Maersk Slashes 10,000 Jobs; Reflects Trade and Shipping Turbulence
Maersk slashes 10,000 jobs amidst a downturn in global trade and excess shipping capacity, marking a strategic reset for the industry.
n a significant shift for the logistics sector, A.P. Moller-Maersk, a leading indicator of global trade health, is set to reduce its workforce by over 10,000 positions as it navigates through post-pandemic market adjustments and a noticeable downturn in seaborne trade. With a third-quarter profit drop to $521 million from $8.88 billion the previous year, Maersk's decision underscores the broader industry's struggle with overcapacity and plummeting freight rates—a staggering 58% decline year-over-year.
The end of the cargo boom has led to a surplus of ships and a decline in big-ticket item shipments, which has not only affected Maersk but also led to a slide in shares for industry players such as Hapag Lloyd. The Ocean division, traditionally a profit-maker, posted a quarterly loss for the first time in years. This stark reversal from pandemic-driven highs has prompted Maersk to aim for savings of $600 million in the coming year, partly through workforce reductions, signaling a "reset of the baseline," as CEO Vincent Clerc put it, rather than a temporary cutback.
Amidst this backdrop, the 2M alliance with MSC has been halted, and with container demand projected to grow by just 2% against a fleet growth of 6%, the industry braces for a continued glut of ships.
Analysts predict a challenging 2024, with an overhang lasting well into 2025.