Suggesting the fraught outlook for container shipping is longer term than some had predicted, Maersk Line today outlined massive spending cuts including slashing its global headcount by at least 4,000.
“Maersk Line will reduce its network capacity and postpone investments in new capacity, while the same time reducing operating costs by escalating already announced plans to simplify the organization,” the world’s number one containerline said in a release.
Maersk Group’s full year results were recently revised downwards by $600m thanks to the deteriorating situation in the container sector.
Over the next two years, Maersk Line expects to lower its annual sales, general and administration (SG&A) cost run-rate by $250 million with an impact of $150m in 2016.
“We are on a journey to transform Maersk Line. We will make the organisation leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible,” said the line’s ceo, Søren Skou.
At least 4,000 out of Maersk Line’s 23,000 staff around the world will be cut by the end of 2017.
“We are fewer people today than a year ago. We will be fewer next year and the following year. These decisions are not taken lightly, but they are necessary steps to transform our industry,” Skou said.
Network capacity will be reduced in this quarter and throughout 2016. Maersk has already announced the closure of four services (ME5, AE9, AE3 and TA4) has over the last two months and plans are in place to further cancel a total of 35 sailings this quarter.
Maersk Line said it was unlikely to exercise options for six 19,630 teu vessels and two 3,600 teu feeders, while it would postpone a decision on an optional eight 14,000 teu vessels.
The news from Copenhagen will be another hammer blow to German containerline Hapag-Lloyd’s Friday debut on the Frankfurt Stock Exchange, an IPO that has been beset by bad market news surrounding the containershipping industry.