MPC Container Ships ASA

OSE:MPCC

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Q1 2021 earnings call. [Operator Instructions] I would now like to hand the conference over to your speaker today, CEO of MPC Container Ships, Constantin Baack. Please go ahead.

[Constantin Baack, Chief Executive Officer]

Thank you, operator, and good afternoon, good morning, everyone. This is Constantin Baack. I'm CEO of MPC Container Ships, and I would like to welcome you to our Q1 2021 earnings call. I'm joined here by our CFO, Mr. Benjamin Pfeifer. Thank you for joining us to discuss MPC Container Ships' first quarter earnings. This morning, we have issued a stock market announcement covering MPCC's first quarter results for the period ending March 31, 2021. The release as well as the accompanying presentation for this conference call are available on the company's Investor and Media section of our website. Please be advised that the material provided and also our discussion today contains certain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business.Before I guide you through the presentation, let me start with a few opening remarks. The strong container market momentum, which commenced in the second half of 2020, has yet not shown any sign of slowdown, but has instead constantly strengthened further during the first month of 2021. The present market conditions are based on fundamentals. Significant demand growth in combination with limited supply, fueled by certain extraordinary effects, such as the container box shortage and the Suez Canal blockage, has led to one of the strongest container markets in history, which we expect will continue. Charter rates are at historically high levels, but charter periods are getting longer and longer, thus increasing cash flow visibility on our fleet. I will elaborate in more detail on this in the course of this presentation, particularly in the market and outlook section.On that note, I would like to start with today's presentation, commencing with a brief recap of the Q1 2021 and year-to-date highlights, followed by an update on some relevant market parameters and concluding with the company's outlook. Turning to Slide 4 of the presentation. The first quarter was basically a reflection of the positive charter market and charters that we concluded during Q4 last year, and it is, in part, visible already in our financials. At $51.4 million, net revenues in Q1 2021 were around 30% and hence significantly above Q4 2020 levels, reflecting the rollover of charter in an improved market environment. And similarly, at USD 22.3 million, the EBITDA in Q1 was around 4x the respective figure in Q4 last year and even higher than the full year 2020 EBITDA figure. Average TCE and EBITDA per day as well as fleet utilization at improved levels underpin the positive market development. The COVID pandemic has continued to affect operations, notably in relation to crew changes or vessel deviations. However, overall, we're happy with the operational performance despite certain COVID-related challenges as can be seen in the OpEx figure.As per end of Q1, the company had a cash balance of roughly $48 million. Moreover, key balance sheet figures remained solid with an equity ratio of around 57% and a moderate leverage of around 41%. Further details on our Q1 2021 financials are made available in the appendix of this presentation and also in the financial report, which is available on our website.Now please turn to Slide 5, where we provide an update on key developments and activities for Q1 2021. Let me start with market developments. On a macro level, a significant recovery is expected for 2021. We expect plus 6% growth versus minus 3.3% decline in 2020. Good progress on vaccination, combined with relatively low or actually historically low inventories-to-sales ratios additionally support both production and trade. When we look at the container market, strong TEU demand has pushed freight rates to historic high levels. And whilst we have observed a significant number of new vessels being ordered, since basically Q4 2020, overall market fundamentals remain solid. Looking at the charter market, all key parameters, such as fleet utilization, charter rates and periods, have not just continued to improve during the first couple of months of 2021 but are at basically historically highs -- historical high levels or low levels as far as idle fleet is concerned. I will elaborate in more detail on the most recent developments in the upcoming market and outlook section. Looking at corporate [Audio Gap] financial developments year-to-date, we have issued our second annual ESG report end of March. We, as a company, are fully committed to ESG and to the IMO's climate ambition, and we will take action, including certain investments in our fleet. Looking at the financials, we basically, as I mentioned before, see a very low financial leverage of around 41%, combined with a net debt to EBITDA, and with EBITDA I refer to the midpoint of our 2021 guidance, of 1.7x, a fairly low number in any event and basically no significant debt maturities until 2023. The significantly improved earnings that we expect for the full year are confirmed by confirming