“The new normal we are now headed into is one of a more subdued macroeconomic outlook, and thus soft volume demands for the coming years, with prices back in line with historical levels, inflationary pressures on our cost base, especially from energy cost, and also increased geopolitical uncertainty,” declared Vincent Clerc, CEO of the company in an investor call, following the announcement by APMM of its third quarter 2023 results.

He added: “The industry invested heavily in new container ships during and after the pandemic to meet strong demand and benefit from record freight rates. Many new ships have entered the market since the summer with no signs of idling or scrapping. If the fourth quarter does not deliver some type of improvements, then I think we’re looking at a pretty dire situation in 2024.”

In particular, Maersk Line, which is pursuing a strategy as a freight transport integrator rather than a pure shipping company, has been significantly impacted by weakening demand, reduced spending and slower rates of destocking in the all-important retail, lifestyle, automotive and technology sectors.

According to Maersk, container volumes in its ocean business sector, which is its largest operating division, could decline by 2% this year.

Given the challenging conditions, Clerc stressed that APMM had “accelerated several cost and cash containment measures to safeguard our financial performance. While continuously streamlining our organisation and operations, we remain dedicated to our strategy of fulfilling our customers’ diversified supply chain needs while pursuing growth opportunities across our Terminals business and Logistic & Services.”

The brunt of these cuts will fall on the company’s employees as the group cuts its staff count back from 110,000 employees in January 2023 to under 100,000 next year, with the objective of saving US$600M in 2024 and beyond. Approximately 6,500 staff have left the company already, with a further 3,500 positions to be retrenched in the coming months. Given the new measures, APMM has revised its restructuring charge upward to US$350M, compared with the US$150M announced in February.

In addition, APMM has cut its Capex for 2024 – down from US$10B-US$11B to US$8B-US$9B – and is reviewing other expenditures, including the planned continuation of its share buy-back programme in 2024.

In Q3 2023, APMM revenues fell by 47% (to US$12.1B) compared with the same period of 2022. Meanwhile, the group’s operating profit (earnings before interest, tax, depreciation and amortisation) collapsed, falling from US$10.9B in 2022 to just US$1.9B this year.

Despite the poor numbers, APMM has maintained its revenue and profit guidance for the year, but stressing that the results would be at the lower end of the range. With regards to EBITDA, the range specified is US$9.5B to US$11B.