dollars U.S. and a free cash flow of more than fourteen point five billion dollars U.S. 33:35 As it looks now, we do not expect to be able to grow with the market. We are upgrading the guidance when market goes to seven percent to nine percent for twenty twenty one. Of course, our volumes are subject to high uncertainty, because it really depends on how many ships we can get out of the congestion to carry more business. 33:55 I also want to underline that we are repeating our CapEx guidance despite, if you will, somewhat low level of CapEx than we've had in the past quarter. This should not be an indication that we do not expect to suspend the full CapEx guidance. It's clear that the current trading conditions are, if you will, subject to more than normal uncertainty due to all of the issues that we have discussed, but we expect, as already said, also current conditions to continue into Q4 and into Q1. 34:33 So with that, let us start with some questions.

34:36 Thank you. [Operator Instructions] Our first question comes from Michael Rasmussen with Danske Bank. Please go ahead.

35:10 Yeah. Thank you very much and well done to all of your talent [ph] team. So three questions from my side. First of all, on the seventeen percent sequential rate growth in the third quarter, you do mention that your long term contract negotiations are part of that. I do understand that some of that is earlier of renovations -- negotiations versus normal. Can you please tell us how larger share of, I guess, it's Asia-Europe contracts that we do see in the numbers already now. So that's my first question. 35:47 My second question is on your comments on the further moderate rate increases in twenty twenty two. If you could please elaborate a little bit more on that other than the rollover, which you mentioned? And also if you could please add a few comments on the spot rate assumptions? My final question is on -- basically there has been recently a bit of talk in the press and I think even I think that you sent out an announcement on freight forwarders. You obviously prioritize your own clients versus freight forwarders? Can you discuss a little bit how you think about running the logistics business at arm's length terms, please? That was three questions. Thank you.

36:43 Yeah. Thanks, Michael. Let me start on the freight forwarders. Let's be clear, freight forwarders make up a very substantial part of our book of business and we expect to continue to have a very substantial share of our business with freight forwarders. We have developed two quite successful products that we're selling through freight forwarders. One is the Maersk Spot product, which is of course two way commitment products. It's all entirely digital and very popular with -- particular with small and medium sized freight forwarders. 37:24 And then we have a block space product where -- which is popular with -- especially with larger freight forwarders that buy fixed -- if you will, a fixed amount of capacity and pay for it used and -- or un-used so to speak. In terms of the rates, it's very clear that we've had a quite unusual year in the sense that many customers have been willing and wanting to commit, if you will, capacity for longer periods. 37:56 As Patrick said, we now have one point four million FFE of multi-year contracts, but we have certainly also seen many customers wanting to, if you will, negotiate early fall for twenty twenty two and typically in connection with having higher demand and we actually -- that they actually had contracted for in twenty twenty one. 38:21 So that's why, if you will, we've already seen a significant part of the resetting of our contract rate portfolio also for twenty twenty two in this quarter. I think this is probably -- we still of course have contracts that reset at the calendar year and there are still that are going to be negotiated by -- between now and Christmas. 38:50 And when we get to February next year, we will be able to give, if you will, a much better guidance for how that will impact. But of course, we do expect that contracts that are negotiated between now and Christmas will be closed at significantly higher volume and that will move the average up moderately for twenty twenty two.

39:20 And so, maybe a comment on spot rates?

39:27 So we have -- I mean, we are reiterating our guidance. So I guess, by that, you can imply that we are not seeing much change in the short-term.

39:40 Okay. Thank you. And then -- yes, thank you so much for answering my questions. Thank you.

39:52 The next question comes from Robert Joynson with Exane PNB Paribas. Please go ahead.

40:00 Good morning, everybody and thank you for the presentation today. Three questions from me please. First of all, on cash returns, the net debt is now down to three billion dollars U.S. You did more than five billion dollars U.S. free cash flow in Q3. So even after including the leases, it appears like the balance sheet will be net cash by year end. You've previously said that maintaining BBB+ equates to net debt-to-EBITDA of around one point five times. And as far as I can say, that won't be possible based on ordinary dividend of kind of thirty percent to fifty percent payout. So in that context, could you maybe talk us through the latest thinking on special dividends? 40:42 And then the second question on contract rates, just a little bit of a follow-up. Sorry, you just mentioned that some contracts will be renegotiated a little bit early than normal before Christmas. Could you maybe just kind of give an indication of what share of the long term contracts will be renegotiated during the traditional period of January through to April or May of next year? 41:07 And then the final question just on the EBITDA guidance. It implies somewhere between six billion dollars U.S. and seven billion dollars U.S. for Q4. So the midpoint essentially implies Q4 is less profitable than Q3. Now given that the average revenue per container, I imagine, should be up in Q4 versus Q3, could you just maybe talk for your expectations on unit costs? Are you expecting quite a significant rise in the final quarter? Thank you.

