Maersk Implements Austerity Measures
Maersk Line, the world’s largest container shipping company, will reportedly slash costs, cut staff by as many as 4,000, and delay or even cancel several vessel orders as trade along the Asia-to-Europe trade route and the global container shipping market in general continue to weaken.
The austerity plan comes just two weeks after the Danish ocean carrier cut its 2015 profit forecast by 15 percent. The company’s full-year earnings are expected to total $1.6 billion, compared with an earlier forecast of more than $2.2 billion.
In addition, Maersk has also laid-up one of its Triple-E 18,000-TEU container ships, which will be idled for at least six weeks, possibly longer.
“A number of markets have disappointed with a lot weaker demand than expected this year,” said Maersk CEO Soren Skou. “And it’s first of all Asia to Europe, which has had negative growth. Europeans have been importing less this year from Asia than last year and that was frankly a surprise.”
Announcement of Maersk’s plans comes as the company is reportedly in discussions with France’s CMA-CGM to jointly acquire Singapore-based Neptune Orient Lines (NOL) in a deal that could reach $2 billion in value.
The company currently commands a 15 percent share of the global containerized cargo market, while Neptune Orient Lines, in effect, a management entity that operates as APL, holds a 2.9 percent share.
Analysts say the possible NOL acquisition would offset Maersk’s austerity plans by strengthening its position in the healthier U.S-Asia trades with smaller containerships more suited for transpacific service, and, at the same time, lower administrative and operational costs.
If successfully concluded the NOL acquisition would be Maersk’s first buy in a decade. In 2005, the company acquired the operations of Dutch carrier P&O Nedlloyd for $3 billion.
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