The majority of the cuts will be in North America where NOL’s costs are the largest, according to a statement from the shipping group. About 50 staff at the company’s Singapore headquarters will go as well.
Such a cutback is hoped to save the company US$200m next year.
The move will “place the company on a more sustainable footing through an expected severe and prolonged downturn in global container shipping”, according to CEO Ron Widdows.
“The negative conditions we are seeing in the market place are unprecedented in our industry's history,” he said.
NOL’s profits fell 82 per cent in the third quarter to US$35m, and an operating loss is predicted in the fourth quarter. Mr Widdows had warned of staff cutbacks only weeks ago.
“Job cuts are a last resort,” said NOL spokesman Paul Barrett. The company had already cut Asia-Europe and trans-Pacific shipping capacity by 20-25 per cent and frozen staff numbers and wages.
“Departures are likely to be progressive over the next few months at least,” according to Mr Barrett, and will cost about US$33 in restructuring fees in the fourth quarter, such as severance packages. Further costs are expected next year.
Analysts have said NOL’s job cuts may not be enough to keep the shipping group profitable.
“While we are positive on the measures announced by NOL, the cost-cutting initiatives may not be able to offset the severe top-line pressure,” said CIMB-GK analyst Raymond Yap.
“The US$200 million savings from previously announced capacity cuts could be more significant, but may still not be enough to keep NOL in the black.”
“The outlook for profitability in 2009 is grim,” the company said in a statement.