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Maersk Expects To Achieve Savings Of US$ 600 Million With Workforce Cut Measures, Until It Reaches The Dismissal Of 10,000 Employees.
The renowned shipping company, A.P. Moller-Maersk, considered a crucial indicator of global trade, announced the dismissal of at least 10,000 employees in an effort to preserve its profitability. The company claims that the shipping sector is contracting at a faster pace than initially expected, due to declining freight rates and increased competition. So far, around 6,500 filled job positions have already been eliminated.
Industry Leader Takes Drastic Measures To Face Market Contraction
The job reductions correspond to about 9% of Maersk’s total job positions and are driven by declining freight rates and heightened competition in the sector.
So far, approximately 6,500 employees holding these positions have been dismissed, according to CEO Vincent Clerc, in an interview with Bloomberg TV.
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He noted, “If we look at the order book and what is coming in the next two years, I think we are probably preparing for a very moderate and pressured environment over the next two or three years.”
The news of so many layoffs shook the market, with Maersk’s shares on the Copenhagen Stock Exchange dropping approximately 15% in early afternoon trading local time.
The company estimates that these workforce reduction measures will result in impressive savings of US$ 600 million.
In addition to the layoffs, Maersk will also reassess its share buyback program scheduled for 2024 and will reduce its capital expenditure estimates for 2023 and 2024.
These actions demonstrate the company’s commitment to confronting the challenges of the shipping market.
Lower Freight Rates And Increased Competition Pressure Maersk
The container shipping sector is facing difficulties after years of record profits in 2021 and 2022, driven by high demand for consumer goods during the pandemic, along with a limited supply of ships, which raised freight prices.
However, in 2023, global economic growth has weakened, and companies are opting to work with existing inventories rather than transporting new products to Europe and the U.S.
Meanwhile, an oversupply of ships is accumulating in the market.
The multinational, which employed 110,000 people until January, is in the process of reducing filled job positions to less than 100,000, which will result in savings of US$ 600 million in 2024 and the following years compared to the current year.
The company’s shares reflect the changes in the shipping landscape as Maersk adapts to market challenges and aims to maintain its profitability amid a competitive and constantly evolving environment.
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