Thursday, August 18, 2016

Union Upset as World’s Largest Container Shipping Company Sheds Vessels and Jobs

Offshore Supply Sector Sacrificed as Profits Tumble
Shipping News Feature
DENMARK – WORLDWIDE – The news that Maersk, the largest container shipping group in the world, is to cut its Offshore Service Vessel (OSV) fleet by up to 20 from a fleet of 56, and the consequential loss of 400 jobs, has been met with disappointment in some quarters but with little surprise. The ships will be sold off over the next 18 months after market conditions described as ‘unprecedented’ by the Danish company.

The vessels are part of the Maersk Supply Service division whose boss, Jørn Madsen, commented on a move which is likely to affect the price of similar craft which are principally used to fulfil the needs of the offshore oil and gas industry. He said:

”The divestment plan is a response to vessels in lay-up, limited trading opportunities and the global over-supply of offshore supply vessels in the industry. One of Maersk Supply Service’s prime objectives is to attempt to restore the supply demand balance in the offshore supply market. This is why the vast majority of the divested vessels will be recycled or modified by their new owners to compete outside their present segments.

”We are facing unprecedented market conditions, and regrettably we have to further adjust our crew pool. It is an unfortunate, but necessary step to safeguard the future of our company. The present supply-demand gap is expected to widen in the coming year and OSV utilization is expected to decline. This will lead to increased oversupply of tonnage in the OSV segment [we must] restore the supply demand balance in the offshore supply market. This is why we are divesting up to 20 vessels from our legacy fleet over the course of the next 18 months.”

Last week the AP Møller-Maersk group issued Q2 figures showing a drop of 89% in net profits, down to $118 million yet this did not dent its share price which rose on the news mainly due to the ability of the group to sell off individual sectors of the whole business or cut costs and assets if deemed necessary, hence the latest announcement.

The parlous state of the shipping market, coupled with a hit to its subsidiaries due to falling oil prices, Maersk has seen over half a billion dollar profit last year turn into a $150 million loss. One group upset by the news is UK union RMT whose National Secretary Steve Todd said:

“Maersk’s announcement that it intends to get rid of more than a third of its fleet represents another bitter blow to an industry already decimated by too many job losses in the last 18 months. The industry appears to be in free fall with no government intervention to stop it or save it. This is going to lead to yet more job losses for British seafarers. The RMT is seeking a very early meeting with the company to try and establish exactly how many jobs are at risk, with a view to minimising the numbers. In this already hard-hit industry the union will be fighting to save every job it possibly can.”