41:43 Hi, Robert. Thanks for your questions. So maybe starting with your last question first on the EBITDA guidance. So we actually, as you know, confirm our guidance for the full year, which effectively implies as you rightly say, an EBITDA for the last quarter between six billion dollars U.S. and seven billion dollars U.S. And I think the full range applies. So I think that's where we see the business going. 42:05 And indeed, as you rightly mentioned, obviously that we see the demand continuing to be strong. We see obviously the constraints as well remaining strong in terms of actual volume shipped. So there is an element here that we cannot ship everything that we have on the book, and that we are -- and our vessels are in a big traffic jam as you know and that increases cost on the other hand as well. 42:29 So it is, as you rightly say, combination of good market conditions, good and solid freight rates environment, but clearly volumes being constrained and an increase in cost position, which will continue to actually to develop in the next quarters as the full impact of the bunker price is not yet in our P&L. And you see inflation positions taking up in some handling cost and terminal costs as well, so the EBITDA being the net of it all. We see rather stabilization at this very high level for the coming quarters, which is why we guide on the Q4 de facto very close to Q3 and Q1 next year, very close to Q4 as well. 43:14 Now going to your first question on the cash return. So clearly, yes, we do have a comfortable cash position now of seven billion dollars U.S. in net debt, including liabilities of minus three. I think we'll see where we end up by year end. I think these liabilities are obviously coming up as well as we have the dual effect as you know of higher charter rates, which we have contracted, but also longer period of rates, and therefore, a whole proportion of time charter which actually comes into the balance sheet, which is also one driver of this one billion increase we have seen now by three -- for two quarters in a row. And you can expect this to continue as we still receive this capacity on our balance sheet. 43:58 Now coming to your question, I think, from the financial point of view, we should not focus now on the end of the year and what is the cash balance and we now solid BBB, super solid BBB. I think we have to position the company in the long term. We are building a company which is -- and we will have a strong balance sheet over the years and be returning cash strongly over the years, which is also our guidance for the share buyback in twenty twenty four and twenty twenty five. 44:30 So it's a strong signal on a qualitative improvement in terms of earnings and returns to shareholders over the years. And that's when we look at the capital structure, we have to look at a post normalized capital structure in twenty twenty three and twenty twenty four, and that is where we will then touch solid BBB. We might be on the very solid side up to then, but that's not a reason now for an extraordinary additional dividend. 44:58 I think we have twenty percent return in ROIC as you can see in Logistics & Services. So a good reason for us to invest further in that growth and to actually get the contributor -- the integrator into a reality in next years by investing into that business and provide therefore solid balance sheet when you look two, three, four years ahead. So that's the policy and how to understand it really. 45:28 And then on the contract rates…

45:28 Yeah, I think all we can say or add in terms of color is, there is a very -- there is a high interest for negotiating contracts. And when we get to February, we have the annual result announcement and we'd be able to provide guidance for twenty twenty two. We expect that we will be substantially done with contract re-negotiations frankly. So well ahead of the normal first of May, if you will, deadline we have in the Pacific. But of course, lots of things going on, not just up to the calendar year, but also up to first of April, so earlier -- we are going to be done earlier this year.

46:14 Did that include Pacific, Soren?

46:15 Yes.

46:18 Interesting. Okay. Thank you.

46:26 Our next question comes from Sathish Sivakumar with Citigroup. Please go ahead.

46:34 Good morning, and thanks for taking my questions. I got two questions. Firstly, on the contract volumes. How does the mix actually compare, especially on the long term contracts in between your top two hundred customers and versus the overall portfolio? Is it like similar sixty seven split or you see more room to gain market share within the top two hundred customers. And then just on the contract rates, again, can you confirm if all these rates are negotiated still on ex-bunker basis? Yeah. Thank you.

47:18 All right. Thanks, Sathish. I mean, all of our contracts have bunker adjustment clauses. So we are not taking any bunker risk in long term contracts. In terms of the contract portfolio, I think, around or slightly above fifty percent of the volume comes from top two hundred customers.

