Massive Layoffs at Maersk as Pandemic Shipping Boom Plummets
Maersk faces deeper layoffs amid declining demand and freight prices, signaling a reversal from the pandemic-induced shipping boom
Shipping giant Maersk is letting go of thousands of additional employees due to decreased demand and reduced freight prices, indicating that the previously thriving shipping industry is now experiencing a downturn. In its third-quarter report, one of the largest shipping companies in the world revealed that its revenues had plummeted by nearly 50% to $12 billion, in comparison to the same time frame in the previous year.
The Danish company has announced that it has already eliminated approximately 6,500 positions this year due to difficult market conditions. Additionally, it intends to eliminate another 3,500 jobs, mostly within the next eight weeks. As a result, the company's workforce will be reduced to less than 100,000 employees.
"Our industry is experiencing a new normal characterized by weakened demand, prices returning to historical levels, and inflationary pressures impacting our cost base," stated Maersk Chief Executive Vincent Clerc.
While the company achieved a record annual profit in the previous year, it has issued warnings for several months now about the temporary nature of the surge in shipping prices following the reopening of economies after pandemic lockdowns. This surge was driven by a release of pent-up demand for goods, which ultimately cannot be sustained.
The global average cost for shipping a 40-foot container on eight major routes is $1,406 this week, as reported by Drewry Shipping, based in London. This marks a 54% decrease compared to the same week in 2022. Additionally, Maersk anticipates that its full-year profit will fall towards the lower end of its previously estimated range of $9.5 billion to $11 billion.
The companys shares sank as much as 12.5% in early trade Friday, extending those losses later to trade down 17.2% by 7.41 a.m. ET.
