Maersk to cut 10k jobs as shipping demand drops
reuters.com
reuters.com
> This is said to be the firm’s best-ever annual result.
https://www.ship-technology.com/news/maersk-logs-record-prof...
Really sad to see these companies make enormous record beating profits then months later do mass layoffs just to maintain better returns.
Companies wonder why employees are not loyal, change companies every 2 years, are disengaged, and not working hard enough.
It's because most companies treat employees are expendable and are ready to fire them with a moments notice if some shareholder wants to buy a bigger yacht this year.
Never heard any CEO wondering about that.
For every job in every business around the world? I doubt it.
It's a case of rules for thee and not for me.
It is an uneven power balance between corporations and workers.
Then the solution is obvious: Workers should incorporate and sell their work under that corporate banner.
A better solution for example would be giving the workers tools and knowledge to get what they want just from their job (because everyone is different).
But "shareholders expect infinite growth forever" directly contradicts "short-term gain prioritized over long-term growth"? Even if they prioritized long term growth that would still be "shareholders expect infinite growth forever".
But it doesn't?
Shareholders expect companies to make whatever decisions are necessary to maximize short term profits, expect those profits to be infinite, and expect this to happen every quarter, every year, in perpetuity.
Then, an absolute number of profit doesn't reveal much. Maybe this seemingly huge profit is tiny compared to the effort to make it (i.e., the profit margin).
As much as I'd like to see a world where we value more aspects of a business than only profits, I can not change it alone. There's a brutal competition of companies to earn a certain profit margin. And Maersk is more or less forced to play this game until we change the rules.
And should demand pick up again in 2-3 years worth of time, they'll now have a really hard time ramping hiring back up... fucking beancounters don't learn, even as the aviation industry is right now showing just how bad this effect can get.
In just a couple of years they have went from scarcity and record profits to a capacity glut and shipping prices cratering.
If I draw parallels to personal finance, say I have a record high profitable year, would I rather assume my profits stay record high in the future and increase spending/investments OR would I ensure I have enough rainy day funds for the next inevitable slowdown (at least give me enough runway to weather the slowdown before cutting big line items in my expenditure). Funny enough, this time around some big companies that laid off thousands just after a year of record profits also had record amounts of cash on hand, making me wonder if it's more about manipulating stock price to a desired level.
I understand that companies are more complex than personal finance but am I wrong that these are potentially symptoms of mismanagement rather than just to be pushed under the rug as demand-in-the-future? Surely, the money/time spent on hiring, training, laying off, and rehiring, retraining people a year or two later when demand returns is worth something. Just seems to me that the economy will be so much more resilient if everyone simply focussed more on emergency funds
The desired level is always higher than the what it is now. This applies to individuals, as well as groups of individuals (businessss).
Your analogy can also work here. When I have a record year I might add some extra services to my life. I see that changing and cut the services before it's a huge problem.
Others who believe the company is well-managed by looking at the forecasts and deciding to return to staffing levels still well above their 2021 (but lower than last month) will continue to hold (or even buy) the shares.
This difference of opinion is what makes a market.
The point imo was how many companies can be potentially overly aggressive during a bull market/bubble e.g. over hire, and seemingly have no accountability for a handful decision makers affecting thousands of people. Mass layoffs can have serious consequences on the people and the economy.
Yes, the employees should expect it and be prepared, and yes, share holders can profit off it, however to give an example there are precedents like the mortgage crisis where there were regulations imposed preventing companies taking unnecessary risks and causing major economic events. So, it isn't that outlandish to question if a (many) companies took too many unnecessary risks.
Opportunity cost is a thing. Just because you're not in the red doesn't mean the decision is costless. Think about it from the opposite perspective. Suppose you're a company with the right number of employees (neither too much nor too little) but you see demand is dropping. Would you go on a hiring spree so you could "react on demand going up again in a short notice"?
- Spend it on labor
- Spend it on sales
- Spend it on R&D
- Fund capital improvements
- Save it in bonds
Their CFO office has definitely modeled relative ROI.
And, from a more socially conscious perspective, let's not forget the shipping industry is trying to budget massive capital expenditures to reduce their carbon footprint by reworking their ship powerplants.
I'm curious about your solution though. How many people do they need to keep on staff that are not doing anything? How much profit are they allowed? Do they have to lose money before they are allowed to trim the workforce? Do they need to be prepared for another COVID-level demand surge?
They could also reduce the amount of hours that everyone works. It's high time for another reduction in hours-per-week anyway.
> Do they have to lose money before they are allowed to trim the workforce?
In a society that values its citizens over its corporations, yes.
> Do they need to be prepared for another COVID-level demand surge?
