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Maersk expects to achieve savings of US$600 million with staff cutting measures, until 10 employees are laid off.
Renowned shipping company AP Moller-Maersk, considered a crucial indicator of global trade, has announced the layoff of at least 10.000 employees in an effort to preserve its profitability. The company claims that the maritime transport is contracting at a greater pace than initially anticipated due to declining freight rates and increased competition. To date, around 6.500 job vacancies that were filled have already been eliminated.
Leading company in the sector takes drastic measures to face market contraction
The employee reductions account for about 9% of Maersk's total job openings and are driven by declining freight rates and increased competition in the sector.
To date, approximately 6.500 employees who filled these job vacancies have been fired, according to CEO Vincent Clerc, in an interview with Bloomberg TV.
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He noted: “If we look at the backlog and what’s coming over the next two years, I think we’re probably setting ourselves up for a very moderate and pressured environment over the next two or three years.”
The news of the layoff of so many employees shook the market, with Maersk's shares on the Copenhagen Stock Exchange falling approximately 15% in early afternoon local time.
The company estimates that these staff-cutting measures will result in savings of an impressive $600 million.
In addition to the layoffs, Maersk will also reassess its share buyback program scheduled for 2024 and reduce its capital expenditure estimates for 2023 and 2024.
These actions demonstrate the company's commitment to facing the challenges of the maritime transport market.
Lower freight rates and increased competition put pressure on Maersk
The maritime transport Container shipping is struggling after years of record profits in 2021 and 2022, driven by high demand for consumer goods during the pandemic along with limited ship supply, which has driven up freight prices.
However, in 2023, global economic growth has lost momentum, and companies are preferring to work with existing stocks rather than shipping new products to Europe and the US.
At the same time, an excess supply of ships is accumulating on the market.
The multinational, which until January employed 110.000 people, is in the process of reducing its filled job vacancies to less than 100.000, which will result in savings of US$600 million in 2024 and in the coming years, compared to the current year.
The company's actions reflect changes in the shipping landscape, as Maersk adapts to market challenges and aims to maintain its profitability amid a competitive and changing environment.
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