Container shipping company Maersk cuts 10.000 jobs

Danish container shipping company Maersk, which accounts for about a sixth of global container trade, is to cut at least 10 000 jobs worldwide. The industry is struggling with falling rates and increasing competition and the company is so protecting its profitability says CEO Vincent Clerc.

The layoffs are expected to save the company 600 million dollars.

Oversupply of ships

In fact, of the 10 000 jobs the company plans to cut out of a total of 110 000 employees, 6 500 have already disappeared. The remaining 3 500 will follow this year and early next year.

Maersk, whose clients include Nike and Walmart, must step in and make savings because global economic growth has lost momentum this year and companies prefer to use their stocks rather than transport new goods to Europe or the United States.

Moreover, an oversupply of ships seems to be building up, partly caused by the emergence of mega vessels that can carry many more containers, reducing costs but aggravating the oversupply problem.

Rates also fell dramatically. The coronavirus epidemic caused prices to swing out of control: the price for a standard container rose from 1 781 dollars to 13 900 dollars. Today, however, the price is almost back to its old level, at 2 287 dollars per container.

Still billion-dollar profit

This is causing container shipping companies, after record profits in 2021 and 2022, to face an abrupt drop in their profits this year. “We are putting our cost base in order and getting ready for the leaner years ahead,” Clerc said.

The Swiss sees an increasing gap between supply and demand. “If we do not see an increase in capacity management, this will increase pressure on rates for quite some time.”

Maersk, the world’s second-largest shipping company after the Mediterranean Shipping Company (MSC), expects global container trade to decline by 0,5 to 2% this year. Thus, in the third quarter of this year, Maersk saw revenue almost halve to 12,1 billion dollars. Net profit plummeted to 521 million dollars from 8,9 billion dollars a year ago.

Nevertheless, the Copenhagen-based company which launched its first green methanol-fuelled container ship in September, still expects a profit of 9,6 to 11 billion dollars.