47:44 Okay. Thank you.

47:50 Our next question comes from Sam Bland with JP Morgan. Please go ahead.

47:55 Hi. Good morning. Thanks. I have two questions please. The first one is on the sort of charter rates and the lease liabilities. Just given idea of kind of how far through the re-chartering of the chartered fleet you are, and basically, I suppose, I think we've seen about a six hundred million dollars U.S. increase in lease liabilities in the last quarter, kind of, whether that get you as a result of the ships you moved on to three or four-year charters? And if there is anything you can say on sort of what the P&L cost uplift if that will be? 48:27 And I think my second question would be, whether -- I'm supposed to be interested logistics on very strong organic revenue growth and strong margins. Can you talk about how much of that do you think is also linked to sort of congestion and sort of unusual freight market development? And so -- could part of the logistics profitability also reverse some of these bottlenecks come out? Thank you.

48:56 So going to your first question on the increase impact of the charter on our P&L and balance sheet. I think you have seen this increase actually probably one billion dollar actually in the Q3. It's been offset by different positions particularly in terminals to the six hundred million dollars U.S. you mentioned. And that will still increase for a couple of quarters. As you've seen that we have increased the size of the fleet as we are now at four point two and we are guiding for four point one to four point three. So we will -- this is a very recent addition. So you will see now the balance sheet probably getting adapted pretty soon in probably Q4 but then the actual P&L impact is then to unfold more into next year as it's a capacity which has been taken in more in the second half of this year. 49:48 You see this increase as well already in the cash flow bridge where we increase, I would say, from a level of previous year of around four hundred million dollars U.S. a quarter to now six hundred million dollars U.S. quarter. So you see this impact coming through progressively in the same order of magnitude is to be expected as we look forward for the first half of twenty twenty two. But overall, absolutely manageable, but it's just a reflection of the current market, and of the extended lease duration which you also mentioned. 50:18 I think in Logistics, the profitability is really driven by gains and business wins and volumes increase. So clearly, I would say, the whole supply chain is a buoyant market right now. That is true, however. As you see, we are also expanding our business in the majority with our top two hundred customers -- Ocean customers which ensures is end-to-end logistics. So there is no reason to believe that those volumes will reverse once situation stabilizes. It is really getting and delivering what our customers want, which is end-to-end logistical approach. This is where the demand lies, and it will continue to be.

51:01 And perhaps if I could just add to what Patrick just said. I mean, at the Capital Markets Day, we did set out a target that we want to have an EBIT margin of more than six percent and we certainly believe we can achieve that. Obviously, we also like to continue to grow very fast, but right now, it's clear that the extra volume that we are getting is helping us drive margins up across the book.

51:31 Okay. Thanks very much.

51:36 Our next question comes from Dan Togo with Carnegie. Please go ahead.

51:43 Yes. Thank you. I'd just like to go back to the question to the subject of the contracts. Of course, you are contracting more and more, now sixty four percent. Where can we see this and what is sort of satisfactory, what is feasible? I guess, you will need -- still need to have some spot volumes available for clients? So that's the first question. And maybe also some comments on the average length of the contracts. How is that now compared to, let's say, a year ago? And then maybe also some comments on the move or the expansion you could rather say in logistics on air -- on Senator? Is this a first step and how big a network do you need in air logistics to fulfill your strategy and continue to be, you know relevant for your top two hundred clients? Thanks.

52:46 Yeah. Thanks, Dan. I think in the air, we are acquiring this company as a growth platform. It effectively doubles our volume in air freight in one go, And with that, we believe we will have a competitive offering in some of the main corridors. We don't have any, if you will, targets or ambitions beyond that at this point. Obviously, we hope that we can make this business grow very, very fast, just as we have done with Performance Team and KGH and some of the other acquisitions. So that's how we think about it for now. 53:26 In terms of average contract length, I think, the way you can look at it for twenty twenty two is that, we are going to have about eight million FFE of long term contracts. Seven from the long-haul trades and one from the short haul trades. And out of those eight, one point four million are multi-year contracts, and we expect the one point four million probably will grow a little bit. So you can -- I guess, calculate the average from that. 53:54 And then in terms of long term target, obviously, you're right that we cannot go to one hundred percent because then we would not have the kind of utilization that we would want in the network. We need the spot market also to help us drive high utilization of the network. We don't have a target -- specific targets set at this point, but we do think it can go higher than where we are today.