the guidance that we have set out earlier this year, and we expect revenues to come in between $230 million and $260 million and EBITDA between $120 million to $140 million. The strong cash generation that we expect for certainly the remainder of this year is on the back of a very, very solid charter backlog of more than USD 400 million as per today. Now I would like to run you through some operational and portfolio aspects. As explained in the previous updates, we have taken action and have worked a bit on the portfolio composition by selling a few smaller, slightly older vessels and acquiring a slightly larger vessel. All of that has been conducted during the first quarter. We are, at the same time, preparing ourselves for the IMO -- the upcoming IMO regulation in terms of EEXI and CII and have set out a work group in that respect and analyzed our fleet on that basis.The fleet utilization is very satisfying. We have very high utilization in the first 3 months and that is continuing in April, and we expect that to continue throughout the course of this year. The continued access to a very strong charter market has created additional visibility as I've mentioned before. And you can see at the bottom of this slide, the different fixture activities. We have fixed a number of vessels year-to-date, 26 vessels at an average period of 19 months and an average rate of $18,220. And as we can see, comparing Q1, which was dominated by pictures for smaller vessels in our portfolio to Q2 2021 periods have been longer and rates have been higher.Now let me run you through some of the market aspects on Slide #8, where you can see, basically illustrated on that slide, the key indicators for both ocean freight and also [Audio Gap] on the left-hand side, you can see key freight market indicators [Audio Gap] the red line, the SCFI index and annual TEU throughput over time. And as you can see, volumes have recovered to above pre-COVID levels. According to CTS, volumes during the first quarter 2021 are up on [Audio Gap] year-on-year. In addition, the freight rate index is basically at an historic high. Looking at the right-hand side of this slide, you can see charter rates and idle stats over the last decade. And you see that we are at the low point when it comes to idle fleet and hence, the high point when it comes to utilization and also TC rate index is at a very high point in time. Very importantly, and we'll touch upon that in a minute, is that it's not just a high level of TC rates, it's also long periods that you can obtain in this market environment. Let me move on to the next slide, Slide 9, of the presentation where we take a closer look at the charter market and second-hand value dynamics over the last couple of months and years. As we can see at the top left, time charter rates have increased significantly, basically steeply and steadily across sizes since Q3 2020. And we are now looking at charter levels of 3 to 5x the level seen in May 2020 depending on the different sizes. The chart on the top right shows the development of second-hand prices as well as, in the background, the light blue columns, the S&P activity. What is very important to note, obviously, the trend is the same. The asset prices have followed the charter market development. But when you look at the bottom left graph, we have compared by way of example 2,800 TEU containership, the development of, and that's the blue line, time charter rates and second-hand values. You can see that asset values have been lagging behind. And I think it's very important to understand in that respect that last time we have seen charter rates of this magnitude, basically asset values were almost double the number of today's [Audio Gap] at the chart at the left-hand side. To give you an example also from our fleet, we have just recently fixed a 2,500 TEU vessel for a rate of around $27,000 per day for a period of 3 years, which translates into a secured EBITDA of $21 million, and that vessel is 17 years of age. So it gives you a clear idea that those asset values that are illustrated at the chart on the left certainly have room to improve further and, in my view, are expected to move further up simply because of the way that charter rates will continue to support based on locked in or realizable cash flow and increase in values. Moving on to the next slide, Slide 10. On the top left, we have illustrated the time charter rate momentum in a way -- of our way of candlestick illustration. What you can see is that there is a continuous increase, and there's no real slowdown in terms of momentum when it comes to charter rates. On the top right, you can see the average period. And I think that is the -- as I said earlier, that is a very important factor to consider that we're not just seeing higher rates, we are actually seeing firmer periods. This means in the region 1,000 to 5,000 TEU, we're looking at average periods of around 2 years. Having said that, when looking at our own fleet, we presently actually see 18 or rather 24 months being a standard period for smaller vessels up to 1,700 TEU and more on the vicinity of 30 to 36 months for vessels above that size. So combined with continuously strengthening