Kuehne + Nagel International AG

Thanks, Alice. Good morning, good day, good afternoon and good evening to all of you, and welcome to the analyst conference on the first quarter 2021 results of Kuehne + Nagel International AG.

Our CFO, Markus Blanka, and I welcome you from sunny Switzerland. We published our first quarter 2021 results and the respective slide deck early this morning.

And as always, let's get started on Slide 3.

Thank you, Detlef also. Ladies and gentlemen, welcome from my side.

I start on number 16, income statement. And indeed, it's a very strong quarter we can report in absolute terms and also in relative terms to last year, of course.

I have to say I will keep presentation short, it's easier to talk to good numbers obviously than anything else. Anyway, a little bit into the details of the development in the first quarter.

Thanks, Markus. Let us conclude on Slide 21 with the current perspectives.

The emergence of the pandemic last year triggered a high degree of uncertainty, which persists through this day. As a consequence, we largely suspended the usually quarterly outlook of KN and market volume growth.

But what we can do, and we'll share our perspectives on current market trends and the positioning of the Kuehne + Nagel Group. And this is what you find on this slide here.

Let me start with market first. As I said before, this is another year -- 2021 is another year that is impacted by the pandemic.

Uncertainty is to possess. The economic activity and trade volume though we see rebounding.

We see signs of macro economic recovery, especially in Asia, partly North America and Europe. And we see a clear consequence or direct link of the share of vaccination of the population and the economic rebound.

Gentlemen, good afternoon. Congrats on the astounding, remarkable quarter.

And congrats on the organization delivering that amid the logistics uncertainty right now. I have three questions, then if I may.

You comment on the current demand mix and services shifts, especially in the sea business. If we weren't seeing the current disruptions in the market, it's kind of fast forward to 3 years from now, do you think there will be an underlying shift in mix or services that support for fairly higher GP units in the upcoming year?

Secondly, again, on the disruption, you said Air would see a more stable development. And Marcus then said, we should not expect good conversion rates at 22% for all of 2021.

How are you thinking about the developments in key logistics then for the rest of the year, maybe more tactically? And anything the exit rates from Q1 can inform about Q2 or maybe even Q3 this year?

And then lastly, given the notable absence of the guidance slide today, could you just tell us if you're reevaluating your mid-term goals? Where are you in the process with your Board and the discussions?

And when do you think you'll be able to share an update with the market? Thanks.

Hi, Daniel. Thank you for your questions.

I'm happy to answer them. Let me start with the guidance slide.

We believe we gave guidance slide, which was the last slide that I refer to, but what you're missing is figures. And it's absolutely impossible to give a percentage figure to growth or conversion rate at the moment.

With regards to the development of Sea Logistics, we see no major change in the next one, maybe two quarters. And if rates go back to a normal level, I'm not talking about the extremely low level we got used to 4 or 5 years ago, then we might see also forest products.

We might also see other commodities pulp and paper, recycling material, agricultural products coming back to the network. But it's really depending on the rates.

For Air Logistics, we don't see any change in the capacity side for the next quarters to come, because the market very much would need belly capacity in order to drive the overall rates a bit down. So, I think we all have to get used to higher rates in principle.

While in the past we were explored by extremely low rates in some markets.

Any underlying shift kind of in the mix in terms of the pandemic has changed kind of on a longer term view in terms of the services you're selling?

Yes, Daniel, we’ve seen a lot of discussions on near shoring less globalization of supply chains and so on, we don't see this. Yes, we see some industries building up a higher minimum stock level which exceeds them 2 or 3 days, yes and we have for sure seen what I said is second source which comes out of a different geography and not relying on one geography or one -- even one city for all your key suppliers.

What we for sure have seen and that will not change and that will even increase in the maybe years to come is eCommerce. So our purchasing behavior has significantly changed and we all collectively all end consumer got used to a very easy just click and buy and get shipped process and that will remain and that will also further increase.

