As the shipping industry's prosperity comes to an end, Maersk's third-quarter profit plummeted 94% YoY, announcing a large-scale layoff to reduce costs.
On Friday, shipping giant Maersk announced its third-quarter performance, with pre-tax profit dropping 94% YoY to $691 million, and stated that it will lay off at least 10,000 people in the face of overcapacity, rising costs, and weak prices.
The company has been laying off employees since January this year, reducing the number of employees from 110,000 at the beginning of 2023 to below 100,000. It is expected to save $600 million in costs by the end of this year. Maersk has already cut about 6,500 positions and stated that &#34;all offices&#34; worldwide are affected by its cost-cutting measures.
Maersk controls about 17% of global container trade, transporting goods for many large retailers and consumer goods companies such as Walmart and Nike. It is considered a barometer of global trade. The decline in container freight rates and weakened demand this year have hit the global shipping industry, and analysts predict that this situation may continue until 2026.
Vincent Clerc, CEO of Maersk, said in an interview:
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If you look at the orders and the situation in the next few years, I think we may have to adapt to a very depressed and highly pressured environment in the next two to three years.
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Affected by this news, Maersk's stock price in Copenhagen fell 17% to 10,060 Danish kroner, hitting a three-year low. The stock prices of other shipping companies also declined, with Hapag-Lloyd falling more than 8% and DSV falling more than 2%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/677db896-8818-4afd-b639-288a98ac50d3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/677db896-8818-4afd-b639-288a98ac50d3.png"/>
Previously, Goldman Sachs analysts issued a warning to clients that the global shipping industry recession will be more severe and prolonged than market expectations, and recommended selling Maersk stocks. Some media outlets warned that Maersk's profitability may not improve until 2025. Morgan Stanley also expressed disappointment with the prospects.
Clerc warned that the influx of a large number of vessels into the market &#34;may put pressure on shipping prices in the next few years,&#34; weakening Maersk's ambition to expand its dominant position throughout the supply chain. It should be noted that Maersk's order volume is much lower than that of industry leaders such as Mediterranean Shipping Company, as it uses its revenue for warehousing, aviation, and broader logistics services.
In response, Citigroup analyst Sathish Sivakumar stated in a report to clients that the company's capital expenditure reduction plan and review of stock buyback plans &#34;may be negatively affected.&#34; Analysts may lower the company's full-year profit expectations to single digits.

AMKBY

The global shipping industry has been hit by a decline in container freight rates and weakened demand, and analysts predict that this situation may continue until 2026.

Shipping giant "struggling through the winter"! Maersk announces layoffs of at least 10,000 people, stock price plunges 17%.