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 historic 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.

Last year, Maersk reported record profits of $36.8 billion. However, for months, it 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 up, a trend that is now cooling due to the gloomy macroeconomic situation.

"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 freight rate for a 40-foot container (large volume cargo) on eight major global shipping routes was $1,406 this week. Compared to the same period in 2022, this price is 54% lower.

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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