Maersk to cut workforce by over 10,000 as profit plummets
Danish shipping major, Maersk, is looking to cut its workforce by over 10,000 people as it looks to save $600 million in 2024. The decision was unveiled together with the results for the third quarter that saw the company post a net income of $554 million in the third quarter, plummeting from the $8.9 billion in net profit during the corresponding quarter in 2022.
According to Maersk, the financial results for the third quarter of 2023 were in line with expectations in a difficult market environment, with good performance in Terminals and a stabilised Logistics & Services which partly offset continued erosion in Ocean.
While volumes were up in most segments and cost reductions improved results, rates continued to erode, in particular in Ocean, and are now close to 2019-levels. The volatility has pushed the company into a restructuring that will result in the company reducing the workforce below 100,000, from 110,000 in January 2023.
Revenue for the third quarter decreased by $10.6 billion to $12.1 billion led by $10.1 billion lower revenue from Ocean, and lower revenue of $665 million and $118 million from Logistics & Services and Terminals, respectively.
Challenges across segments
Ocean results have reached break-even levels due to continuing challenging market conditions resulting in substantially lower freight rates compared to the abnormally high rates in 2022. The impact of lower rates was partially offset by lower operating costs, which decreased despite an increase in volumes. Cost containment remains a key focus while ensuring the quality and reliability of Ocean products.
Logistics & Services business performance continues to be impacted by lower rates, particularly in the air and haulage market and by lower volumes for lead logistics and e-commerce. Profitability decreased versus previous year and stabilised sequentially with an increased emphasis on cost management to protect margins in a lower rate environment.
Terminals storage revenue declined given the normalisation of storage cost and lower volumes, mostly due to ongoing construction work and exits of terminals. However, tariff increases in line with local inflation as well as strong cost control secured a continued solid financial performance.