A.P. Maersk will slash jobs as a part of comprehensive reorganization that will affect a third of the Danish shipping giant’s staff as it seeks to integrate its seaborne container and in-land logistics businesses, it announced on Tuesday. The industry leader has become the latest company to highlight the impact of coronavirus on the global economy.
Maersk, which handled about one in five containers shipped worldwide, has been under immense scrutiny from investors to expedite its transformation from a cumbersome conglomerate. Lately, it has proved resilient in the face of the COVID-19 epidemic which has shuttered a good number of companies.
Maersk’s latest cost cutting measures have helped the company double its share price since March. On Tuesday morning, its shares were trading 0.9% up at 9,652 crowns.
Danish Industry Leader Undergoes Restructuring
The Danish shipping company sold off Maersk Oil to French oil and gas company Total as a part of its restructuring plan to focus on container transport and logistics. In addition, it also sold off Maersk Tankers to AP Moller Holding for $1.7 billion, and is de-merging Maersk Drilling into a separate listed company. As of now, the Danish industry leader is still searching for a long-term solution to offshore vessel owning arm Maersk Supply Services.
Hamburg Sud, which Maersk bought in 2016, will remain a separate brand but its back office will be operated under the Maersk brand name.
Under the organizational shake-up, its Damco freight-forwarding business and Africa-focused carrier Safmarine will be integrated into Maersk by the end of the year and their brands will cease to exist, it said in a statement on Tuesday.
As a part of the reorganization process, the company will have to regrettably cut jobs and roles that will no longer be needed. According to a Maersk spokesperson around 26,000 to 27,000 employees will be left jobless out of Maersk’s total headcount of 80,000 due to the restructuring process.
The company is yet to shed light on how many would be laid off or on the total number of Maersk job cuts.
To boost its customer proximity and deliver more effectively, Maersk will optimize its restructuring process by the end of the year.
Reeling under the impact of coronavirus epidemic
Maesk’s problems are echoes by global shipping companies. As the coronavirus engulfs the world, the outlook for the shipping industry in 2020 continues to exacerbate. The pandemic is likely to result into major economic distress; the World Trade Organization estimates that world trade is expected to plunge somewhere between 13% and 32% in 2020. The shipping industry faces unprecedented challenges due to the outbreak. It has resulted in a situation where short-term and long-term impact on micro and micro-economic trends appear to be grim.
Ratings agency Moody’s has changed its economic forecast for the shipping industry from stable to negative for the coming 12-18 months.
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