So the shift from retail to eCommerce most likely will continue whether at that speed that we have seen in the last 18 months or 12 months or 15 months or at a lower speed, but it will continue.

So maybe I pick up on the question and the mid-term targets, so conversion rate.

Yes.

I think we try to do a bit of an expectation management here. I think it was a very strong quarter.

As Detlef said, we have a good feeling about the second quarter, but the uncertainty remains. So that's why I'm just trying to prevent that models are being just multiplied for and then we get to a number which might not be in rich.

Secondly, question, what are the mid-term goals or is there an update to this? I think our strategy has extended and our goals have extended until the year 2022.

And I think we will come within due course. We will come with a new set of targets, which I think you can understand today we will not disclose, but I'm pretty sure until the end of 2021 there will be such communication.

That’s helpful. Thanks, Markus.

Yes. Thank you.

Thanks, gentlemen. I've got three questions.

Firstly, on volume trends in Sea and Air segment. If you could shed some light around the demand trends that you've seen across the trade lanes, especially say in Trans Pacific and Asia to Europe, which is actually surprised to the upside as we went into Q1.

And then secondly, on the -- your comments regarding the performance of Road Logistics in North America, actually, what are the challenges affecting this segment given the strong consumption in the U.S market? And third one around the lower commodity product side.

So do you expect to see some volume catch up in this segment as and when the rates normalizes, or they've already been shipped through other modes like say road and rail?

Sathish, Detlef speaking, thanks for your questions. The volume trend that you have seen for both Sea and Air Logistics, we do not expect to change significantly in the next one or two quarters.

The Trans Pacific -- specifically, Trans Pacific and Asia exports to Europe or the high demand of imports -- for imports in Europe as well as in North America will continue. The Trans Pacific is strong and with the port congestion some of the volumes are automatically transferred to Air Logistics.

So both the consumption drives the volume growth in both in both Sea and Air freight. Your question regarding Road Logistics, I think there is a demand there and we don't have a problem with the demand.

Our topic is the production costs at the moment. Congestion, truck driver -- safety of truck drivers, the market is very specific as you know, while intermodal does cope with the speed and reliability of our customers.

So trucking is the solution often. And we see in the way of organizing this challenge at the moment in -- specifically in the U.S.

I'm not talking Canada or Mexico, which all belong to North America -- to our North American region, yes. Your question to commodity -- regarding commodities, and when will they be back?

I think it's a clear function of rates. And they are products if you see the in Europe, which you have partly in Canada as well, that can be high transport costs.

And once the costs will come back maybe to a level that we have seen pre-pandemic, those commodities might come back. I'm not too optimistic that this will happen too soon, because at the moment if you look into the market equilibrium and market rates and how long it takes install additional vessels as well as containers into the market, this will not change too soon.

So most of those producers will find either other markets that they ship to and then as you rightly said via train or via truck, or they have to go more local in their demand, in their supplies. At the moment, we don't see commodities coming back true for Sea and Air Logistics markets.

Okay. Yes, thanks, Detlef.

That's very helpful.

My pleasure.

Thank you.

Good afternoon, everybody. I hope you're well and congratulations on such a very strong quarter.

Just a couple of questions, first of all, on shipper reactions to the congestion that's been ever present for quite a long time now. Just interested in, first of all, have you seen a meaningful uptick in cross selling across your portfolio through the pandemic?

I know Detlef you mentioned pharma and health care touching multiple business units, but would you describe what you're seeing as resembling any kind of a step change? Or is it more just continued evolution of your business development?

Then the second question, although aimed in that direction, given such congestion, it makes me wonder whether there are opportunities for new products focusing on things like supply chain visibility to help shippers out? From your perspective, would you describe the pipeline of new products, new technological product development as consistent with the last few years?

Or is this an opportunity, given how cash flow generative the business is to really go harder in that direction? And then the final question, more housekeeping.