54:20 Okay. Thank you.

54:26 Our next question comes from Lars Heindorff with Nordea. Please go ahead.

54:30 Yeah. Thank you for taking my questions. The first one is on congestion. If you could help us out a little bit. I understand that it ties quite a bit of your capacity. How much of the catastrophes as you tied up owing to congestion? And the volume impact that we've seen here with volumes being down year-on-year, how much of that is actually cost versus solely caused by congestion or is there any impact in your view from the rising energy prices and hence also the impact on production in China? That's the first one.

55:22 Yeah. Hi, Lars. So overall in the world around three hundred container ships are sitting outside ports, almost eighty of them outside the LA and Long Beach, but also outside Felixstowe, outside Ningbo, and many other places we have congestion. I don't have an exact number, but we think somewhere around ten percent of our network capacity is basically tied up in congestion right now. So that's really why we are having a real hard time delivering on the volumes, and certainly growing as much as we would like to do. We don't have good evidence on whether the rising energy prices are impacting our volumes, but our assumption would be that -- that's probably not a factor of any significance at this point in time. 56:22 I mean, we know of course, we still own Maersk Container industry, even if we have sold it, and there we are impacted to these rolling power cuts, which is basically that you -- instead of working Monday to Friday, it means you are allowed to work Wednesday through Sunday. So you still get five days of production. It's just another five days, then the five days, you would usually want to work. So that’s -- we don't think that's a big factor at this point in our volumes.

57:01 Okay. Regarding the capacity development, you talked a little bit about also in respect to your net debt and leasing liabilities that you have on the balance sheet. Can you say anything about the length or the average length of the TCN that you have and maybe how much that is up? I understand that we've heard about some of the competitors buying businesses instead of actually charting them because it’s cheaper.

57:32 Yeah, I think it's -- there is always a mix between very short-term charters and then charters we activate on the balance sheet, which has typically for a few years, right. So, what we have seen is this mix change a little bit because of very short term. It doesn't really exist in the market anymore. So, you have to go above one year. That is probably the most disbalancing shift or change compared to previous situation apart from the cost of all the charters being obviously higher. So, the average length is probably not changed too much for two to three years but you have more of it in that range because you have the disappearance of the very short chartering. 58:09 And the cost is a factor, but it's also a matter of preserving flexibility you see as -- currently the demand pattern is very strong, but -- and supports all these capacity, you also have a high capacity being tied up. So, you need those vessels just to ensure a minimum of actual deliveries. Once situation normalizes, you probably will not need all those vessels to carry the same volume. So, it's important there to keep this flexibility to revise downward your capacity at one point in time. So, we still prefer to have flexibility rather than just looking at the financial cost of it.

58:50 Okay. And then the last one is on demurrage or rather maybe I should express it as dwell cost for containers. The line of other revenue is actually up very significantly here in the third quarter compared to previous quarter in Ocean. So, I just wanted to get a feeling for the dwell cost and what's -- customers maybe in some cases, even Ocean have to pay for the year for the containers and the demurrage and detention that you get in Ocean from your customers. I mean, how much -- how does that split and how much is actually impacting Ocean and how much is impacting Terminals?

59:32 Look, I think, clearly as containers cannot be moved out of the ports quickly given the lack of Landside Transportation, and in particular, in the U.S., the missing trucks and truckers. There are obviously charges, because the whole purpose of the model is to move the containers as fast as possible out of the terminal. So that is really -- the purpose here is not to penalize for not being able to, it's just because the floor implies that you need to get those containers out very, very quickly. And if you don't, then you actually block the others which is what's happening now. So that is why those charges are taking to our customers. 60:18 I think it is one factor of the increase in the other revenue line. For Ocean, you can see that it's actually not that much higher than in Q2. So, it is more than last year clearly, but it's maybe one hundred million dollars U.S. in that range for Ocean. So, nothing significant in terms of actual profitably in Ocean, while in terms of Terminals, we have disclosed here that the -- I would say, most of the increase of the revenue per move which we have disclosed was thirteen percent, fourteen percent, is coming from those charges around the world. So that's the modest quantification.

61:01 That's very clear. Thank you very much.

61:02 Thank you.

61:08 Our last question of today comes from Cristian Nedelcu with UBS. Please go ahead.

