Wednesday, November 4, 2015 6:37 pm
Maersk Line, the world’s largest container shipping company, plans to slash costs, cut staffing by almost a fifth and pull out of vessel orders due to slowing trade from Asia to Europe, it said.
The business, part of the A.P. Moller-Maersk conglomerate , is a bellwether for global trade and the shipping industry, which is run largely by unlisted companies not required to make their assessments public.
“A number of markets have disappointed with a lot weaker demand than expected this year,” Chief Executive Soren Skou told reporters on a conference call.
“And it’s first of all Asia to Europe, which has had negative growth. Europeans have been importing less this year from Asia than last year and that was frankly a surprise,” he said.
This was partly due to inventory reductions, he said.
Raw material trade routes, such as West Africa and the east coast of Latin America, had also slowed. Much of the raw material had been headed for China to feed its massive infrastructure boom.
“What went up with China, went down with China,” Skou said.
Maersk Line said it would save $250 million in sales and administrative costs in the coming two years and reduce its workforce by 17 percent or 4,000 people, mainly through attrition.
It will also not exercise options to order six of its flagship mega-vessels, called Triple Es, which have a capacity of holding about 20,000 20-foot containers and are 400 metres long. The order would have gone to Korea’s Daewoo Shipbuilding and Marine Engineering Co.
Maersk Line will also not execute an option to order two smaller vessels from Singapore-based Cosco.
Overcapacity – more ships than goods to carry – has long been a problem and has led to freight rates on the world’s busiest sea routes, from Asia to Europe, to drop to below commercial levels for weeks at a time in the past year.
Nevertheless, large shipping companies, including Swiss-based Mediterranean Shipping Company (MSC) and France’s CMA CGM, continue to order larger ships to supersede smaller ones, which will make their fleets more efficient.