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Speaker 1: Musk has boosted its global container trade forecast for the

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Speaker 1: full year. Partner shipping Giant says it will cut its

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Speaker 1: work for Spy about ten thousand people in a drive

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Speaker 1: to reduce costs. Joining us now is Vasonclett, the CEO

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Speaker 1: of Musk, So thank you for joining us this morning.

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Speaker 1: Let's start on the job cuts.

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Speaker 2: Then.

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Speaker 1: Ten thousand, it's a big number. Is this enough to

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Speaker 1: get costs to where you want them to be?

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Speaker 2: It is enough. It is a big number, and it

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Speaker 2: is for what we can see now, enough what we

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Speaker 2: can do in order to bring our cost base in

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Speaker 2: line with the level of activity we expect to see

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Speaker 2: both for the end of this year but also towards

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Speaker 2: twenty twenty four and twenty twenty five.

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Speaker 3: That's not good morning. I feel like what's happening in

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Speaker 3: global freight markets is exactly as you and your predecessor

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Speaker 3: always kind of talked about in the show the last

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Speaker 3: couple of years, that the pandemic level freight rates would

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Speaker 3: come down and probably fall below pre pandemic because of

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Speaker 3: this glot of supply coming online just as global growth

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Speaker 3: is slowing down. So it's kind of panned out exactly

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Speaker 3: as you're kind of roughly outlinings in the global macro outlook,

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Speaker 3: and yet you're still cutting ten as jobs, almost tempts

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Speaker 3: in your workforce, you're cutting capex. So what does this

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Speaker 3: mean for your industry overall?

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Speaker 1: For those who didn't.

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Speaker 3: Kind of prepare for a long time for this much

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Speaker 3: more negative scenario.

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Speaker 2: Yeah, I think you're right. The quarter as it is

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Speaker 2: is pretty much as we expected it to be. But

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Speaker 2: the outlook that we have is completely different from what

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Speaker 2: we had just a year ago. And following this COVID boom,

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Speaker 2: we're seeing prices today which are either in line or

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Speaker 2: below what they were in twenty nineteen, and an outlook

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Speaker 2: that is pretty subdued on the macroeconomic level. Furthermore, this

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Speaker 2: is compounded by a glot of supply, as you said,

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Speaker 2: that has started to come online and that has put

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Speaker 2: freight rates in the shipping division under a lot of pressure.

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Speaker 2: In those circumstance, we just have to really get ourselves

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Speaker 2: ready for whatever is going to come ahead. There's a

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Speaker 2: lot of uncertainty about around how this is going to

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Speaker 2: shape for the next couple of years, but we want

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Speaker 2: to make sure we are duly prepared to come out

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Speaker 2: of this cycle. In a very very strong fashion. What

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Speaker 2: this means for us is getting a type control over

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Speaker 2: our cost past, something we started already at the beginning

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Speaker 2: of the year. Out of the ten thousand jobs we

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Speaker 2: have announced we're going to reduce our workforce with six

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Speaker 2: and a half thousand have already been executed. The rest

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Speaker 2: of it is an acceleration of those of those cuts

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Speaker 2: that will take place mostly here in the fourth quarter.

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Speaker 2: So we're getting our cost pace in order. We're getting

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Speaker 2: fit for what could be lena times here ahead. And

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Speaker 2: also that means also reduction in our CAPEX program and

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Speaker 2: making sure we preserve some powder for whatever opportunity will

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Speaker 2: also arise here during this cycle.

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Speaker 1: Okay, so we need to make sure that your match

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Speaker 1: fit for this leaner time or these leaner times are

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Speaker 1: not coming ahead. On those freight rates, then Van Song,

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Speaker 1: what is your sense at this point whether as to

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Speaker 1: whether or there's more pressure coming through on those rates?

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Speaker 1: Have they bottomed or is there more downside? Do you

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Speaker 1: think to freight rates?

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Speaker 2: So we have seen throughout the third quarter rates actually

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Speaker 2: slide as some of the new tonnage was coming online,

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Speaker 2: and this influx of tonnage is not much by demand

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Speaker 2: or by capacity management measures of idling or scrapping of

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Speaker 2: older tonnage. As long as you have this over capacity,

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Speaker 2: you can expect to see further pressure on the freight rates.

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Speaker 2: This is why we see a pretty fat tale to

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Speaker 2: how this could play out into next year, and that

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Speaker 2: requires for us with constant care to really get ourselves

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Speaker 2: fit for the game that is going to unfold and

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Speaker 2: make sure that we can play strong throughout.

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Speaker 3: I understand the message you're conveying of uncertainty and preparing

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Speaker 3: for kind of the worst, and as you said, there's

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Speaker 3: a fat tale of outcomes. What's your kind of base

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Speaker 3: case for how much further freight rates can decline, and

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Speaker 3: at your base rate kind of estimation of how much

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Speaker 3: further than the decline, how much of the broader industry

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Speaker 3: is profitable. Going back to the point that you've been

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Speaker 3: preparing defensively for some time and diversifying your business for

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Speaker 3: this scenario, I.