61:13 Hi. Thank you very much for taking my questions. Could I please ask and apologize, I'm coming back to the contract questions before. But you're talking about a -- roughly three thousand dollars U.S. per container contract rate on average this year. Different third-party providers are suggesting the last few weeks we are seeing contracts rate at around four thousand or more. Based on what you disclosed in the past, I think, you still have at least around five million dollars U.S. containers that you need to renegotiate going forward, at least, this is what you've done until May this year. So could you elaborate a little bit why you only flag a moderate increase? 61:56 Secondly, on the one point four million multi-year contracts, can you tell us a little bit more if the rates in twenty twenty three is fixed on this contract and you can you provide a bit more color on the enforceability of these contracts? And my last one, if I may please. Regarding logistics and capital allocation, could you give us a rough idea, what percentage of your twenty twenty three, twenty twenty four group capital employed is likely to be linked to the Logistics division or some sort of range or any color in that regard would be helpful? Thank you.

62:40 So let me start with the long -- the multi-year contracts, the one point four million FFE. We actually have quite a number of them that are fixed rates, but the majority are -- I mean, so fixed rates for multiple years, but the majority are fixed rate for the first year and then with a floor and a ceiling and an adjustment mechanisms that is either yearly or half yearly. So it's relatively steady, if you will, contract and revenue stream. And you worked out the three thousand dollars U.S., which is the average for the long-term contracts this year for the eight million FFE in total. And that is of course a combination front-haul and back-haul and it's the total global network. So it's not just Pacific or Europe, and so on. Therefore it's always super difficult to compare to a number from the market because what is it actually we are talking about. This is the facts -- this is our average rate this year. 63:55 We have -- as we already have said, the negotiating more contracts early then we would normally have done, and that's why we do not have quite the same number of volumes to -- still to renegotiate. So when they were seeing some of the increases that we are seeing and they have already been baked into the twenty twenty one numbers, and then of course, they will not be increasing in twenty twenty two. So I don't think I can give more color than that on the contracts. And then, Patrick, will you cover the Logistics questions?

64:33 Yeah, sure. So indeed as we grow and we mentioned in Logistics & Services, we are obviously a higher proportion now to invest in this high return business. And we intend to do so as we have communicated in the Capital Markets Day by at least having a ten percent growth, which we are overshooting right now quite significantly. And we are -- we've built sixty one warehouses now in the first nine months and we will continue to expand those activities in the years to come. 65:01 I think we guided in our Capital Markets Day for roughly one billion dollars U.S. CapEx in logistics, and that's certainly a figure you can take as a reference as well for -- that was for the two years twenty twenty one, twenty twenty two and that's wouldn't see right now a reason to believe that it will be reduced in twenty twenty three, twenty twenty four landscape. So we will continue to invest in logistics as we expand our footprint as we have seen as well for instance in there with additional aircrafts that we have ordered as well. 65:31 Now the purpose of that is obviously to increase logistics, which is an asset light business. So organically we are now at above twenty percent ROIC, and that's certainly a very attractive level to continue to invest in it. But if you compare to investment capital which is now around two point seven dollars U.S. billion for Logistics & Services, if you count, let's say, a billion every two year coming on it and a bit of working capital as well. You still are at very low numbers when you compare to the twenty nine billion we have in Ocean right now. So it will be a further increase in those invested capital in the order of magnitude I indicated, but still guaranteeing a very high ROIC and therefore a shift on our ROIC quality as well becoming a bit less, asset heavy in future in terms of looking at returns. Thank you.

66:28 Understood. Thank you very much.

66:37 Okay. If there are no more questions, then we will go to the final remarks. And let me just say that we've had, as you all know, another record quarter, and it's across the business, it's across Ocean, Logistics and Terminals, of course, driven by exceptional market conditions but also driven by successful execution on the strategic transformation in Maersk. 67:02 We are doing -- whatever we can to help or alleviate disruptions for our customers. It is adding to our cost as we expand capacity, but we strongly believe that's what we need to do. We will continue to build a better Ocean business, a higher quality Ocean business by expanding our portfolio of long term contract volumes. 67:25 Logistics & Services organically continue to outperform the growth in the market by a lots and now we are adding, if you will, to our capabilities with the acquisition of Senator. We have reiterated our guidance and also, today announced further share buyback. 67:47 And then let me end by announcing that we will host a virtual ESG Day on tenth of March twenty twenty two, where we will give you a lot more insights into the -- into our future ESG strategy. So, thank you very much for listening and we will talk to you again if not before then at the next quarter. Thank you.