Maersk has announced that by early 2024 it will have laid off 10,000 of its staff.
The company reported revenues in Q3 2023 that were US$10 billion below revenues for the same period in 2022. It also reported margin had declined by 4.4 percent.
While this result is in line with market conditions, the liner company said it expects global container volume growth will be in the range of -2 percent to -0.5 percent, compared to -4 percent to -1 percent previously. Ocean expects to grow in line with the market.
“Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base. Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling. Given the challenging times ahead, we accelerated several cost and cash containment measures to safeguard our financial performance,” Vincent Clerc, Maersk CEO, said in a statement.
Ocean reported a nine percent increase in volumes since the previous quarter. However, EBIT was negative at $27 million, down from $8.7 billion in Q3 2022, driven by significant pressure on rates, in particular on Asia to Europe, North America and Latin America trades.
Revenue in Logistics & Services was $3.5 billion compared to $4.2 billion in Q3 2022. The segment was impacted by lower prices, especially in the air and haulage market, while volumes were broadly back in line with last year’s level. Increased cost management helped stabilize margins.
Terminals reported revenue at $1.0 billion, compared with $1.1.billion in Q3 2022 driven by less demand for storage amid eased global congestion and a 4.1 percent decline in volume.
Maersk has imposed cost containment measures during the year, including a headcount reduction from 110,000 in early 2023 to around 103,500 today. Given the worsening price outlook in its ocean division, Maersk plans to further decrease the workforce by 3,500 positions, with up to 2,500 to be carried out in the coming months and the remaining to extend into 2024. This will reduce it global workforce to under 100,000.
Oher cost control measures undertaken will bring down Maersk’s selling, general and administrative expenses (SG&A) cost by $600 million for 2024. The company has also cut capital expenditures.