Maersk Line will reduce its network capacity and postpone investments in new capacity, while the same time reducing operating costs by escalating already announced plans to simplify the organisation.
In light of the lower demand these initiatives will allow Maersk Line to deliver on the ambition to grow at least in line with the market to defend the market leading position.
Over the next two years, Maersk Line expects to lower the annual sales, general and administration (SGA) costs.
SG&A savings will be derived from already initiated transformation projects and the standardisation, automation and digitalisation of processes.
Søren Skou, CEO of Maersk Line, said: “We are on a journey to transform Maersk Line. We will make the organisation leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible.”
(Source: Maersk / Facebook)
The organisational transformation and on-going automation and digitalisation will enable Maersk Line to reduce the global organisation by at least 4,000 staff positions by the end of 2017 with the aim of minimising redundancies through managing natural attrition.
Søren Skou continues: “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.”
As a response to the current market outlook, network capacity will be reduced in Q4, 2015 and throughout 2016.
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, 2015.
Maersk group’s interim report for Q3, 2015 (Q3) will be released on November 6, 2015.
Nils Anderson, CEO of Maersk previously said that in order to defend the market, the company will be cutting capacity on some of the world’s key shipping routes.
Shipping analysts Drewry believe that once Maersk plans for capacity cut-backs are in full-flow, other liners will follow-suit.