A little bit early, as you said to say, or to assume as to where we will land when it comes to the contract volume, and also the prevailing rates that we will manage to secure with our customer base. Some are waiting a little bit as well as they potentially want to get more visibility as to what the spot market might be doing in the coming weeks. There still have a lot of weeks to go before we aim at concluding the discussions. So the pace of our customers might vary from customer to customer. We clearly have ourselves some internal objectives that we are willing to achieve in this respect, but a bit early to say where we will close this contract season.
Omar Nokta: Okay. Thank you. Thanks, Xavier. Thanks, Eli. I’ll turn it over.
Operator: Your next question comes from the line of Alexia Dogani with Barclays. Your line is open.
Alexia Dogani: Yes. Thank you, gentlemen for taking my questions. I also had three. Just, firstly, on the volume outlook you’ve given. Can you help us a little bit understand the magnitude of volume growth? Your peers have talked about global trade recovering 3% to 4%. Should we expect you significantly higher from this level because of your upsizing or how should we think about that? And secondly, on the spot rate discussion, I mean, we’ve seen the spot rates kind of peak already, if you like as carriers are now adjusting their schedules around the Cape of Good Hope. And can you help us understand at the upper end of your guidance, what is really the trajectory you expect from here? Is it that they stay flat from the current levels or yeah, what is kind of the evolution?
And then finally, I want to understand a little bit your comments around cash preservation in the current market. Clearly, financial leverage increased significantly at the end of the year. It’s now 2.2 times net debt to EBITDA. If I look at your guidance, which is broadly flat, let’s say year-over-year at the midpoint, how should net debt evolve? And maybe you can give us a little bit of color around CapEx. I see you’ve bought some vessels. Have you done any more charters in this period to get capacity for the sailings around the Good Hope? Anything you can help us with that, that will be great. Thank you.
Eli Glickman: Thank you, Alexia. So, I’ll start with the first question around our volume assumptions for 2024. Yes. We are also looking at the market growth expected to be around the numbers you quoted, 3%, give or take, in terms of the potential growth in demand. As far as we are concerned, we have more ambitious objectives in terms of growing our volume of carried TEUs. As a result of us upsizing the vessels that we are deploying in many of the trades where we operate, Transpacific trade is clearly one where we have significant gross volume assumptions here. We reopened the line that we suspended in 2023, our fast line between South Asia to the U.S. West Coast, Southwest Coast. We’ve opened a new line on the Pacific Northwest.
We are upsizing the vessels that are currently being deployed on our trades between Asia to the U.S. East Coast. So we intend to fill those ships. And as a result, we have gross volume assumptions on those trade lanes. Second, also on the backhaul back from the U.S. to Asia, we also as opposed to repositioning empty containers. We are putting a lot of commercial efforts in order to capture some of the full cargo that can be moved back from the U.S. to Asia and that also will count in our volume growth assumptions as opposed to moving back an empty. And third, in terms of region, we also growing quite rapidly in Latin America. We have a redeployed capacity away from Intra-Asia also to the Latin America trade lane. We see growth opportunity in the future.
And I think we’re talking mid-term long-term here as well, especially between the north — of North America and South America, as we see the patterns of our customers willing to diversify also their sourcing base away from the predominance of China. I’m sure you’ve seen Mexico taking a very strong position in terms of imports in the U.S. this year, outperforming China. So we want also to make sure that we position ourselves early on those trade lanes, where we believe that there is a significant growth potential. Spot rate, your second question, in terms of what is our forecast in terms of evolution? I think, we talked about two potential scenarios which we think that, yes, they may have peaked that they will potentially trend down, and then now the pace as to which they will trend down and potentially go back to where they were before the Red Sea crisis started to erupt, will be in itself a function of when the disruptions in the Red Sea dissipate.
And if they dissipate during 2024, we think the rate adjustment might be quite severe and quite rapid. If the Red Sea situation continues, we expect that then the new capacity coming into the trades will put additional pressure on today’s market, where already some of the capacity has been absorbed by the redirection of tonnage around the Cape of Good Hope. But all incoming vessels coming into the trades between now and the end of the year, even if the Red Sea situation was to last for longer will put pressure on the supply demand equilibrium. And then I think you had a question on cash preservation and what is our objective or what is the capital structure or what is the trend of the capital structure of the company going forward? You are correct that we are closing 2023 with a leverage of 2.2. Clearly our — and we’ve mentioned that, I think since quite a few quarters now, as a result of the 46 newbuild program that we initiated back in 2021 and 2022, we will see our debt continue to increase and so the balance sheet — the lease liability that we have on balance sheet will continue to go up, up until we get delivery of the last vessel.
