Due to a decline in the market for container freight, the multinational shipping behemoth AP Moller Maersk is laying off at least 10,000 employees globally.
The Danish company disclosed that in an effort to reduce expenses by 600 million US dollars (550 million euro) in the upcoming year, it is reducing its personnel from 110,000 in January to less than 100,000.
Since early 2023, Maersk has reportedly eliminated almost 6,500 positions, and as it increases cost-cutting measures, an additional 3,500 will be lost.
It also said that 2,500 of those extra cuts would take effect in the "coming months," with the remaining 2,500 coming in 2024.
The company, which is the second-biggest shipping container company in the world, refused to comment on how the job losses will affect its operations in the United Kingdom.
In addition to its main office in Liverpool, Maersk maintains locations at several UK ports, including Belfast, Northern Ireland; Felixstowe, Suffolk; Grangemouth, Scotland; London Gateway, Corringham; Portsmouth, South Shields, Southampton; and Tilbury, Essex.
In all, it has locations throughout the UK and Ireland at twelve ports, twenty-three depots, and nine speciality refrigerated container facilities.
Among its locations in the UK are a technical team in Maidenhead and an additional office in Birmingham.
The demand spike that occurred during the epidemic years is waning, which is hurting the shipping sector.
From 2020 to 2022, the industry saw record earnings as economies started to pick up steam following the lifting of lockdowns and as businesses battled to obtain inventory in response to rising demand.
The market is currently returning to more historically normal patterns, with demand also being repressed as the global economy has weakened. However, shipping prices skyrocketed as a result.
In an update on Friday, Maersk revealed a sharp decline in sales and earnings for its third quarter, raising the possibility that profits in 2024 may fall short of earlier projections.
"Our industry is facing a new normal with subdued demand, prices back in line with historical levels, and inflationary pressure on our cost base," stated Vincent Clerc, chief executive of Maersk.
"We accelerated several cost and cash containment measures to safeguard our financial performance, given the challenging times ahead," he continued.
Russ Mould, investment director at AJ Bell, stated that the profit warning is concerning since Maersk is a reliable indicator of the state of the economy and a "fair proxy for global growth."
"If the economy is doing well, there will be a strong demand for transport; however, if there are clouds in the horizon, the demand will be the opposite."
"The global economy may be slowing down, as indicated by Maersk's 9% decline in share price following its most recent results."