Maersk layoffs: Shipping group to cut at least 10,000 jobs as revenue drops

Layoffs: Shipping group A.P. Moller-Maersk on Friday said that the company would cut at least 10,000 jobs in the face of overcapacity, rising costs and weaker prices. This comes as the company has reported a steep drop in third-quarter profit and revenue. As per Financial Times, the company has said that the job cut would generate annual savings of $600mn.

As per the report, Maersk had already let 6,500 workers go. “We had to hire a lot of colleagues during the pandemic [but now] you don’t need the same workforce,” Clerk said.

Subdued Demand

The downturn which was steeper than Analysts' prediction is mainly due to subdued demand, prices back in line with historical levels and inflationary pressure according to Maersk CEO Vincent Clerc.

"Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base," CEO Vincent Clerc said in a statement.

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He further added that since summer there has been overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.

The Shipping sector experienced a boom during the coronavirus pandemic. The redundancy is the latest sign of a downturn in consumer spending has reversed the fortunes of container shipping companies. During the pandemic these companies generated record profits due to increased spending on online shopping.

However, Maersk's CEO Vincent Clerk has now warned that shipping costs would remain under pressure for the next two years. Despite the company's ambition to expand its business, job cuts could be seen in its logistics business.

Profit Drop

Maersk's profit before tax has plunged 94% year on year to $691mn during the three months to September. However, the earnings remain above pre-pandemic levels.

Maersk controls about one sixth of global container trade, transporting goods for a host of major retailers and consumer goods companies such as Walmart and Nike. The Shipping giant has said that it expects global container volumes in its ocean business, its largest segment, to fall by up to 2% this year.