But on the Road Logistic side, I noticed that in the first quarter expenses stepped up 12% quarter-on-quarter, whereas usually that's around 2% or 3% historically, comparing the first quarter and the fourth quarter. Is there something going on there in terms of extra headcount or anything funny in the comp or could you help me understand that big step up in expenses and Road Logistics?

Okay. So, Neil, thanks for your questions.

Let me start with shipper reaction. We have products in the market that for sure was -- were much more demanded than in the past.

I remember that we spoke about sea and air products in the past, or train and air or train services in the past, both picked up significantly, especially sea and air, going into the final mile or final country, distribution via air freight helped a lot. But I would say it's an evolutionary topic because at the end of the day, it's always about cost per unit and also CO2 per unit our shippers look at.

But if you have a congested market, or if you see that congestion will not be resolved too soon, you have to react. Our sea and air volume has grown, but we will not disclose.

We will not disclose the baseline, but by Sector 10 in the first quarter. That is clearly a reflection of the market situation.

The congestion and supply chain visibility, for sure is a topic and we feel well-positioned to serve our customers. We have updated our SeaExplorer platform, and we mentioned SeaExplorer a couple of times in the past.

And we have updated that platform with an alert function, so to say if for shipments something potentially is going to happen, you will get an alert function. And we have tested this already when we went into the Suez Canal situation by chance.

I mean, we didn't have the Suez Canal obviously to test that module of our SeaExplorer, but it works well. And we have highest visibility.

We know exactly where each and every shipment each and every container, including the associated goods or article numbers in the containers are positioned right now as we speak. But your question is right, we have accelerated five digital projects earlier this year, or by the way end of last year, which we will deploy by the end of this.

We are moving fast into deploying five platforms or solutions, which includes also the next generation if you want for visibility. And that is what we are really that we are really focused on.

At the same time, we see a high degree of registration on our platforms, even more than at the beginning of the pandemic, maybe everybody was still in a shock situation. And we have the highest growth rate ever on onboarding of new accounts to our myKN platform, which is the entry point to all our operating system for our customers.

Your Road Logistics question, and I think I mentioned that already when we gave the annual result 2020 -- during the annual result 2020 conference. Road Logistics is impacted by lower shipment size.

So while the volume as such maybe remain stable the and thus the average per volume is lower as a result of eCommerce and our way of ordering and maybe different stock level keeping. And we see higher production costs per shipment in Road Logistics.

I hope that answers your question.

Thanks, Detlef. It was actually the expense line below gross profit?

I can follow-up with Chris or Markus offline anyway.

I do have it for you. So the Road Logistics expenses, I think, yes, they are below the GP line.

This is the -- this is ours. So there is two factors or three factors.

There was the inRoad Logistics, we have a good part, euro denominated costs. So the euro appreciated around 2%, that is a factor.

The second factor is smaller than this, but still noticeable in the first quarter at the back end, first quarter in March 2020 there was basically a lot of volumes, stopping very abruptly. And we had already at that point in time a few subsidies going into the P&L for around half a month.

And last but not least, we have increased indeed our FTE for the Brexit services that we have built. So that's a slight increase in FTEs overall, but these three components pretty much make that percentage.

Great. Thank you both.

You’re welcome.

You’re welcome.

Good afternoon. Could you talk a little bit about Apex?

Maybe there wasn't much mention of that in the release today. Any indication of how broad that Apex has been this year so far, given what you've seen with your kind of -- mean, in Air business?

And then secondly, how should we be thinking about dividends for 2021 if earnings are very strong? Should we still continue to think about it in payout ratio terms or on absolute levels?

I realize you don't have a dividend policy, but just kind of if you could give a steer on how to think about dividends in a very potentially, very strong year. And then could you give an indication on where you think yields and EBIT per unit would normalize to in Air and Sea, please.

Thank you.

Hi, Muneeba. It's Markus.

Let me pick up the first one on Apex. You know that we are continuing to stay within the signing and closing period.

So my indications are going to be pure indications, nothing better than that. The Apex activities are very much around the Trans Pacific trade lines.

