Dive Insight:

Maersk’s plan to reduce its workforce comes as a volatile ocean market has created headwinds for the carrier, Clerc said in the call. By the end of Q3, the company had already significantly reduced its workforce since early 2023, from 110,000 employees to 103,500, but a difficult market led the company to target more job cuts. The company expects the total of 10,000 job reductions — combined with other “cost containment efforts” — will save Maersk $600 million in selling, general and administrative expenses during 2024. Due to an unpredictable ocean market, Maersk and MSC not moving forward with their 2M alliance and global demand volatility are not doing the ocean carrier any favors. “Throughout the quarter we have seen overcapacity across most regions triggering a new wave of price reductions,” Clerc said in a LinkedIn post. While volumes for the company’s ocean segment increased by 5% year-over-year, its revenue was down 56% YoY, from $18 billion in the third quarter of 2022 to $7.9 billion in Q3 2023. Revenue declines come as ocean freight rates have tumbled from pandemic highs. Freightos’s Global Container Freight Index showed spot rates at $1,166 in October 2023 compared to more than $3,000 a year earlier to move a 40-foot-container. Other segments including logistics & services, terminals, towage and maritime services revenue were also down compared YoY. Looking ahead, Clerc said he did not see clear waters ahead. Instead, he said the ocean carrier expects “further headwinds as the market conditions in Ocean are worsening.”