Maersk Supply Service Cuts Deep
Maersk Supply Service announced Thursday that it is following its competitors with deep cuts to its fleet and roster, a response to the down market and the widespread oversupply of OSVs.
The offshore services firm, a market leader in anchor handling, said that it would divest 20 vessels by the end of 2017, with 10 to be disposed of by December. It had 13 vessels in layup as of the end of the second quarter.
The vessels to be disposed of amount to one third of Maersk Supply's 60 ships.
The ships will be sold for scrap or conversion and will not be reentering the offshore market under new ownership, Maersk Supply said. “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,” said CEO Jørn Madsen.
Maersk Supply still plans to take delivery of six anchor handlers and four Stingray-class subsea support vessels. It will flag out the Stingray class and and five other project vessels to the Isle of Man.
In addition, the firm will lay off 400 more employees by the end of September. It laid off 200 workers last December, and its present roster comes to roughly 1,500 positions.
"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,” Madsen said.
Maersk Supply was profitable last year with a net income of $150 million. However, fleet utilization has fallen and the company lost about $100 million in the first half of 2016, due in part to an impairment of $97 million "related to old vessels with limited trading opportunities.”
The firm has 40 percent contract coverage through 2016 and 15 percent contract coverage in 2017.
Parent company Maersk Group's second quarter profit was down by nearly 90 percent from the same period last year, and its board replaced CEO Nils Smedegaard Andersen with Maersk Line head Soren Skou; under new leadership, the conglomerate is undertaking a thorough strategic review amidst widespread market speculation that it may sell or spin off some of its business units.