And Trans Pacific trade lines generally in the first quarter have done pretty well. I would believe that that is also true then for a business that is predominantly operating in this trade line.

Second question on the dividends, I think dividends we have been very clear and vocal around why the dividend level is at that level where we are. We are proposing this year a 68% payout ratio towards -- we're proposing it towards the General Assembly.

That translates into for CHF50. And I think as it stands today, I cannot identify any reason why this unwritten policy admittedly should change in the near future.

I think we have had a very good quarter. But having a very good quarter as you know I think a little bit of the history with Kuehne + Nagel.

Having good quarter doesn't need necessarily we are going to rewrite the dividend policy. So I would stay on that course.

I would believe that the company is going to stay on the course that have been put in place. Yields, that that's really the $1 million question.

What is the -- what’s sustainable yield level going forward? I think it's very clear.

We do have elevated gross profit levels right now. They are justified.

We do a lot more as Detlef said on service intensity than we did maybe 2 years ago. There is hardly any shipment that you would consider as a standard routine job.

So very challenges that we try to resolve for our customers, starts with getting the space and ends up with actually managing the changes in the supply chain. So there's a lot of that being done.

I think that has been very clear also. There might not be a lot of change that situation in the foreseeable future.

Quite some uncertainty going get the back end of 2021. And how it's going to look further on a mid-term basis, that's really, really for us not to see right now.

So I would be cautiously optimistic for 2021 that an elevated level we'll stay at least for the next quarter, and maybe some small pressure on the margins at the -- in the second half of this year. But further than that, I think it's going to be very difficult to forecast.

Thank you.

Thanks, Muneeba.

Yes, thank you and all the best to Switzerland. First, on the targets.

2021 is at rise, that the closing of the Apex deal is some kind of a precondition before you will go out with some further long-term or mid-term guidance, this is first question. The second one is on Road Logistics and your implementation of your KN networks there.

As saying, you implement that in Asia, then you're going to Russia, you're going to Australia, what are the plans going forward? And what is the current share, which you manage overseas platforms according to the total share of Road?

And then -- and the last question is concerning CO2 free transport. You have some kind of interesting activities there in place.

Can you give us an update on demand there? And is there a higher pricing tech for that?

Thank you.

Thanks, Christian. Detlef speaking.

Let me answer your questions. You are on the spot.

We will comment on Apex once the closing has happened. We have to look into the current trading and can then also review our overall target setting for the years to come.

And therefore we said -- Markus said before, clearly by end of this year, early next year, we will have this revision done. And then we'll share the new set maybe of targets that we are all committed to.

But at the moment -- yes, at the moment, it's not possible because we cannot even talk to the Apex . Road Logistics, I assume, Christian, you're talking about eTrucknow, our digital platform for Road.

Yes, yes. Sorry.

Yes.

We have a clear rollout plan where we see in markets where we have either no Road Logistics business, or no clear brokerage business where this platform, this purely digital platform gets a lot of attraction. We have a roll out plan that is geared to the number of bookings that we want to generate via this .

So far we feel very comfortable that our extremely tough targets will be met, because it's a bit of a blockbuster. But please forgive me we do not give any details on the number of bookings or shipments.

But it will eventually in a couple of years be a significant element of our Road Logistics service offering to the market. And CO2, Christian, I don't know how much time you have.

But this is one of our core topics for our strategy. Because we believe that first of all the transport logistics industry and we as one of the bigger players in the market have not only a responsibility, but we also have a chance to offer solutions that metaphor our customers and thus change the CO2 emission of transports.

And we have a suite of activities running more than 300 activities only internally in our organization and we see a lot of buying of our customers. Usually we do not or cannot reveal names, name a bit like pharma customers.

Out of 300 pharma OEMs we can mention one or two, sometimes but not in general and to same is our CO2. We have a couple of activities running.

One is identify. First of all, have transparency of the CO2 emission per shipment.

