When the Tide Goes Out: Maersk's Struggle Reveals Shipping's Structural Crisis

By Andrew Mwangura

Email, thecoastnewspaper@gmail.com

The announcement by A.P. Moller-Maersk that it will eliminate roughly 1,000 corporate positions might seem like standard corporate belt-tightening. In reality, it is a stark signal of an industry caught in a trap of its own making.

Denmark’s shipping giant isn’t struggling due to poor management or lost market share; it is floundering because the fundamental economics of global container shipping have broken down. And there is no quick fix in sight.

Consider the paradox at the heart of Maersk’s predicament. The company moved nearly 5% more cargo in 2025 than the year before. In most sectors, such volume growth while holding market position would signal robust health.

Yet Maersk’s net profit collapsed by more than half, plummeting from $6.1 billion to $2.7 billion—its worst performance in five years. Revenue actually declined despite handling more containers.

This is not an operational failure; it is the inevitable result of a structural oversupply that has annihilated pricing power across the entire sector.

For years, the shipping industry has added capacity at a pace far outstripping demand. New, larger, and more efficient vessels continue to enter service even as the market struggles to absorb the existing fleet. The result is a relentless buyer’s market, where shippers can dictate ever-lower freight rates.

Carriers like Maersk are caught in a vise: squeezed between rising operational costs and collapsing revenue per container. The company’s core ocean transport business saw profits plunge by nearly a third to $6.3 billion, accounting for most of its overall decline.

When your primary business deteriorates this sharply despite moving more goods, you are facing a pricing crisis, not a demand problem.

What makes this situation particularly dire is the absence of clear solutions. Maersk has responded by the book—cutting overhead, targeting $180 million in annual savings, investing in artificial intelligence for efficiency, and streamlining operations.

These are prudent steps, but they treat symptoms, not the cause. The core issue is an industry-wide glut: too many ships chasing too little profitable cargo. Until significant capacity is scrapped or demand surges unexpectedly, carriers will be left fighting over scraps.

The company’s outlook for 2026 borders on alarming. Maersk projects results ranging from a $1.5 billion loss to a $1 billion profit—a $2.5 billion spread that essentially admits management cannot predict whether it will make or lose money next year.

This is not conservative guidance; it is a confession that freight rates have become so volatile that even the world’s second-largest container line cannot forecast its own profitability.

Compared to last year’s underlying EBIT of $3.36 billion, the projected range—between a $1 billion profit and a $1.5 billion loss—underscores the profound precariousness of its position.

External factors have certainly compounded the pain. Ongoing Red Sea disruptions have forced lengthy reroutes around Africa, inflating time and costs on major trade lanes.

Geopolitical tensions and tariff threats create uncertainty, making both carriers and customers wary of long-term contracts. Supply chains remain fragile. Yet these challenges, while real, are not the root cause.

Even in calmer waters, the overwhelming overcapacity would persist.

The job cuts, while significant to corporate staff, represent less than 1% of Maersk’s total workforce. They will reduce overhead but will not alter the company’s fundamental trajectory.

Neither will artificial intelligence, despite its considerable hype. AI can optimize routes and improve efficiency, but it cannot manufacture demand or remove ships from an oversupplied market.

What the industry needs is either a dramatic reduction in capacity—through widespread scrapping or idling—or a sustained, explosive recovery in global trade. Neither appears imminent.

Trade growth remains modest, with Maersk projecting just 2–4% volume growth for 2026.

Meanwhile, shipyards continue to deliver vessels ordered in more optimistic times, deepening the glut.

The market’s reaction—a nearly 6% drop in Maersk’s share price—suggests investors grasp the gravity of the situation. They are not selling because of the layoffs or the disappointing 2025 results. They are selling because the 2026 guidance reveals an industry in which even the strongest players may lose money despite operating efficiently and holding their ground.

Shipping has weathered cyclical downturns before, but this feels different. It is less a temporary rough patch and more a prolonged reckoning with years of overbuilding.

Until that fundamental imbalance corrects itself, expect more announcements like Maersk’s—from companies doing everything right strategically, yet trapped in an industry whose economics are broken.

Andrew Mwangura is an independent maritime consultant and former Secretary General of the Seafarers Union of Kenya (SUK).