rates, this obviously is very positive for tonnage providers like ourselves that have vessels coming open in the foreseeable future. And that is also another aspect that you can see at the bottom left that vessel availability going forward will get tighter and tighter, especially due to the fact that vessels are being fixed for longer periods, i.e., they will not be available to the charter market that frequently as was the case, for example, during the last 10 to 12 years, where we were always looking at shorter charter periods and more flexible redelivery windows.Looking at the fundamentals on the next slide, Slide 11. As you can see on the left-hand side, we have illustrated the supply-demand development for the total market, with the blue line being supply growth and the red line being demand growth. Last year, we have, for the reasons known, seen a negative demand growth as a result of the COVID pandemic. However, it is worth noting that this negative demand growth was mainly triggered by the period between February, March and July, where we have exposed -- due to lockdowns and other measures have seen a significant decline in volumes and the latter part of last year was already showing a completely different picture. So that is important to note. For this year, clear growth in demand is expected with around 6% to 7% for the overall market, whilst the supply growth is expected to be comparably -- significantly lower for the overall market based on the existing order book. And it is worth noting in that respect that 2021 and 2022 the order book is basically carved in stone, so there's no further supply coming to the market. If you then look at the top right, which drills down the supply-demand dynamics to ensure regional trades, the trades in which we are involved and which is our focus, you can see that especially the supply side shows a significantly different picture than in the overall market because the supply growth for the next 2 to 3 years is dominated by the large ships and is basically 0 in the segments we are involved in, whilst at the same time, we expect a more significant demand growth as a result of[Audio Gap] which I'll elaborate on in a minute. Now looking at -- a bit closer at the supply side on Slide 12. At the top left, you can see the order book to fleet ratio. And as I mentioned, there has been a significant increase in ordering activity, pretty much geared towards larger sizes. And you can see the developments in terms of order book at the top right, top basically line on the top right, where we show the changes since October 2020 in the different sizes. As you can see, there has been a predominant run for the very large container ships in terms of ordering activity. Yet 17.6%, considering especially the age profile of the fleet and the expected demand growth, is nothing to be overly concerned about in our view, especially if you look at our segment and intra-regional trades, in particular. As you can see at the bottom left, the age profile of vessels between 1,000 and 5,000 TEU, you have roughly 40% of the fleet being above 15 years of age. Just to remember, the average age of our vessels is 13.5 years. So we are pretty much in the midpoint of the fleet profile. So there's a significant number of vessels being aged 15 or above, and this is very important when also looking at ordering activity in our segments.Now to move on from supply to demand. On the left-hand side, we have, again, following the logic looking at the total market and specifically at intra-regional trades, I think, first and foremost, it's important to explain that 54% of the total amount of container vessels is actually -- so that's around 5 million TEU, is actually deployed on intra-regional trade. So it is a very relevant part of the global trading pattern. That's why we have focused a lot on these trades with our fleet in particular. So the demand growth is expected to be positive. We've seen 2020, obviously, another good year, but with the exception of 2020 and 2009, we have always seen growth in demand for TEU -- for additional TEU volumes. And in intra-regional trades, [Audio Gap] amongst others, let's say, measures to make the supply chain a bit more resilient, the growth, in particular in Southeast Asian countries, and other stimulus packages that we believe there's certainly a significant growth potential, in particular in the intra-Asian market.From the markets to the company specifics, let me run you through Slide 15, where we have basically illustrated our charter backlog and also [Audio Gap] charter book. At the top left, you can see the different quarters for this year in terms of fixed operating days evolving obviously quite dynamically as we are fixing vessels. And you can see on the right part of the top left graph, the basically coverage for 2021, 2022 and 2023. That is talking days. If you then look at the secured revenues, please refer to the text on the right-hand side, where we have illustrated or basically named the different charter backlog for the respective years. We look at around $220 million for 2021 already locked in, roughly $138 million for 2022 and so forth. Looking forward, especially the increased charter