That is sounds easy and standard, but it's not. And you have to have a lot of details of your systems and what you transport in order to do a proper assessment.

Secondly, avoid by changing supply chain, by optimizing supply chain, by consolidation, shifting from one mode to the other, whatever it is by avoiding port, certain parts of certain airports and so on. Thirdly, it's reduce.

So whatever you are doing and can't change and avoid, try to optimize it. Use alternative fuel SAF we have introduced, biodiesel we have introduced, biofuel we have introduced and we offer this of the same routing to all our customers.

And then the last one is compensate, which is a conclusion of the three effects before if you can't fully offset by just reducing the CO2 emission. We are dedicated to it.

We have tools for it. We have tools and platforms that show this during the booking process even to our customers and we all have a choice.

Our customers have a choice, we have a choice and each and every consumer has a choice. And we believe that this will be increasing -- the demand for these transports will be increasing.

Now, Christian, I stop because otherwise you get a bit of a lecture of Kuehne + Nagel's environmental and sustainability strategy, which is for sure not the purpose of this call.

Yes, that's okay. But I have two different question for these items.

Can you give us an idea of how profitability differs between eTrucknow on a pure -- eTrucknow and on a standard Road Logistics business. And the second one to CO2.

Do you see that there is any change in demand pattern towards these kind of products? Or is that minimal so far, at least.

So, change in demand pattern, I think it's increasing. While we were -- we continued with our strategy, also our sustainability strategy through last year, even throughout the pandemic.

We worked on a lot of initiatives and continue to work on them. And we see more and more demand coming, especially from those industries that direct to the end consumer.

And there is a change, there's at least a change in consciousness, and whether that then will eventually change the demand, we will see. But we believe it is, and we are as a first mover very close to those customers.

Secondly, your question regarding profitability. Yes, we know, Christian, but we do not share those details.

We will not share those details. It's a different solution, which requires -- which is a more automated approach, systems driven approach, which obviously has less logistics experts doing in the process or require less logistics expert to win in the process.

If the shipper that our customer stays in the standards of that platform, whenever there's demand to talk to a logistics expert from our organization, it's a different animal out. And I think it's working quite well that in a very low touch environment, automated platform environment, we see a lot of automated bookings and matches of supply and demand.

Okay. Thank you very much and all the best.

Thanks, Christian.

Good afternoon. Thanks for taking my questions.

I also had three. Just firstly on the conversion ratio for the group obviously at 21.3%.

I think in your commentary, you mentioned that there have been some portfolio mix changes benefiting the ratio. Could you kind of single them out a little bit to understand how much of that 21.3% could be more structural rather than benefiting from current capacity disruptions?

And then secondly, on just sea freight, clearly the market remains very tight, given kind of the disruption we've seen, and also this was adding to that. Your CHF50 to CHF60 per TEU user you talked about being a normal level at the moment.

What needs to happen for the -- to kind of fall away? And do you see movement on that front?

Or is it still very, very kind of elevated the levels of disruption? And then finally, just on air cargo, would you be willing to comment kind of the March growth rate?

Because my understanding is that March saw quite a steep acceleration in volume. And in terms of your capacity outlook, you talk about kind of stability and we wouldn't expect to have the belly capacity return, but do you feel that the dedicated freighters potential to be able to replace the belly capacity medium term?

Thank you.

Hi, Alexia, it's Markus. So I'd take the first question on the conversion rate for the group and the methodology around it.

We have been always emphasizing that our target also to 16% was assuming a stable mix in business units, because you're entirely right, when business units with naturally high conversion rates grow faster than the conversion rate goes up, and mathematically the other way around as well. So, whatever the reported 21% and now are in terms of composition, my understanding and also my calculation are showing that we have been nearly neutral in terms of the mix effect of the business units for that 21% conversion rate.

And what I said previously was, as I mentioned more of a precautionary statement that we are not looking into just an extension or a replication of the numbers on a full quarter basis as we have seen on the first quarter basis. But, again, we will come back to you in until the year end 2021 with most likely a little bit more detailed set of targets than what we have done in the past in terms of conversion rates.

