International shipping giant Maersk has announced a fresh wave of job cuts as the global freight industry faces a “new normal” of tumbling prices, inflation and weak consumer demand.
In its Q3 2023 financial report, the Danish firm said it would cut 3,500 jobs as it sought to deal with the “challenging” economic environment. 6,500 job cuts were announced earlier in the year, bringing the total number of jobs expected to be lost to 10,000.
Falling financials
Maersk reported a steep drop in both profits and revenue compared to last year, but said that this was “in line with expectations” as shipping rates continued to fall from 2022 levels and world-wide capacity rose following an easing of Covid-related blockages.
Revenue was $12.1bn in Q3 2023, down from $22.8bn in Q3 2022. Operating profits also dropped to $1.9bn, down from $10.9bn in 2022, while revenues dropped 47% to $12.1bn.
However, Maersk predicted that it would still hit its annual earnings target, but this was now expected to be at the lower end of the range.
‘New normal’
Vincent Clerc, Maersk CEO, said the industry was 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.”
He said the company remained “dedicated” to pursing its strategy of servicing customer needs across the entire supply chain.
Global signs
Russ Mould, investment director at AJ Bell, told the BBC that the news suggested "the global economy is losing speed".
“If you want an economic bellwether, look no further than Maersk, as its status as one of the world's largest container shipping companies makes it a fair proxy for global growth.”
Maersk now expects global container volume to fall by as much as 2% this year.
The Loadstar predicted that job cuts were expected across the forwarding industry, citing industry sources.