It's not unlikely that there will be a surge once the Russians get booted out of Ukraine.
Working hard is a trait you earn for yourself not just for the pay check.
If you work hard, learn more, I’m sure you’ll have better chances improving your career or even starting your own business later
I agree with your point about getting laid off being awful, but I think this should be solved by the government having a robust social safety net (funded by taxes) so that getting laid off doesn’t cause stress. Fortunately, Denmark already scores high in this area.
> surprise! You are probably needed elsewhere!
Is not the way to handle this kind of thing.
Decentralized people that each make individual choices more quickly and ideally allocate unused labor where it's most needed.
... but to the broader point from sibling threads, the humane solution here is {permit companies to be agile with layoffs} + {fund strong government-provided safety nets for unemployed workers}.
Also its about 10% of employees right, that means if you give the whole company 1 day off every two weeks. Everyone who would have a full workload again. Googles 20% was about double that
better, Cheaper, and with out the political corruption that comes with all government programs.
Hell we just saw during COVID unemployment "insurance" being used as a political tool to essentially buy votes, by all political parties and organizations. Also used a tool to make authoritarian control of the population palatable
Further How many dystopian novels have the trope of the masses being paid not to work...
The axiom of a "social safety net" is apt but not the the way people using it believe it to be, the social safety net in practice tends to be like a fishing net, once you get entangled in it, you rarely escape it...
So its a waste for the bottom line of the company owners? Thats what 100 people max? Compared to 10.000 jobs and livelihoods lost its pretty clear to me.
To the economy as a whole. At the end of the day you're still having workers twiddle their thumbs not doing anything productive, with no incentive to move onto another job where they'll actually be doing something useful. We should weigh this against the workers' economic security, but let's not pretend that keeping workers around is some sort of free lunch.
Management should be fired for miscalculated headcount instead.
Sorry, but that hardly makes sense…you might as well say management must be able to see the future.
Arguably they can't have ignored that a surge this big would be temporary... It's not like we suddenly discovered a massive amount of resources at our disposal to produce the goods they are transporting.
EDIT: It's frankly amazing to see how much has been projected onto my comment. For the sake of transparency towards the neoliberal police, I quoted what was obviously the only phrase I was answering to.
If that means during Christmas your checkout line takes longer so be it. I also want a job year round, why wouldn’t someone else deserves that?
This is not a conversation about amount of work vs number of people. Its amount of work vs pay.
If there really is only work to do 2 months out of the year, then they should pay 600% of a regular monthly salary.
Sounds like your last sentence also agrees that businesses should be able to increase number of employees and decrease number of employees.
Arguably workers should wake up and accept that jobs are not permanent or guaranteed.
We need dynamic, responsive economies that can adapt to conditions, and we need strong protections for worker's rights and support for citizens through economic adjustments. These are not contradictory goals. A stronger more adaptive economy is better able to afford the costs of effectively managing such adaptations.
I don't think anyone unconditionally owes me a job. I don't have an unconditional claim on other people's money just because they paid me in the past. I'm owed fair compensation for my work, and reasonable notice and compensation if I'm let go, which has happened.
It's not reasonable, and is seriously inefficient, to compel private companies to be government work programmes. The result is companies won't hire when they need more workers in case they get stuck with them, harming the company, workers, tax payers from reduced revenue, and the economy in general.
You're not owed either of these things.
The way you write is curious. You don't really seem like someone who needs to work for a living, but you're trying to portray yourself as labor and not capital in your posts.
Or you are against your own self-interests, which is illogical.
They're in my contract, and protected under UK employment law.
>You don't really seem like someone who needs to work for a living, but you're trying to portray yourself as labor and not capital in your posts.
You're hallucinating.
>Or you are against your own self-interests, which is illogical.
What are our interests? I have interests as an employee, but I also have interests as a customer of other companies, as a tax payer, and as a citizen generally.
A lot of the products I buy here in the UK, or inputs to them are probably transported by Maersk. I have an interest in Maersk being a well run efficient company that does a good job cheaply and reliably transporting those goods. If they have insufficient employees or investment, that jeopardises supply. If they have increased costs, that makes the goods I depend on more expensive.
It's in my interests that companies I buy products and services from are efficient and are not burdened with unnecessary costs. Also if they see an increase in demand, that they can respond to that without worrying about being locked into near-permanent employment contracts. I even have that interest as an employee, because if my company becomes ossified employing people that are under-utilised that saps their ability to invest, grow, compensate me better, or even for the company to survive.
It's also in my interests as tax payer that there is an affordable social safety net, but as an employee that there is an adequate one. Both factors are important to me.