Alexia, let me answer then the other two questions. Sea Logistics any movements?

I mean, the Trans Pacific is the market at the moment. We are able to find capacity in the market.

We grew more than 30%, I mentioned that and we don't see any sign of change the moment. As mentioned, the consumption pattern is changing this request other sortiments, other consumption or products be consumed in the westerly markets.

And this will drive the demand for Sea Logistics capacity on the Trans Pacific but also towards Asia towards Europe. Air -- your air question is a different one.

I mean, we have seen an increase in freighter capacity and demand for freighters or main deck as we call this during the pandemic, because belly is not existent. But the capacity in the market will never be able to fully compensate the miss or the lack of belly capacity.

And it requires a return passenger flights eventually to have a similar market offering as we had pre-pandemic in the market. The next one or two quarters will be strong and we mentioned that, that will not change.

But eventually we will see passenger schedules coming back to the travelling again and a slight increase in belly capacity. I'm talking intercontinental flights.

There's only one market that we know has a constant supply of belly capacity at the moment that is domestic China. The only market where you have more or less, I wouldn't say a normal situation, but a regular sort of belly capacity again.

With regards to March increases that you mentioned before, March is always a very strong month. I mean, it's a typical March pattern.

It's nothing specific to this March the previous year's March.

All right, and thank you very much.

Thank you.

Thank you.

Hi, there. Thanks.

I've got two questions, please. The first one is on you referred a lot about how high service intensity is helping the unit margins.

I just wonder what that's doing to your rollout of the eTouch platform, I guess eTouch is sort of the opposite and that it relies on automating a lot of things. How's the rollout going given this high service intensity?

And the other one was on you talked about kind of lack of commodity volume, helping the sea freight unit margin. As those commodity type volumes come back, should we think about that as a net positive because you've got higher volume or actually it's more a negative because it kind of implies that freight rates and therefore unit margins will be lower at that point in the future.

Thanks.

Yes, let me answer your questions. First of all, service intensity, you're right.

I mean, eTouch is a fully -- the ideal eTouch shipment is fully automated with a conversion rate exceeding 80%, 90%. In theory, it's a 100% conversion rate because the incremental shipment doesn't attract any additional costs.

But at the moment we are in deployment of eTouch. So some of the processes are fully automated, but not the total shipment flow as such.

Therefore we benefit from eTouch and we have given some details on how we have progressed in eTouch, especially in air freight, Air Logistics during our last call, but we have no end-to-end eTouch shipments that would be jeopardized by the current market situation. We do not see any changes in that respect for the next couple of quarters.

With regards to lack of commodity in the mix, you're right. The commodity will come back eventually if the rates normalize.

We do not expect this in the next couple of quarters, but they will have a contribution, they will have a positive EBIT effect. And that is what we always said, when we said if you compare our mix, the mix of other suppliers, we had always some areas where we had a high degree of commodity shipments, but contributing on a positive EBIT.

And the mix effect is at the end of the day, helping us at the moment in the unit figures. But it will help us also to go back to a normal EBIT per TEU figure in, I don't know, whatever quarters to come.

Okay, thank you.

You’re welcome.

Yes, thank you. Good afternoon, gentlemen.

Just two question from my side is, can you comment on vaccine logistics trends and anything related to the pandemic? And any changes you observed, let's say, over the last 3 months and how that would affect your business and your expectations?

And the second question is you talked about market share gains in eCommerce and I was just wondering if you can share an indication of sort of what sort of market growth in eCommerce you've seen and how your growth compares to that? Thank you.

Right, vaccine logistics, the first quarter this year 2021 we have shipped 50 million vials vaccine, COVID-19 vials worldwide. And we see this demand increasing significantly for the second quarter.

So 5,6, 7 we will see based on the production outcome output, nothing else. But it's a typical shipment which we have done before.

