Maritime transport giant lays off 10 thousand employees. Crisis in international trade and therefore in the economy
Shipping giant AP Moller-Maersk A/S reported a decline in profits and revenues for the third quarter, forcing the company to take a defensive stance by eliminating more than 10,000 jobs as container rates fall and the decline of demand hit the global shipping sector, which could last until 2026 . The company still kept its full-year guidance at the lower end of its previously indicated guidance.
“If you look at the order book and what's going to happen over the next couple of years, I think we're probably adapting to a very pressured and pressured environment for two or three years to come,” Vincent Clerc CEO Mark Cudmore confirmed Friday.
Maersk, which controls around 17% of global container trade, began reducing its workforce from 110,000 in January and will fall to fewer than 100,000 by the end of the year – resulting in cost savings of 600 million of dollars. Clerc said about 6,500 positions have already been eliminated.
Maersk is considered a proxy for global trade. Container lines are already seeing earnings declines after record profits in 2021-22 as demand for consumer goods during Covid surged.
According to the World Container Index and the Baltic Dry Index, global shipping rates on major routes have already plummeted by 75%-85% compared to 2021 peaks.
“Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base,” Clerc said in a company press release, adding: “Since the summer, we have experienced excess capacity in most regions triggering price drops and no noticeable increase in recycling or ship detention.”
Maersk shares fell 14% to 10,485 crowns, a three-year low in Copenhagen. Other shippers slipped on the news, including Hapag-Lloyd -6%, DSV -2.4% and Kuehne + Nagel -1.8%.
Analysts at Goldman Sachs issued a cautionary note to clients, suggesting the global shipping sector could be in a more prolonged recession, and recommended selling Maersk shares. Bloomberg Intelligence warned that Maersk may not see an earnings recovery until 2025. And Morgan Stanley said the outlook was disappointing.
The indicator linked to the total number of global payments also indicates that we are moving towards a recession, after years of plenty.
Meanwhile, JPM's global manufacturing PMI index remained stuck below 50 (contraction) for the entire year. So there's a very bad period ahead
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The article Maritime transport giant lays off 10 thousand employees. International trade crisis and therefore of the economy comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/colosso-del-trasporto-marittimo-licenzia-10-mila-dipendenti-crisi-commercio-internazionale-e-quindi-delleconomia/ on Sun, 05 Nov 2023 07:00:08 +0000.