They could have paid by having less profit. Instead employees are paying by losing their jobs.
This would have been a totally different discussion if they were making a loss. If you ask me a good business keeps a safety net when times a good and uses their safety net when times are bad. Only when those savings run out they should consider letting people go.
Even beyond the business itself, profits mater. They are the surplus a business generates that gets plowed back into the economy outside the business. That money gets invested in other businesses, spent on other goods and activities. It's the fuel that goes into other beneficial economic activities.
Leaving it sunk in an unproductive business that's paying people to do less, and generating fewer outputs is a tax on the whole rest of the economy. It's invisible because it's investment and spending that never happens, but it's a real effect. It's true that those unproductive workers still get paid and that money goes into the economy, but if they were working in another job at a productive company or retraining, that's a net gain. That's can't happen if they're stuck in an unproductive job.
>If you ask me a good business keeps a safety net when times a good and uses their safety net when times are bad.
Any good business does this, but they need to take acton on foreseeable headwinds in order to maintain that safety net against unforeseeable ones. When it looks like times are uncertain and getting worse, possibly in unpredictable ways, is not time to give up your safety net. That's how businesses fail and the whole company goes under. How does that benefit anyone?
No, I only answered to the previous commenter who wrote that management can't predict the future. They knew it was coming, and increasing temporarily the headcount was their plan.
I don't like job cuts neither, but shipping is directly linked to the global economy. And if we go into a slow down, shipping demand slows down as well. Head count at Maersk is directly linked to that demand, so there are only so many options on the table.
Shipping goes through these cycles on a regular basis, not adjusting would put all jobs at risk. The real tragedy is, that a signifocant chink of those affected are under paid crew members and blue collar workers from countries without social security nets, whose families depend on their pay checks. And working on a Maersk vessel easily beats the quasi slavery on some fishing vessels by light years.
Where did I write that, exactly?
And also the plan of the workers. It is not like they didn't also know what was coming when they took the job.
I see no evidence for this. Business was booming by the end of 2021 and headcount increases realised in 2022 would have started the year before, which was before the invasion of Ukraine.
In any case a 10% drop in had count is not all that much. That's the level of head count churn most companies go through in a year anyway. The majority of this was probably satisfied by early retirement and voluntary redundancies. In Europe in most circumstances you're required to go through that process first. This whole furore is a storm in a teacup inspired by profound misunderstanding of how economies and companies actually function in the real world.
So let's talk about those generous amounts of taxes that were paid by Maersk lately...
Or is that decreased demand for this company only?
There are plenty of people who simply can't afford to stay at a company when their pay is being cut by 10% or more. They need pretty much all of their salary to pay bills. Taking such a pay cut is only an option for the higher incomes, where there is some jiggle room due to significant discretionary income.
Not every company can afford ridiculous salaries and headcounts until the next VC funding round comes through.
Now there's 2 parts of management. There's accounting, processing orders, filling out whatever government forms need filling out, keeping up to date with new regulations, ... Sometimes this is called accounting, but generally it's called management. They're not who we mean.
But then there's management, like the C-suite. Who "set direction". Their ONLY job, like shareholders, is to predict the future. That's literally their only function.
So yes, firing them because they misjudged required headcount doesn't sound even a little bit unreasonable.
Unless of course, and I didn't check, Maersks bets on air freight, warehousing and fulfillment didn't oay off. In ehich case the C suite set a wrong strategy.
Companies hire workers when the need them and let them go when they don't. Just like workers take jobs when they need the pay and quit when they don't.
If management did not hire more people when they needed more workers it is bad for the company and also bad for the workers who could have been hired and earning those wages when there was increased demand.
Think of it this way: if Maersk didn't expand headcount just so that they could avoid layoffs later, then people wouldn't have had jobs in 2022. Consider * 5,000 people working in year X and in X+1. * 10,000 people working in year X and 5,000 people working in year X+1
Which was the better situation for workers and society at large?
It's not unheard of in the past to resort to salary cuts, reduced hours, etc, while they bridge some solution or wait out what might be temporary.
There's also the notion of better planning. If you suspect, for example, a demand spike is temporary...there are ways to deal with that other than overhiring employees.
Or at least being up-front about the temporary nature of the employment and structuring the program to suit that. "Seasonal hires" have a different expectation.
Not when it's universal and systemic.
> Or diversification of market offerings to reduce seasonality
And this is good, but really too much to ask if you are going to require it.
> skill diversification for employees so they can be repositioned during low demand in one area
This also doesn't work when the changes are global and systemic. But then, most of the layoffs we have seen in the past were rushed things that didn't even bother to evaluate this option. This one cuts me as done in around the shortest timing to make this possible, so we'd need to check if they tried it or not.