We were in vaccine shipments also previous years. Our pharma and health care sector has been active in this sector.

The big difference is that the world requires billions of those vaccines at the moment, and that this needs to be orchestrated, especially from a production point of view. At the moment, we don't see any major constraints or any bottleneck or any restrictions other than production output.

The second question regards market share gains in eCommerce. We for sure showed or have seen a growth in eCommerce fulfillment, especially in contract logistics of 25%, 30%.

Why we assume the market has grown slightly below that figure, maybe 15% to 20%, because the biggest growth was seen in eCommerce fulfillment in the second quarter last year. Therefore, we said we have gained market share.

But it's one of the growth drivers still in our eCommerce fulfillment business -- in our contract logistics business.

Thank you very helpful. Thanks, and well done.

Thank you.

Thank you. Good afternoon.

Just one question for me, please. In terms of the GP per unit, per TEU, what's actually changed?

Because I guess over the last 12 months, it's been relatively stable within a few Swiss francs. We know that freight rates sort of are at record highs, we know there's a shortage of capacity, there's a shift away from commodities, and that you're focusing on sort of high value add.

So what's actually happened in this quarter, let's say, versus q4, that your GP per TEU has jumped into sort of CHF400 per TEU. Is it something in your organization, you're better at selling, you’re -- what's actually changed because I'm sort of struggling to sort of as a market probably as in terms of trying to forecast that number for Q1 and obviously going forward.

Thank you.

Andy, two effects that we try to explain. One effect is increasing demand versus very scarce supply side, both equipment as well as vessel capacity.

So there's a bottleneck and we are able to find that space and containers for our customers. And secondly, that's the mix effect.

So the per TEU gross profit of a paper and pipe shipment, a forestry shipment is significantly lower with a positive EBIT contribution, but significantly lower than our average of CHF300 plus per TEU. If this volume is totally excluded in a quarter because we don't ship it anymore, customers cannot afford this price level in the market at the moment goods.

This is the -- this directly ends in the overall higher GP per TEU. So the mix effect for sure has a significant impact on the CHF440 per TEU that we have shown in quarter one this year.

Detlef, forgive me, isn't that been the case for a number of quarters now? Obviously, you said obviously that the commodities become at the need to fall to sort of pre-COVID levels, but freight rates are obviously up 4x or 5x what they have been.

So I'm still struggling, but you're saying that this is the quarter where a lot of that mix effects in commodities really made a big difference, because I would have thought that trend has continued that we've talked about over the last 12 months has been the next positive mix impact.

No, it's not for the last 12 months. We have been more rigid to accept also cargo while we had scarce capacity to fill and our high yielding and high long lasting customers to serve.

We were forced to be much more selective. While in the past, and if you look back even the last quarter of 2020 has shown already this effect.

We had an increase in yield already there. But market rates and the rates per container on certain freight lanes exceeding the price levels that we have never seen before really happened since the beginning of this year.

So this effect is really isolated or can be isolated to this year quarter one. So it's both.

It's the mix effect, which got even actively -- more actively managed by ourselves quarter one this year as well as a supply side, a capacity side, which is extremely .

So how much is freight and how much is commodities of your volume wise then in Q4? I think you were sort of in leading to that pretty much disappeared.

So what was the percentage of shift place?

We usually do not disclose those details and we will not go down . It was more significant.

At the moment its very awkward.

Okay, great. Thank you very much.

You're welcome, Andy.

Thanks, ladies and gentlemen for joining our analyst call on the quarter one results for 2021 of Kuehne + Nagel International AG. As we have stated Kuehne + Nagel marks a strong start to 2021 and 2021 remains challenging and unpredictable.

And we are committed to our proven strategy of providing reliable, high quality services to our customers. And it's all about our logistics experts, our technology, our platforms as well as our agility.

And having said so we thank you for joining. And we look forward to talking to you again in about 3 months when we talk about the semiannual results.

Thanks. Bye, bye and take care.