Shipping giant cuts 10,000 jobs

Maersk will cut thousands of jobs as weak demand and plunging freight rates push revenue down.

On November 3, Maersk - one of the world's leading shipping lines - announced that its third-quarter revenue fell nearly 50% compared to the same period last year, to $12 billion. It said it had cut 6,500 jobs this year due to "challenging market conditions" and planned to reduce another 3,500, mostly in the next two months.

This will reduce the company’s workforce to less than 100,000. “Our industry is facing a new reality, with demand weakening, freight rates returning to historical levels and inflationary pressures driving up costs,” Maersk CEO Vincent Clerc said in a statement.

Shares in the company fell 17.2% on the Danish stock exchange yesterday, to a three-year low, following the news.

Maersk reported record profits of $36.8 billion last year, but for months it has warned that high freight rates would not last. During and after the pandemic, soaring demand for goods and disruptions to supply chains pushed freight rates higher, a trend that has since cooled amid the gloomy macroeconomic environment.

"Demand for transport will be strong if the economy is improving. But if the outlook is gloomy, the situation will reverse," said Russ Mould, investment director at AJ Bell.

According to Drewry Shipping, the average freight rate for a 40-foot container (large volume cargo) on eight major global shipping lanes was $1,406 this week, down 54% from the same period in 2022.

Maersk maintained its pre-tax profit forecast for this year at between $9.5 billion and $11 billion. However, they said the actual level achieved could be around $9.5 billion.

Ha Thu (according to CNN)

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