duration and charter periods will add to the visibility and also certainty about revenues going forward with another roughly 25 to 28 vessels coming up for renewal in the course of the next couple of quarters, we believe that we will have a significantly higher visibility on the basis of current market environment with a long period for our earnings for the upcoming 2 to 3 years.Looking at the top left -- sorry, the bottom left illustrates the counterparties by contract. So it's quite a diverse pool, obviously, with the main liner companies being key customers of ours when you look at charter coverage. At the bottom right, more -- in more detail, we have illustrated what has already been fixed, which is the light gray part of the columns as well as upcoming renewals for the next quarter, so basically until year end. So you see our expectation based on current redelivery windows is that we will have another roughly 25 to 28 vessels to be renewed in the course of Q2, Q3 and Q4.On that note, let me move on to the next slide, where we look at kind of the operating leverage, which is obviously very important in our view and has been a key ingredient strategically in our DNA to kind of try to operate vessels with a significant operational leverage. And if you look at the bridge shown basically from left to right, you can see that our Q1 cash breakeven per vessel and day was around USD 7,900 per vessel and day. If you put that in context with kind of market reference data from Clarksons being -- and that's based on the baskets of representing the MPCC fleet basically, we look at spot rates of around $25,160 today. Of course, we have an existing charter book and, of course, not all vessels are available for renewal at the same point in time. This is just an indication of where we stand and where the spot market stands. And looking at what I said earlier, it's important to understand these spot rates not as spot rates for a 1- to 3-month contract. These rates are actually rates that you can lock in for a prolonged period. So spot is just the nature of the point in time. It doesn't necessarily reflect the period. And we have also put that in context with the '20 average of Clarksons of around $12,000 per day looking at our basket. And that basically illustrates the significant operational leverage that we can benefit from in this very strong charter market, especially given the coverage that we have in place plus even more so the upcoming charter renewals. Now let me wrap up this presentation and open the floor for questions with our last slide, Slide 17. First of all, from left to right, looking at the market, our corporate and then, of course, the outlook, I think short-term momentum is extremely strong and continues to get stronger basically by the day, and we see ourselves as being ideally positioned to continue to participate in the current upswing with attractive periods and very attractive charter rates, whilst at the same time having already secured a significant charter backlog over the last 3 quarters.In the midterm, as I explained, the supply-demand dynamics are interesting, are favorable in our view, in particular for intra-regional trades and intra-regional vessel sizes. At least in our segment, there's not a significant order book. We, however, do expect that more orders will come into the market. But looking at the age profile of the intra-regional fleet, we believe this is also necessary as a very least in order to cope with the expected demand growth, even if it's less than the expectation currently is for 2021. In the long term, of course, there are a few uncertainties. The industry landscape will be affected by the energy transition and decarbonization effects. We believe, however, that with our fleet, in terms of age profile, charter backlog and delevering capacity and investment capacity, we believe we are very well positioned for the transition into new technologies over the next couple of years to come. Looking at our corporate profile, we have a very clear focus on intra-regional trades. We will continue with that focus to own and operate vessels that operate in intra-regional trades, as I said a sector where we see extremely compelling demand and supply developments ahead. And at the same time, we do expect a very favorable demand growth in intra-regional trades going forward. And overall, we expect to see the continuation of a compelling market development in 2021, and we believe we are very well positioned to benefit from that. It is the combination of strong cash generation, whilst at the same time having extremely low residual value risk, a very low leverage. And, of course, a focus on a very prudent capital allocation strategy, which we believe makes up MPC Container Ships attractiveness as an investment in the shipping sector. In terms of looking forward, we believe with the current portfolio, the charter backlog and the upcoming renewals, we are positioned very resilient when it comes to potential market volatility. And at the same time, we are well positioned to benefit from the market ahead. And on that note, I would very much like to hand over to you, moderator, and I'm looking forward to receiving your questions.

