Growing Recession Warning Signals... Walmart Restructuring and Musk's "Decline in Cargo Volume"

Walmart Cuts 200 Management Staff... Musk's Q2 Container Shipments Down 7.4%

[Photo by AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Warnings of an economic slowdown from companies continue. Maersk, the world's largest shipping company based in Denmark, has forecasted a decline in cargo volume due to weakening demand, while Walmart, the world's largest retailer, has been confirmed to be conducting small-scale layoffs as part of an organizational restructuring.

The Wall Street Journal reported on the 3rd (local time), citing sources, that Walmart plans to lay off hundreds of corporate workers responsible for managing overall company operations, rather than employees who serve customers in stores.

According to sources, about 200 employees across various departments such as merchandise sales, technology, and real estate are targeted for layoffs. A Walmart spokesperson explained that some roles are being eliminated due to the company’s organizational restructuring, but new jobs are also being created through investments in other areas.

Walmart is scheduled to release its fiscal second-quarter earnings on the 16th. Earlier, on the 25th of last month, it disclosed preliminary earnings guidance, forecasting a 13-14% decline in operating profit for the second quarter compared to the same period last year, and an 11-13% decrease in annual operating profit.

On the same day, CNBC reported that Maersk expects container demand to weaken this year. When announcing its quarterly earnings, Maersk revealed that container shipments in the second quarter fell 7.4% year-over-year. Maersk had projected container shipment growth for this year to be between -1% and 1%, and now expects results to be near the lower end of that range.

Maersk explained that rising energy prices and inflation are darkening the global economic outlook and weakening consumer demand, with demand decline in Europe being particularly severe.

Despite the demand slowdown, Maersk significantly raised its future earnings forecasts. This exceptional situation is attributed to sharply increased shipping rates caused by supply chain disruptions despite weak demand.

Maersk raised its operating profit forecast for next year from $24 billion to $31 billion, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast from $30 billion to $37 billion.

Maersk’s second-quarter revenue rose 52% year-over-year to $217 billion, and operating profit more than doubled to $8.9 billion.

Amid heated debate over whether the U.S. economy is in recession, those denying a recession cite a strong labor market as evidence. However, concerns about labor market instability are emerging as large companies like Walmart show signs of reducing employment. Previously, Ford announced plans to cut office staff aiming to save $3 billion annually by 2026, and Meta, the parent company of Facebook, also stated it will reduce future hiring.

This content was produced with the assistance of AI translation services.