We also don't know if they were up-front about the temporary nature of those employees. They are certainly not formally temporary because the timing doesn't work here (what is good for the employees anyway), but we don't know if they were warned.
Similar to health care, it is useful to have safety nets to allow for the free flow of labor.
Now where it gets sticky is you cannot apply it outside of your country so in cases like shipping, the vast majority of their employees who run the ship are from low wage developing countries.
They could just apply the same pay, safeguards and social support to employees of low wage countries that their Danish colleagues receive. Remember that your countries rules about pay, leave and social security are minimums, and your employer is choosing not to give you more than the minimum.
Moreover, there is natural attrition. They can stop hiring, promote internally, and so on, until they’ve reached their desired head count.
The point is that both of these are doable when the company is wildly profitable. And they should be done for the negative secondary effects of layoffs (ruining lives, morale loss, people following their laid off friends out of the company, etc).
It seems like these days companies don’t even freeze hiring and grow competencies in house in times like these that much. They just assume (often wrongly) that they’ll quickly hire everyone they need once the demand picks up. But it takes years of training before an employee is fully integrated and has all the institutional knowledge to perform at their peak, and it takes many months to fill difficult positions.
Some people who have been around tech for a good number of decades have seen this fashionable layoff footgun used more than once.
Disagree. Especially if they knew they were hired for a surge that would end.
Otherwise it's just corporate greed: we know we'll have a surge in demand, so we buy new vessels and containers and manpower to last us 2 years; we make huge profits, discard this surplus and blame it on the "new normal" (FTA)
By that logic, every business around us operates on corporate greed since their sole purpose is to increase their profits and bring down costs, not to be a UBI jobs program.
Sure, certain large and profitable companies with sizable market caps could easily stomach having even more idle workers coasting all day for great paychecks, with a corresponding reduction in profits and still stay afloat, but why would they?
In this case they could have just said "we don't have capacity to fulfill all new demands, we can happily run at full capacity, and charge more if needed". Other companies could have taken up the slack, new businesses popping up, etc. Instead, they recruited people who prioritised this new job, just to be let go.
Sure, but then they'll be overtaken by their competitors who will rake in more profits as they don't mind being greedy, and your shareholders won't appreciate that.
Greed and capitalism are basically synonymous, as the end game of capitalism is to accumulate as much wealth and market cap as possible, at the expense of your competition, until you own the whole pie.
Preaching to companies "just be OK with being a little poorer this time", while their competitors are using every dirty trick in the book to get ahead, will never work.
If you want a level playing field for everyone to not be greedy, it must come from regulations that hold companies accountable, not expecting companies to voluntarily act in favor of their labor force out of the kindness of their hearts, as that will seldom happen.
Capitalism is not synonymous with greed. We just idolize greedy people. We call them things like "successful", "self-made", "inspiring", or "capitalist" to absolve them of their greed. In the Soviet Union, people would call greedy people "successful", "self-made", "inspiring", and "communist".
It's really just the greed.
Do you think Apple, Microsoft, Google, Saudi Aramco, etc. got to trillion dollar valuations by being mindful and not greedy?
No. Knowing that the downturn is inevitably coming (because it always does) is not the same as knowing when the downturn is coming.
That means the outrage in your last paragraph is rather misplaced.
In what world would that be better than continuous employment as long as needed, for either the company or the employees? (The good times usually last longer than just one year.)
More to the point: Why do you think you have the right to tell them how they should structure their employment practices? Why do you think the entire economy should be restructured to match your preferences?
I agree with making it clear that they are being hired to cover a surge.
More to the point: Why do you think you have the right to tell them how they should structure their employment practices? Why do you think the entire economy should be restructured to match your preferences?
Of course I have the self awareness to recognize that I'm just a random guy sitting on the couch supplying my 2¢ on the employment practices of an enormous corporation in a different country. But I assume that's not what you're talking about, since a fundamental conceit of Hacker News (and, frankly, most of the internet) is that random anonymous people bored at work or at home with vastly varying competence, understanding, and reasoning are free to indulge their hubris and make broad, sweeping judgements well outside their own domains, safe in the knowledge that they have zero power to actually enact those judgements.
So that makes the question more "Why should the public have any interest or say in the business decisions of a private corporation?" And if we don't already see eye-to-eye on that, I very much doubt that we will, since it tends to be a very baked in opinion.
Your long paragraph: Well, yeah, you and me both. And well said.
But on your last paragraph, I probably agree with you more than you expect. The public has a definite interest in such things.
