Following the announcement that its earnings in the latter part of last year would be less than had been forecast, the world’s largest container shipping company, the Maersk Line, of Copenhagen, unveiled a number of cuts that would be made to improve the situation.
Unveiling the changes in November, Maersk Line chief executive Søren Skou said: “We will make the organisation leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible.”
The Maersk Line attributed the downturn to deterioration of the container shipping market beyond the group’s expectations especially in the later part of the third quarter and October last year.
The line said it will reduce its network capacity and postpone investments in new ships, while cutting operating costs by escalating plans to simplify the organisation. The company’s network began to be reduced in the fourth quarter of last year and continue throughout this year. This meant the closure of four services, ME5, AE9, AE3 and TA4, in the third and fourth quarter and for a further cancelling of 35 sailings in the fourth quarter. The line said it will not exercise the previously announced options for six 19,630 teu ships and two 3,600 teu feeder ships and will postpone decision on the optional eight 14,000 teu ships, the company said in an announcement.
Over the next two years, the Maersk Line expects to lower the annual sales, general and administration costs by $250mn with $150mn being in 2016. It planned to cut at least 4,000 jobs by the end of 2017. The Maersk Line has 23,000 land-based staff globally.