[Operator]

[Operator Instructions]

[Constantin Baack, Chief Executive Officer]

Okay. There are a few questions through the web, which I'm happy to read out and answer as we go through. The first question comes from Jonathan Hansen and his question is, how is the options for charterers to cancel their agreements?So we are looking at firm charter contracts. So there is no such option available to cancel the contract. So it is a firm commitment, it is a firm contract, including period and rate. So no such option exists. The second question comes from and that's a pretty long question, so I will have to read it out first to try to summarize it, and that is a question by [Audio Gap] So he's asking about expectations on daily costs, vessel, including everything, also dry dock installations for the year 2021 and 2022, respectively. So first of all, 2021 will be a year with comparably high number of dockings, just by virtue of the age profile of our fleet. So we are looking at -- for 2021, we are looking at investing CapEx over the whole company of around $35 million, and that includes dry docking as well as maintenance CapEx and others. For the year 2022, we look more at CapEx in the vicinity of $26 million as a result of lower number of dockings. So that's the first part of the question. And then the second part is relating to the operating cash breakeven of around $6,200, comparing that with $8,400 in 2020.That is, I think -- the difference there is that the operating breakeven is excluding interest and excluding CapEx. That's number one. And number two is that 2020 was still affected by kind of spillover effects of our scrubber program. So there are a few extraordinary items in the 2020 number, which we, however, have normalized out when looking at our end of 2020 reporting. So it's important to compare operating cash break even with full cost cash breakeven. The question goes on. So let me just read that out. So the next part is basically alluding to refinancing and repayment of debt, which will contribute positively to both profit and opportunities for investment dividends in the coming year. Yes, that's actually not a question. In your presentation, utilization, excluding dry dock -- yes. It's a different measure. So there's a question around how we report utilization. One is obviously -- and that's the industry standard, like all container tonnage providers do where you take out dry dock. Therefore, we report both numbers separately. More detail in our quarterly report, which you can read up. If you have further questions on that, please feel free to reach out to our IR mailbox. We're happy to provide respective references. And then last question is related to steel prices. So steel prices are up [67%] over the last 6 months. And new building orders have canceled. Yes, that's true. And that will definitely add to a further delay in new supply coming to the market. I hope I have answered all the questions from that gentlemen. And I would like to move on to a question by [Eric Gunderson]. So there is a question, what are your plans with regards to dividends? And as I said, we have a very, let's say, prudent view in terms of capital allocation. We look at what creates value for shareholders. I think, at this junction, delevering the company financially is certainly one of the key priorities and optimizing the balance sheet structure. That is priority number one. Of course, returning capital to investors is on the cards as well. Given that we still have a significant number of charter renewals coming up in the second half of this year, we will take a view, together with the Board, towards the second half of this year in that respect. But we're always, obviously, comparing the different capital allocation options. And I think at this stage, delevering financially is priority one. If opportunities arise, we also want to make use of those, but returning capital to investors is certainly a very relevant subject as well. The next question comes from Anders [Audio Gap] how do you see inflation affecting MPC? Well, I would say, inflation wouldn't be a bad thing because we own real assets. So we believe that will rather positively contribute to values when you look at real assets such as container ships. Then there is another question by [Eric Gunderson], who is asking, what our plans are in terms of refinancing, given that your debt is not due until 2023. Of course, if you look at the market circumstances at present, both the container markets as well as the credit markets are in a very firm condition. So looking at a potential refinancing is definitely something we are considering. However, there is no rush. But usually, I mean, you want to look at refinancings when you can and not when you have to. So we are definitely looking at all options available, but we're in no rush as of today, but we will definitely -- and we are, in fact, exploring options in that respect. There's a question by [Eric Brunswick]. He says his question is a bit macro oriented on the demand side. How do you view the demand growth currently? And why is it so much stronger than in 2018 and 2019? And do you believe there is an element of restocking at suppliers' retail, et cetera, at the moment ahead of post-COVID reopening, which caused a temporary surge in demand? And the next question is also whether we think the demand for goods may decline a bit over the next months as consumers can spend more money on activities, et cetera? First of all, looking at restocking, yes, of course, there is quite a bit of restocking. But if you look at the inventory-to-sales ratios, in the U.S., for example, they are at a 28-year low. So whilst there has been quite a bit of restocking, there is significantly more restocking needed. And in fact, due to changed consumer behavior, in particular, when it comes to e-commerce, it's all about lead times. So I would rather expect stocking or the restocking to certainly exceed prior levels. And as I said, we are nowhere near prior levels. So I would actually think that it's not an element that I'm concerned about looking at the demand side. It's actually something I'm rather positive about, to be frank. And then the question is whether there might be a shift from goods back to services. As a result of the reopening, yes, that's certainly something that could happen. But looking at the tight situation in terms of vessel availability, I think this is nothing to immediately affect us. There is potentially -- I think we're all happy when we can go on holidays again and consume differently. But there is still a very strong, as I said, restocking necessity that I'm expecting going forward. Then there is another question by [Harry Oltruce] regarding the splicing of shares. This is an element of uncertainty, and it is unclear how it should be interpreted. That is alluding to the AGM and to the authority to the Board to potentially run a share split. Obviously, this is just an option. So this is nothing that will happen automatically and is obviously subject to also share trading. We have quite a high number of shares at the moment due to the private placement and subsequent offering in last year. So we basically want to have the opportunity to consider a share split depending on share values. At these levels, I think it's not necessary, but it's something that where the authorities [Audio Gap] place for the Board. So I hope that clarifies the situation. And there's a question by [Kenneth McGrath] regarding a reverse split of shares. And I think that I covered just now. And then there's a question about a listing on the U.S. market in future. It's nothing we actively work on. It's something one should always have on the radar if it adds value to achieving the company goals and increase shareholder value. But there is nothing lined up as yet. We have looked at it in the past, but we feel also very comfortable with our listing on the Oslo Stock Exchange. So that's nothing that we are actively pursuing at this point in time.Then there's a question by [Miguel Fei], asking about -- around the inflations threat being a good thing for MPC. Why is that the case? Thank you.I'm not saying it's necessarily a good thing, but I'm saying I'm not particularly concerned owning real assets because, obviously, real assets -- the value of real assets in an inflation environment is rather supported in my view, and that's what I was alluding to when I made that comment. I hope that clarifies this question. There's more coming in. There's a question by [indiscernible]. Is there anything specific being done to prevent virus outbreak on ships? This indeed is a very tangible and relevant challenge and concern. There is a very clear procedure that crew members joining vessels or leaving vessels have to go through different testing procedures in terms of the days prior to joining a vessel or prior to leaving a vessel. However, it unfortunately cannot always be ruled out. So we had instances of COVID on board of the vessels, unfortunately, leading to also downtime and deviations to some extent. But that -- we do our utmost in very close coordination with our crew managers and our technical managers to prevent that from happening. So there is indeed a very clear procedure to address the risk that you are alluding to. I think that's, at least, it for the time being in terms of questions through the web. I don't know, moderator, whether there are any questions through your line. Otherwise, we will hold for a second to see whether further questions will come up.

