Shipping giant A.P. Moller-Maersk A/S is in the process of cutting 10,000 jobs as revenue slides after a peak during the COVID pandemic.
Maersk has already cut 6,500 jobs and will trim the remaining until the end of the year, its Chief Executive Officer Vincent Clerc told Bloomberg on Nov. 3.
“If you look at the order book and what is going to come over the next couple of years, I think we’re probably settling in for a very subdued and pressured environment for two to three years ahead,” Mr. Clerc said.
The cuts follow falling container rates and waning demand after a peak in 2021 and 2022, when COVID pushed global trade to its highest for years, doubling shipping rates, mainly from China to America and Europe.
From the start of 2023, the rates have started to return to their pre-COVID amounts, according to the World Container Index and the Baltic Dry Index.
Global shipping rates of major routes have already plunged by 75 to 85 percent from their 2021 peaks.
Maersk controls 17 percent of the global container trade and is considered a bellwether for international trade.
The Danish shipping and logistics company’s cutting of 10,000 jobs translates to $600 million in savings.
Its workforce will be reduced to below 100,000 by the end of this year.
Maersk’s shares fell 14 percent, returning to their pre-COVID level.
Other shippers followed a similar route, including Hapag-Lloyd, losing 6 percent, DSV losing 2.4 percent, and Kuehne + Nagel, losing 1.8 of their share price.
Oil Price Surge
Maersk’s staff cutbacks come as oil prices, which directly affect global trade, have surged this week after Saudi Arabia and Russia, the world’s top oil exporters, announced their decision to maintain additional voluntary oil supply cuts through the year’s end.
Brent crude, the international benchmark for oil prices, traded at $85.97 per barrel, increasing by $1.08 from the previous trading session. U.S. West Texas Intermediate crude rose by $1.30 to $81.81 per barrel.
The increase in oil prices came after Saudi Arabia said on Nov. 5 that it would extend the voluntary cut of 1 million barrels per day through December. The country has aimed to produce 9 million barrels per day.
Russia said that it would continue its cut of 300,000 barrels per day from its crude oil and petroleum product exports to the global market through the end of the year.
The World Bank has warned that an escalation of the latest conflict in the Middle East could send crude oil prices to as high as $157.
The international organization said that oil prices could fall to $81 per barrel as global economic growth slows, but they could surge to $157 if “the conflict were to escalate” in the Middle East.
Furthermore, the abandoning of Russian oil fields in the Arctic Circle this winter could push the price even higher as another 2-3 million barrels per day of Russian crude oil could go offline, according to investor Louis Navellier.
Andrew Moran contributed to this report.