Maersk Line accelerates efficiency initiatives as response to market outlook
Maersk Line will reduce its network capacity, postpone investments in new capacity and accelerate plans to simplify the organisation
As a response to both the short term and long term market outlook, Maersk Line is accelerating a number of already established cost and efficiency initiatives. 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 & Administration (SG&A) cost run-rate by USD 250 million with an impact of USD 150 million in 2016. SG&A savings will be derived from already initiated transformation projects and the standardisation, automation and digitalisation of processes.
“We are on a journey to transform Maersk Line. We will make the organisation simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible,” says Suren Skou.
Today, Maersk Line has 23,000 land based staff globally. The organisational transformation and on-going automation and digitalisation will enable Maersk Line to reduce the global organisation 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,” concludes Suren Skou.
As a response to the current market outlook, network capacity will be reduced in Q4 2015 and throughout 2016. As already announced, the closure of four (4) 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.
Maersk Line will continue to manage capacity and does not plan to exercise the previously announced options for six (6) 19,630 TEU vessels and two (2) 3,600 TEU feeders and will postpone decision on the optional eight (8) 14,000 TEU vessels.