[Operator]

We have a question over the phone, sir. It's come from the line of Frode Morkedal.

[Frode Morkedal, Managing Director]

Yes. Sorry, if you already covered it. I came in a bit later. But when you look at the upcoming renewals, could you maybe indicate, let's say, after the summer, when you've done a lot of renewals, let's say, how -- what the percentage of 2022 you expect to have booked at that time?

[Constantin Baack, Chief Executive Officer]

Sure. I mean, we -- as I said, we have around 25 to 28 and that's a bit of a range because the real delivery will -- or redelivery will depend on the schedule as well. But we expect by the end of Q2 to have around 55% to 60% of the days for 2022 covered. Again, that's on the assumption that the periods, the charter periods that we can fix vessels upon does not change, right? So if that changes, then that will be affected. But assuming a sideways movement in terms of periods, that will be the coverage of days and the rest is then obviously rolling forward the current rates, and that's then the -- depending on how the rates are, whether they increase, et cetera. We will then have a respective revenue coverage, which I would assume is probably in the same vicinity. But it obviously depends on your rate assumptions to some extent. But I think days covered indication is probably in the vicinity of 55% end of Q2 for 2022 and probably somewhere between 70% and 75% towards the -- in terms of days covered towards the end of Q3 accordingly. And we then move towards 80% towards the end of the year if all those charters get renewed at these periods.

