Maersk, the second-largest container shipping company in the world, announced on November 3rd that it would be laying off thousands of employees. The announcement came as demand continues to weaken and freight rates plummet, leading to lower revenues.
Earlier this year, Maersk, which had 110,000 employees, cut 6,500 jobs. And according to its report, third-quarter revenue in 2023 fell by nearly 50% from the same period last year, to $12 billion. This led the "giant" to plan to cut an additional 3,500 jobs. And in the absence of any positive signs in the market in the last two months of the year, they will proceed with this plan. Thus, Maersk's workforce will be below 100,000 by 2024, saving the company $600 million.
The move also caused Maersk's stock to fall 17.2% on the Danish stock exchange, the lowest level in three years.
Maersk CEO Vincent Clerc said that the shipping industry is facing many challenges due to a sharp decline in market demand caused by the impact of the economic recession, in addition, inflation is causing costs to rise.
Last year, Maersk announced record profits of $36.8 billion thanks to the resumption of disrupted supply chains and a surge in demand for goods after the pandemic. However, since the end of 2022 and the beginning of 2023, the macroeconomic environment has shown signs of gloom, affecting businesses around the world.
Simon Heaney, director of container shipping market research at Drewry, predicts that global container freight rates will fall by 33% in 2024. He also said that the container shipping index in the following year will reach a very low level, with supply growth forecast to be 6.4% while demand growth is only 2%.
Although the trend of falling ocean freight rates will continue, it has not yet had an impact at this point. When inflation is high, causing operating costs to rise, high freight rates are a difficult equation for container shipping companies
