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SINGAPORE: Global cargo transport and logistics company Neptune Orient Lines (NOL) is cutting 1,000 jobs, or 9 per cent of its workforce, worldwide.
The reductions will come mainly from its North American operations, with 50 from its headquarters in Singapore. The Singapore-listed shipper hires about 11,000 people globally.
The company will incur a restructuring cost of US$33 million in its fiscal fourth quarter, with more to come in 2009.
The latest cost-cutting measures mark a second phase of NOL's restructuring exercise.
Last month, NOL said its container shipping business, APL, will reduce capacity in Asia-Europe trade by about 25 per cent. This would save the group some US$200 million in costs next year.
NOL also warned that its profit outlook for 2009 appears grim due to an extended downturn expected for the shipping industry.
The shipper said it does not see a recovery from the challenging conditions for quite some time and that the situation could persist for the next few years.
NOL said the market environment has worsened considerably over the past month and that it anticipates further deterioration in trading conditions going forward.
The shipping industry has been hurt by slowing economies in the US and Europe. Shipments have also been delayed or cancelled due to the global credit crisis, which has made it more difficult to insure cargo.
Last month, NOL reported an 82 per cent fall in third-quarter profit to US$35 million. It also said then that it was expecting an operating loss in the fourth quarter.
An NOL spokesman in Singapore told Channel NewsAsia that affected employees will be notified by the end of the year, and departures are likely to be progressive over the next few months.
NOL's staff strength in Singapore is 800. The spokesman said retrenchments would be across the board.
The shipper said that besides severance payments, it will provide a range of support services to affected employees. This will include counselling, job search and training assistance.
NOL emphasised that it has already taken steps to tackle the adverse economic climate, among them, reducing the capacity of its APL container ship network by between 20 to 25 per cent in the Asia-Europe and trans-Pacific trades. It also imposed headcount and salary freezes.
But even with these measures, the outlook is for a severe and prolonged downturn in global container shipping. As such, the company has to adjust its organisation and cost base, and it has taken the difficult decision to reduce staff.
- CNA/yb/ir
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