COVID-19 Impact: Maersk Undergoes Major Restructuring

Danish industry leader Maersk will cut jobs as a part of comprehensive restructuring process that will affect a third of the company’s staff.



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 Restructuring Process Reorganization

To boost its customer proximity and deliver more effectively, Maersk will optimize its restructuring process by the end of the year.

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.

Whether you want to stay up-to-date on the latest business news, read in-depth CEO interviews, or find new ideas on leadership, management and innovation, Industry Leaders Magazine is here to suit your needs and help you stay more informed.

Avatar
Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Hyundai commits $7.4 billion in US investment by 2025

Hyundai commits $7.4 billion in US investment by 2025

South Korea’s Hyundai Motor Co., announced on Thursday it will soon start manufacturing electric vehicles in the United States. The automaker plans to produce EVs, upgrade produc
1 hour ago
US inflation report of 4.2 percent raises concerns

US inflation report of 4.2 percent raises concerns

The US reported the highest inflation recorded in the last dozen years at 4.2 percent in April, riding on government stimulus packages, improved energy prices, better spending and
5 hours ago
Aon – Willis asset disposal aims to ease approval of $30 billion merger

Aon – Willis asset disposal aims to ease approval of $30 billion merger

Aon Plc and Willis Towers Watson have agreed to sell $3.6 billion worth of assets to rival Arthur J. Gallagher & Co. in a bid to appease European competition regulators over th
1 day ago
Roblox declares Q1, reports $387 million revenue as bookings increase

Roblox declares Q1, reports $387 million revenue as bookings increase

Roblox, the hugely popular online gaming platform, reported its first-quarter earnings after becoming a listed company. Its revenue more than doubled as the videogame company benef
2 days ago
Weak US job report results in volatile market

Weak US job report results in volatile market

A weak job report resulted in a record close on Friday for the US stocks. The US labor department’s monthly non-farm payrolls report revealed employers hired 266,000 new workers
3 days ago
Star and Blackstone launch bids to buyout Australia’s Crown Resorts

Star and Blackstone launch bids to buyout Australia’s Crown Resorts

A bidding war has broken out between Australian casino company Star Entertainment Group and US private equity investor Blackstone Group over Crown Resorts, Australia’s bigges
3 days ago