London – Maersk Line parent A.P. Moller-Maersk will cut costs by an additional $1 billion this year to respond to the “new global reality”, CEO Nils Andersen said.
“We cannot go on doing business as we have done until now,” Andersen wrote in the Danish transport and energy company’s house magazine.
With low oil prices and a tumbling ocean container market characterised by overcapacity and unprofitable freight rates, 2009 will prove difficult for most of the company’s business units.
This means Maersk will have to trim investments and improve cash management, Andersen said. The company has set a target of reducing costs by $1 billion in addition to already planned cuts.
“We need a cost-leadership mentality. Not being cost-competitive, benchmarked against the best competitors, means we risk our company’s long term survival,” Andersen wrote in the Maersk Post, according to Reuters.
Maersk Line launched a cost-cutting program, called StreamLine, in 2008, which removed 4,500 employees from its payroll. Chief executive Eivind Kloding last week said the carrier could lay up as many as 25 medium-size container ships this year. Eight vessels were laid up in December.
“When this year is over we want to be able to say: Maersk Line outperformed competitors, improved profitability and has satisfied customers while continuing to grow its market share,” Andersen said.