Maersk to cut 10,000 jobs as freight rates pressure profitability

AP MOLLER-MAERSK, a bellwether for global trade, plans to cut at least 10,000 jobs to shield its profitability amid declining freight rates and increased competition in marine transport.

Maersk said in a statement on Friday (Nov 3) that it expects to save US$600 million through the job cost measures. The Copenhagen-based company will also put its 2024 share buyback programme under review and reduce its estimate for capital expenditure in 2023 and 2024.

Maersk said earnings before interest, tax, depreciation and amortisation (Ebitda) fell to US$1.88 billion in the third quarter. That compares with a median estimate of US$1.89 billion in a survey of analysts compiled by Bloomberg. 

Maersk said it now sees 2023 underlying Ebitda “towards the lower end” of a previously given range of US$9.5 billion to US$11 billion.

Container lines are facing an abrupt drop in earnings after record profits in 2021 and 2022. At the time, there was high demand for consumer goods during the Covid-19 pandemic, coupled with limited vessel supply, which drove freight prices higher.

This year, global economic growth has lost steam and companies are working through existing inventories instead of transporting new goods to Europe and the US. At the same time, an oversupply of vessels is building up on the market.

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Global container trade will probably decline 0.5 per cent to 2 per cent this year, Maersk said, compared with its previous prediction of a contraction of 1 per cent to 4 per cent.