MercoPress. South Atlantic News Agency

AP Moller-Maersk cutting jobs as global shipping business declines strongly

The Danish company said in a trading update last week that there had been “significant pressure on rates” in the past few months.

AP Moller-Maersk announced it will be cutting 3,500 jobs because of a downturn in business. This adds to another 6,500 jobs cut earlier this year. The Danish company one of the largest global shipping enterprises said profits plunged 92% and a policy of rigorous containment had to be applies. It said “worsening” prices for shipping by sea required further job cuts.

 The cost of shipping goods soared in the first year of Covid when lockdowns lifted and businesses began to resume trading, increasing their orders for stock.

Such high demand led to congestion and logistical problems at the busiest ports. There was also a shortage of shipping containers in Asia.

However more recently, high inflation and rising interest rates have curbed spending and dampened demand.

Maersk previously warned in August of a steeper decline in global demand for shipping containers by sea this year.

The Danish company said in a trading update last week that there had been “significant pressure on rates” in the past few months.

“Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base,” said Maersk chief executive Vincent Clerc.

“Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.”

It estimates that the redundancies will save the business £600m next year,but has not revealed the locations of the cuts or the types of roles going.

The company, which controls about one-sixth of global container trade, has already decreased its staff to about 103,500 from 110,000 earlier this year.