The shipping giant can’t bear it anymore! It’s laying off 10,000 people! It’s pushing forward the price increase plan again...

With the end of the boom in the shipping industry, the container shipping market has continued to decline, and many shipping companies have experienced quarterly losses. In the third quarter, industry giant Maersk couldn't bear it any longer. Its third-quarter profits fell 94% year-on-year, and it announced a large-scale layoff to reduce costs.
On November 3, the third quarter results of Maersk, the world's second largest shipping company, were released. Its revenue was almost halved, the actual earnings before interest and tax (EBIT) of the shipping business turned a loss, and it planned to lay off 10,000 people.

Affected by falling freight rates and reduced cargo volume, revenue in the third quarter of 2023 was US.1 billion, down from US.8 billion in the same period last year, with an EBIT margin of 4.4%. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell more than 80% to .88 billion.

In the shipping market, the third quarter is usually the peak season for the industry. Freight volume and freight rates will rise during this stage, but this year's peak season has not formed. Vincent Clerc, CEO of Maersk, said in this analysis: "Low demand, freight rates returning to historical levels and inflationary pressures on costs have become the new normal for our industry. Since the summer, we have seen overcapacity on most routes around the world. problems, leading to a drop in freight rates." According to Maersk's third quarter report, Maersk's average freight dropped by 58% to US,095/FFE (40-foot container) in the third quarter, which was also a 14% decrease from the previous quarter.

With the continued decline in freight rates leading to a decline in profit margins, "increasing revenue and reducing expenditure" has become an inevitable measure that Maersk must take to save the crisis. In the past third quarter, Maersk focused on cost control. Under fixed fuel prices, the cost of a single box dropped by 11% year-on-year. This part of the cost reduction has alleviated the profit contraction caused by the decline in freight to a certain extent.
However, in the face of freight volumes and freight rates that will continue to decline in the future, Maersk also needs to develop new cost-saving measures. As a result, the world's second-largest container shipping company has also begun laying off employees. Since the beginning of this year, Maersk has reduced its workforce by 6,500 employees, and announced when it announced its third-quarter financial results that it would continue to lay off 3,500 people, for a total of 10,000 layoffs. Through this move, Maersk's number of employees will be reduced from 110,000 to less than 100,000.

Maersk stated that the personnel adjustment is a supplement to the full-year cost control, and its cumulative effect can reduce Maersk’s selling, general and administrative expenses (SG&A) in 2024 by US0 million.
Maersk controls about 17% of the world's container trade and is considered a bellwether for global trade. Falling container freight rates and weakening demand have hit the global shipping industry this year, and analysts predict this situation may continue until 2026. The latest container forecast report released by Drewry also predicts that the industry will lose US billion next year...
Maersk announced an increase in FAK and the imposition of peak season surcharge PSS. Following Hapag-Lloyd, CMA and others announced rate increases, Maersk also announced that it would increase FAK rates from the Far East to Northern Europe and the Mediterranean, and also levy peak season surcharges, congestion charges, etc.