Denmark-based ferry and logistics company DFDS announced around 650 redundancies across its operations in Europe earlier today. The job cuts come as the company adapts to new market conditions as a result of the COVID-19 Coronavirus pandemic. DFDS currently employs around 8,600 people. In addition to the announced redundancies, 200 of which will come in Denmark, the company will also reorganise its operations. The changes are expected to generate around DKK 250m in annual savings, though one-off redundancy costs will be about DKK 100m. The company exited the Danish Government’s furlough scheme today,
DFDS’s initial response to the pandemic was to layup 12 freight ferries during March and April and suspend its two passenger focused routes, Copenhagen – Oslo and IJmuiden – Newcastle. With freight volumes improving and most areas now slightly ahead of expectations for Q2, five of the freight ferries have now returned to service. The Copenhagen – Oslo route was restored on June 25, but with the addition of a call at Frederikshavn. The resumption of the Newcastle – IJmuiden service and return of non-essential travel on the English Chanel routes from Dover to Calais and Dunkerque will depend on the easing of UK and EU travel restrictions.
New market conditions
According to DFDS, the company is undertaking a number of initiatives to realign its business. These are expected to generate the DKK 250m per savings per annum along with the announced job cuts. They include
- Industry sales of large freight customer solutions, involving both ferry and logistics operations, will be combined in one unit to drive sales across the DFDS organisation. The unit will be part of the Logistics Division. In addition to creating a stronger commercial focus, overlapping functions will be streamlined
- Consequently, the Ferry Division will focus on delivering reliable and cost-efficient services to freight forwarders and hauliers
- Freight and logistics operations will be adapted to new market conditions, including optimisation of port terminal and haulage operations
- Passenger concepts have been aligned to changes in travel market dynamics with a higher share of passengers that primarily travel for transport purposes, including holiday travel. Onboard concepts and offerings have been simplified
- A range of improvement and efficiency projects will simplify and focus business support functions. This includes a reshaped and integrated IT and digital organisation as well as a downsizing of various functions.
Less freight and fewer passengers
Announcing the changes, DFDS CEO Torben Carlsen said
“Our initial response to Covid-19 has been successful. We now take further steps to restore long term growth and efficiency. At the same time, we continue to monitor new opportunities that may arise”
“As a ferry and logistics company, DFDS has experienced that passenger numbers, freight volumes and terminal activity dropped dramatically.
“Throughout our network, restrictions are being lifted, manufacturers are resuming operations, and government support measures are ending, and we are now seeing the outlines of a new normal.
“However, it will not be a return to the situation before the crisis. We are facing a world with less freight and fewer passengers to carry.
“Consequently, we are adapting our structure, staff and costs to the business that will emerge from Covid-19.”
“We regret this situation, which affects many good colleagues. With the measures being implemented, we are confident that it will allow us to regain growth and profitability, maintain our ambitions to deliver excellent customer services and continue being an attractive employer.”