Danish container shipping company and freight forwarder AP Møller-Maersk will cut at least 10,000 jobs worldwide. The company wants to save costs and protect profitability. The move follows falling freight prices, increased competition in the sector and weaker demand for container transport.
Maersk previously warned that global container volumes will decline more than expected this year. As the global economy weakens, fewer goods are transported by ship from Asia to Europe and the United States. For example, consumers are buying fewer things due to high inflation and manufacturers are trying to reduce existing stocks before building new stocks.
Due to the mass layoff, about 9 percent of the company’s employees will disappear. Maersk expects the layoffs to result in cost savings of $600 million. The Copenhagen-based company will also revise its share buyback program for 2024 and reduce capital expenditure in 2023 and 2024. Earnings before interest costs, taxes, depreciation and amortization this year will be at the lower end of the previously forecast range of $9.5 billion to $11 billion.
CEO Vincent Clerc stated in an interview with Bloomberg TV that Maersk has already started cutting costs and has already cut 6,500 jobs in the round of layoffs. Since the beginning of the year, the workforce has already been reduced from 110,000 to 103,500. Ultimately, the company wants to reduce its workforce to below 100,000 by 2024.
Maersk achieved record profits in 2021 and 2022 thanks to high demand for consumer goods during the corona pandemic. This strong demand, in combination with the limited supply of freight ships, led to a significant increase in transport prices. In the third quarter of this year, Maersk saw sales almost halve to $12.1 billion. Net profit plummeted to $521 million from $8.9 billion a year ago.
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