Maersk  Line begins cut in workforce, freight rate to increase in 2016

MAERSK Line,  Container shipping arm  of Maersk Group, is cutting 110 jobs at its Copenhagen headquarters as part of the proposed  savings plan.

The company explained that this  is only the beginning of the planned reduction of 4,000 jobs expected to take place by the end of 2017.

The number represents a decrease of 17 percent in the company’s workforce of 23,000 land based staff globally.

World Maritime News quoted  Maersk Line as saying  the move has “the aim of minimising redundancies through managing natural attrition.

Maersk Line Chief Executive Officer (CEO), Søren Skou was quoted as saying: “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.,”

The move comes as the group fights to mitigate the negative impact of the situation in the global container shipping market which deteriorated beyond the group’s expectations especially in the latter part of Q3 and October with no signs of recovery by the end of the year.

Meanwhile,  the latest Container Shipping Forecaster from Maritime Strategies International anticipates a slight improvement in freight rates in 2016 as more carriers layup tonnage.

However, service withdrawals and reduced demand are expected to have a negative effect on the vessel charter market as vessel availability rises.

Container freight rates continued their decline in November, with the Shanghai Containerised Freight Index falling by eight percent. At the same time, the lines’ attempts to improve earnings with the use of general rate increases (GRIs) produced mixed results.

A reduction in capacity on the water appears more likely to provide a long-term solution, according to MSI Senior Analyst James Frew.

“Despite the seemingly endless gloom that surrounds the container industry, MSI believes a limited upturn is possible in 2016 as further sailings are removed and idle capacity increases. However, our forecasts are certainly modest and given the degree of oversupply, no meaningful increase in rates will be achieved until more capacity is removed or trade growth picks up.”

Spot rates on the key Asia-Europe route were $488/TEU in November and MSI forecasts an increase to $684/TEU in February and a slight fall to $656/TEU in May.