[Frode Morkedal, Managing Director]

Yes, which is really important, right? So I mean, if you look at what Maersk is saying, like they think this market will stay strong, so to speak, throughout this year. So it seems like you are -- should be able to book the majority of next year at least before any potential softness in the market, right?

[Constantin Baack, Chief Executive Officer]

Absolutely. And I think it's worth noting, and I alluded to that earlier. And I don't know whether you were on the call back then already for it, but smaller vessels up to 2 years or basically 2 years is almost the standard. So below 1,700 and basically 30 to 36 months is standard for the larger vessels by now. So every ship that gets covered 2 to 3 years, I mean, means we are also looking at enhanced visibility for 2023, right? And there -- I mean, again, that also depends on the periods, of course, but there, we would also be looking at -- towards Q3, Q4 probably at somewhere between 40% and 50% of the days covered for 2023, if periods stay the same.

[Frode Morkedal, Managing Director]

Yes. So that's great. And maybe you could indicate, like, let's say, run rate EBITDA, if you look at the current 3-year charter rates or something like that, what would be, let's say, the run rate EBITDA per quarter?

[Constantin Baack, Chief Executive Officer]

Yes. If you look at -- I'm just looking at the slide, wherever that is. It's Slide 16, maybe we can bring it up here. That's probably -- there, you can run your annualization, right? I mean, we're looking at -- and that's spot rates now, right? Current spot rates, so you have a -- that's a little simple, let's say, $25,000, let's say, $8,000 in costs. So you're basically at $17,000 per day, and we have around 20,500 days available. So you would run 20,500 days times $17,000 in EBITDA, right? And I don't have a calculator with me. Benjamin, do you have that? That would obviously mean you disregard any charter -- any existing charter book, but that would translate on the spot rate basis into an annualized EBITDA of USD 340 million. But again, we have an existing charter book. We have quite a bit covered already, right? But I think the numbers are provided on Slide 15 quite transparently in terms of what is the cover already. So that's probably the math than to make based on rate assumptions, right? But this is an annualized run rate that is possible at these spot rates.

[Frode Morkedal, Managing Director]

Yes. I mean it's based on your guidance for the full year, like the $140 million. It seems like the EBITDA should be going from towards $20 million towards $50 million by the end of, let's say, Q4, right? And then the numbers you just gave indicate more than $80 million EBITDA per quarter run rate. So this...

[Constantin Baack, Chief Executive Officer]

Yes. Okay. Please continue, Frode.

[Frode Morkedal, Managing Director]

No, I was finished. Just given where this cash flow is heading, it's just a matter of time before you're net debt 0, right? So I'm just looking -- I'm curious, when you look ahead, let's say, 3 to 5 years ahead, where do you think MPC would be? What's your long-term goals, given the strong cash flow coming in the next few years, which seems to be already booked?

[Constantin Baack, Chief Executive Officer]

Yes. I mean the -- and you alluded to it. I mean we will be very quickly net debt 0. I mean, being net debt 0 is, obviously, no kind of ultimate goal of the company, but it's obviously a reflection of the earnings capacity. And I mean, our goal is to be kind of a low-risk investment in the shipping space, right, in a segment which we believe is very attractive when looking at demand-supply dynamics, I personally believe vessels in our sector will at least run until 25 years. We will then also have the ability, should the market get a bit more bumpy, at a fairly low leverage level to also make use of opportunities, of course, also to return capital to investors. So I think strategically, we will continue to focus on intra-region tonnage that might increase in size over time. But to be kind of a tonnage provider that at some stage will renew the fleet, once we have more certainty about propulsion technology, et cetera, definitely something to consider and to do that from a very low-risk position. And at the same time, of course, and that is important also in a market like this as part of the capital allocation strategy have returning capital to investors is one of the ingredients.