Where we differ (and it seems like a small difference, at least to me) is that I see nothing wrong with hiring people for the duration of a temporary increase in demand, as long as they know up front that that's the deal. For those willing to take that deal, and companies willing to give it, I see no need for the government to prevent it.
I don't buy this - not any more. These companies are going to need these employees next year, when demand picks up again.
This is pure folly of management. The problem is upper management never pays for their mistakes. I know a company that fired it's last Perl developer and their payment system was written in perl. They literslly couldn't take payment for like 2 months becaus of it. You think the guy that made this decision has lost any sleep?
This is like just in time supply chain - lets keep zero stock on hand to 'optimise'. Oh shit, we cant get shipment in time because of disruption/flood/covid. Now we are loosing money. Well, the guy that made the decision doesn't care.
What we are seeing across the west, is that companies are destoying the base of skilled middle class employees that they actually need to operate. This is happening on purpose.
After the base is destroyed, they will beg for gobernment subsidies to compete. They basically use taxoater money to pad their profit margins
Not saying that they should have kept the employees, they just keep in mind that short term greedy can come at the cost of long term greedy. I think the real problem is often executive compensation incentives short term greedy behaviors at the expense of long term greedy behaviors, so while this decision may not be in the best interest of the company I’m certain it’s in the best interest of the execs.
One alternative to hiring/firing would have been for existing staff temporarily work harder with offers of large bonuses. Maybe they tried that as well. This would only be effective in some areas of work so some hiring/firing correlating with demand would still be needed.
Do you suggest anyone other than the employees should decide about that?
For technology in particular (which seems to be one of the affected functions), this is hardly the way it works - tech projects are unlikely to be a good way to handle temporary spikes in demand, etc. Even for more specialized non-tech functions the lead time for getting someone productive can be too long to make this a feasible strategy.
Maybe also particularly for tech, but I suspect it is much more likely that the "good times" gave the company a large appetite for longer term strategic initiatives/investments, and now that tides have turned that appetite has gone too.
There is no way that it has come as a surprise that the market would change eventually, and creating and killing long term initiatives as the market goes up and down is bad planning, bad for the people affected and bad for the company as well.
I don't know the shipping industry, so it's possible this isn't feasible.
Having been in a couple of similar situations, the only loyalty worth having is with the team.
Usually the only companies that have empathy for their employees, management started on the bottom, instead out of management school with their beloved MBA degrees.
European countries have robust rules around these things that often require companies to offer voluntary terms and such first. I think the outrage about this is almost certainly misplaced.
And then a combination of public and private unemployment benefits kick in. And if you want to e.g. retrain or pursue a graduate degree, there’s support for that too.
So there’s a solid safety net, but employers are also required to shoulder some responsibility for supporting terminated employees.
The surge in the transportation services demand during COVID couldn't be resolved by additional hiring and was offset by increase in freight rates, hence the enormous profits. They couldn't resolve surge demand by hiring, as their bottleneck was and still is the land infrastructure, sea ports, terminal (in)efficiency, inland transport to which they have little control of.
Maersk decided to become vertically integrated carrier and started acquiring various companies, including last mile delivery services, custom's brokers, air freight capacity etc. This, in my opinion, contributed to the increase in the headcount.
Other carriers followed the Maersk acquisition spree...
The article suggests it is an oversupply of container ships with very few ships scrapped as opposed to demand: "The industry invested heavily in new container ships during and after the pandemic to meet strong demand and benefit from record freight rates. A large number of new ships entered the market since the summer with no signs of idling or scrapping, said Clerc."
Furthermore just because container ships were over ordered does not mean that other types of ships were so it is misleading to just refer to shipping in the title. It should be "container shipping".
Really hope we’re not approaching a downturn.
A confirmation would be to see if truck traffic through specific border town routes went up.
And a map with helpful bubbles and options to drill down to various modes: https://explore.dot.gov/views/BorderCrossingData/Map?%3Aembe...
There are tabs at the top of the map with different views. Some are specific to this question.
Many of the comments here immediately and unequivocally supporting management are a reminder that the veneer of civility is soon lost when money is at stake.
The 2021 annual report says 95k+ employees.
The 2020 annual report says 80k+ employees.
Seems like they have acquired quite bit in the past few years, e.g.:
https://www.freightwaves.com/news/shipping-giant-maersk-cont...
Shipping giant Maersk continues buying spree after best quarter ever (November 2021)
It appears they have executed a strategy to become a vertically integrated end-to-end logistics company rather than just a container shipping company. Profits during the pandemic allowed them to accelerate the change.
https://qz.com/2103412/maersk-is-no-longer-just-a-shipping-c...
(Have a look at that quarterly profit graph...)
I don't get these execs.