Maersk Line to cut jobs, scale back shipbuilding plans

Maersk Line CEO Søren Skou: "These decisions are not taken lightly, but they are necessary" Maersk Line CEO Søren Skou: "These decisions are not taken lightly, but they are necessary"

NOVEMBER 4, 2014 — The world's largest container shipping company, Maersk Line, says that "as a response to both the short term and long term market outlook," it is "accelerating a number of already established cost and efficiency initiatives."

Those initiatives will see it reduce network capacity, shed "at least 4,000" jobs by the end of 2017 and cut back on the ambitious shipbuilding plans announced earlier. It will not exercise previously announced options for six 19,630 TEU vessels and two 3,600 TEU feeders and will postpone its decision on an optional eight 14,000 TEU vessels.

Maersk Line says that, in light of lower demand, these moves will still allow it to grow at least in line with the market to defend its market leading position.

Over the next two years, Maersk Line expects to lower the annual Sales, General & Administration (SG&A) cost run-rate by  $250 million with an impact of $150 million in 2016. SG&A savings will be derived from already initiated transformation projects and the standardization, automation and digitalization of processes.
"We are on a journey to transform Maersk Line. We will make the organization leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible," says CEO Søren Skou.

Today, Maersk Line has 23,000 land based staff globally. Organizational transformation and on-going automation and digitalization will, it says, enable it to reduce the global organization by at least 4,000 positions by the end of 2017 with the aim of minimizing redundancies through managing natural attrition.

"We are fewer people today than a year ago. We will be fewer next year and the following year. These decisions are not taken lightly, but they are necessary steps to transform our industry," says Mr. Skou.

As a response to the current market outlook, network capacity will be reduced in Q4 2015 and throughout 2016. As previously announced, the closure of four  services (ME5, AE9, AE3 and TA4) has already been initiated over the last two months and plans are in place to further cancel a total of 35 sailings in Q4.

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