[Frode Morkedal, Managing Director]

Yes. Makes sense. Just a final question on -- maybe you talked about it, but the EEXI. I'm curious to know if you have done study on your own fleet or maybe if you have any thoughts about the wider containership fleet, right, in order to reach those carbon emission regulations, what would be the impact? How large of a share of the fleet has to slow down the speed, for instance?

[Constantin Baack, Chief Executive Officer]

Yes. And I know that this is a subject that is being discussed up and down. And we have, of course, looked at EEXI implications for our very own fleet. Of course, the formula is yet to be finally defined by the IMO, which will take place in June in all likelihood. That's at least our expectation. So we have run preliminary figures. We expect that certain engine power limitation measures are required on a lot of vessels, not just in our fleet but in general. And having said that, in particular, on our vessels and looking at the trading profile, the question is, will a engine power limitation actually affect the trading profile? Or will it just cut, let's say, the upper part of your speed curve? So when we look at our vessels, actually 60% of the vessels will not be affected at all. So they will not run slower. So it's important to understand that not for all vessels, a EPL, so engine power limitation, exercise will actually change the speed at which they operate, because most of the vessels, especially the vessels built, let's say, pre-2010 with more -- with larger main engines, et cetera, will actually not necessarily run slower on the trades they operate in. So I think to answer that question globally is very difficult because you would need to factor in the specific trading profile. And if people answer that as a global number, I think they are pretty brave, and they seem to have more visibility than we have on all the trading pattern of all the vessels. So I would be very careful on that part. But there will certainly be some implications. So I do expect the overall market to go slower. I do expect that vessels will be affected that probably not run in trades where they already now run slow. So there is an implication, and that's certainly a positive one for capacity. Yes, I don't know, operator, whether there are further questions on -- through the line. There's one more here through the web. So there's one question about whether it's possible to get some further information about the pool MPCC is joining, expecting earnings per vessel in the pool seems to be rather low, et cetera, et cetera. What are the reasons for joining the pool and not operating the vessels by yourself? Okay. So basically, we operate a number of vessels 1,300 and 1,500 TEUs in a pool together with one other owner. So it's not that the pool dictates what to do. We are the largest contributor to this pool. So the charter strategy is basically being given by us. So pool does not necessarily mean those vessels operate on short-term charters. It does mean that the earnings are proved. And [Audio Gap]to run this pool is because we have a certain regional focus, and that is on vessels with high reefer container capacity operating predominantly in Latin America and the Caribs, where we have a very strong footprint with that pool and with our fleet in particular. So chartering wise, that pool will reflect pretty much our chartering strategy. Looking at the pool was quite helpful during last year because we were able to, given the larger fleet, basically buffer a bit the negative market, but it takes slightly longer now, obviously, to digest and grow into the good charters. But just as an example, we have just yesterday a 1,500 TEU vessel in the pool was fixed for 24 months at $20,800 per day. So there's also coverage in the pool. That coverage is increasing. And if you look at the rates, which we have also illustrated at the very last page of the earnings -- or sorry, the second last page of the earnings call presentation, there we have provided a guidance as far as expected financial year 2021 gross pool rate is concerned for the different clusters. And indeed, that is at a slightly lower level than spot rates. But that's just a function of digesting the existing pool book. And going forward, I expect that to catch up accordingly. So here, you can see that slide. If you have that in front of you, at the bottom here we have run some explanations on pool earnings, which obviously will increase over time. So that was the question on the pool. Just seeing whether there are further questions. Operator, are there further questions through the line?

[Operator]

[Operator Instructions] There are no further questions. Please continue.

[Constantin Baack, Chief Executive Officer]

Okay. If there are no further questions, I would like to thank everyone for their interest and for listening in and for raising questions. Thank you, operator. And we are certainly looking forward to a very exciting 2021 and for -- continue to enjoy the ride in this historic container market. Yes. And if there are any further questions, please feel free to reach out through the IR function on our website. And many thanks for your attendance. Many thanks, operator. Take care. Bye.

[Operator]

That does conclude our call for today. Thank you for participating. You may all disconnect.