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Speaker 2: Think we're very fortunate to head into this cycle with

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Speaker 2: a very strong balance sheet, a very moderate CAPEX program,

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Speaker 2: which means basically that we are really in good shape

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Speaker 2: to see this cycle through and still have a lot

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Speaker 2: of powder to take advantage of opportunities that always arise

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Speaker 2: as we're going through a cycle like this that is

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Speaker 2: really really good for MARSK and something we want to

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Speaker 2: make sure we protect throughout so that we can come

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Speaker 2: out strong on the other side. If you just proate,

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Speaker 2: and there's been different analyst report that I've started to

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Speaker 2: provate a little bit the macroeconomic expectations on demand with

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Speaker 2: what is going to happen on supply, then the gap

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Speaker 2: is set to grow throughout next year. And if we

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Speaker 2: don't see an increase in capacity management, then this will

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Speaker 2: cause further pressure on freight rates for a while.

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Speaker 1: And as you project out just a bit more granular

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Speaker 1: detail if you can in terms of volumes and how

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Speaker 1: you think that story evolves, where are you seeing and

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Speaker 1: how do you expect those volumes in that demand to

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Speaker 1: shape up in the next six to twelve months. Which

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Speaker 1: regions are looking more resilient, which we're looking more vulnerable.

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Speaker 1: How does that overlay of the slowdown the global economy

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Speaker 1: affect and shape your views in terms of volumes.

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Speaker 2: So volumes have been actually remarkably resilient to higher interest

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Speaker 2: rate environments, and we still expect a market that is

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Speaker 2: moderately down compared to last year, which was really a

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Speaker 2: peak year, So we're still seeing the demand side holding

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Speaker 2: pretty good. There could be some downside risk to this

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Speaker 2: if North America or Europe go into a recession, but

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Speaker 2: our base case is still that we can have a

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Speaker 2: continuation of this and maybe a little bit of rebound

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Speaker 2: as we get out of these inventory cycles that have

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Speaker 2: all of the COVID years. Going forward. We see also

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Speaker 2: strong resilience in a lot of the emerging markets that

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Speaker 2: have held actually pretty strongly throughout this year, and that's

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Speaker 2: that is something that we expect to continue into next year.

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Speaker 2: The environment, though in general, is still fairly moderate. We

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Speaker 2: don't expect a large volume recovery on the back of

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Speaker 2: this twenty twenty three.

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Speaker 3: Okay, so volumes holding up, but not necessarily a big recovery.

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Speaker 3: You talk there about capacity management. I guess your reference

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Speaker 3: in the fact that it informer or previous down cycles

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Speaker 3: in rates, we've seen this kind of race to this bottom,

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Speaker 3: this kind of doing unprofitable rates to kind of keep

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Speaker 3: going through the cycle, which obviously can be very damage

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Speaker 3: of the whole industry. Are you worried about that happening

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Speaker 3: in this cycle? I kind of felt like there's a

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Speaker 3: bit of a dig there about if we don't see

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Speaker 3: capacity management from the industry overall. So what's the kind

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Speaker 3: of perspective on that.

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Speaker 2: Yeah, I think, as I mentioned, if you simply do

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Speaker 2: the math on everything remaining between the supply that is

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Speaker 2: coming in and the demand that we expect, then you

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Speaker 2: see a gap growing between the supply coming to the

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Speaker 2: market and the demand that there is, and that historically,

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Speaker 2: as you mentioned, has always led to actually a very

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Speaker 2: damaging pricing environment. I think it's too early to say

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Speaker 2: that this is what is going to happen, but it

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Speaker 2: is certainly something that we need to entertain, and for us,

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Speaker 2: it is something that we're preparing for should it happens,

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Speaker 2: so that we are in the best possible shape to

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Speaker 2: see it through.

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Speaker 1: The preparations are clearly there from you and the team.

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Speaker 1: What is the timeframe that you're looking at for this

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Speaker 1: down cycle? How far are you projecting out in terms

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Speaker 1: of when you expect this downcycle to turn around to end?

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Speaker 2: So I think if you again, if you look at

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Speaker 2: if you look at the order book and what is

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Speaker 2: going to come over the next couple of years, I

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Speaker 2: think that we're probably settling in for a very subdued

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Speaker 2: and pressured environment for two to three years ahead. That

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Speaker 2: is at least what our models is leading us to

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Speaker 2: believe in. That is why also we have to take

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Speaker 2: measures that are pretty severe or pretty comprehensive in order

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Speaker 2: to deal with this and make sure that we are

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Speaker 2: ready for the long run.

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Speaker 1: Okay, find some clich CEO of mrst