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Loss! Maersk 10,000 layoffs!
Nov 06,2023
Maersk released third-quarter results yesterday, saying that due"Accelerated decline in freight rates",Its liner shipping business recorded in the third quarter.$27 million loss from operations.
In addition, due"Deteriorating market conditions" and an expected group EBIT loss for the quarter, the Danish shipping and logistics group is taking radical measures,Layoffs are taking place globally10000 people-including 3500 layoffs in the future.
Maersk implemented strict cost control measures this year to effectively mitigate the impact of the challenging market environment, including reducing the number of employees fromFrom 110,000 at the beginning of 2023, it has dropped to about 103,500 at present.In light of the deteriorating maritime market outlook, Maersk will continue to implement these initiatives and announced plans for further staff reductions.3500 employees, 2500 of whom will be affected by the end of the year and the rest through 2024. The measure would reduce the company's overall headcount to below 100000. As a result, restructuring charges are now expected to total $0.35 billion, up from the $0.15 billion announced in February.
CEO Ke WenshengVincent Clerc said that "the trading environment is very uncertain and there is a significant risk of further downside", which he believes is partly due to an oversupply of capacity.
"Since this summer, we have seen excess capacity in most regions trigger a new wave of price cuts, and at the same time, the situation of dismantling and idling capacity has not yet improved. Therefore, as market conditions deteriorate, we expect further resistance."
He added:"The real trick now is to understand where the spot rate moves in the contract season in the coming months because that will have an impact on the renegotiation of the contract."
Maersk AboutSixty-eight per cent of liner traffic is under contract, so it enjoys a premium over spot freight rates, but Ko expressed concern that if spot freight rates are not restored, the contract will have to be "reset" at a lower level.
"If the fourth quarter (as far as the in stock market is concerned) does not bring some improvement, then I think we will face a fairly severe situation in 2024." Ke Wensheng warned.
In terms of revenue, the Group's third quarter turnover fell year-on-year46% to $12.1 billion, with EBIT of $0.538 billion and net profit after tax of $0.6 billion, compared with $8.9 billion in the third quarter of last year.
Although the volume of the quarter was above the industry average5%, to 6.3 million TEU, but revenue from the maritime business plunged 56% to $7.9 billion. However, Maersk's average rate fell 58% YoY to $TEU1048, resulting in an EBIT loss of $27 million.
At the same time, in itsThe "typical" logistics and services division, with revenue down 16 per cent to $3.5 billion and organic revenue down 22 per cent, hurt by a decline in the retail and lifestyle segments of its business, particularly in North America, led to a 47 per cent decline in EBIT to $0.136 billion.
On a more positive note, Ko said Maersk's terminal business"Still resilient," although its global terminals saw storage revenue fall, with throughput down 4.1 per cent to 3.1 million TEU, but turnover fell only 11 per cent to $1 billion and operating profit fell 24 per cent to $0.27 billion.
Elsewhere, Maersk's disappointing third-quarter results were hampered by itsA boost from Towage & Maritime, which realized a net gain of $94 million following the sale of US Marine Management.
At the same time, Ko said he expects the European Commission next year.The April decision not to update the Coalition's Collective Exemption Regulations (CBER) for liner shipping "has little, if any, impact".
Ke Wensheng said"We have ample data to show that alliances and VSA are good for consumers because they form a lower-cost route network and therefore lead to cheaper shipping prices".
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