Coronavirus impact drives car carrier to reduce fleet, workforce

As the coronavirus pandemic has put the brakes on vehicle production and auto sales around the world, car carrier Wallenius Wilhelmsen is laying off workers and laying up ships.

“As the COVID-19 pandemic continues to progress and mitigating actions by authorities evolve quickly, supply chains are being hit hard and vehicle producers are shutting down plants around the world,” Wallenius Wilhelmsen said. “We continue to actively monitor the situation and its ongoing effects on the global supply chain and will adjust our approach as necessary in line with developments.”

The layoffs of 2,500 employees reportedly amount to half the Norwegian company’s workforce in the United States and Mexico, countries where it operates about 25 vehicle-processing facilities.

The company has 11 terminals at some of the largest roll-on/roll-off ports around the world. U.S. terminals are at Port Hueneme in California, Port of Brunswick in Georgia and Port of Baltimore.

Wallenius Wilhelmsen employs more than 9,000 people in 30 countries and is a logistics provider for automakers as well as a shipowner. The company did not respond to a request for information on where the laid-off workers were located.

“We have no choice but to respond to the disruption experienced by our customers and the effect it has on our operational throughput and income,” CEO Craig Jasienski said in a COVID-19 update on the company’s website.

Wallenius Wilhelmsen also said this week it is reducing its fleet. It is one of the world’s largest car carriers, with a fleet of some 130 vessels.

“The current situation indicates an overcapacity in the Wallenius Wilhelmsen fleet of 10-15 vessels,” the company said. “This will be solved through a combination of redelivery of chartered vessels to tonnage providers, early recycling and cold layups.”

Wallenius Wilhelmsen said it will recycle up to four vessels, all at least 24 years old. Up to 10 vessels will be put in cold layup, meaning they will be supplied only with emergency energy.

“This puts us in a position to quickly adjust costs as the supply chain and market impacts become clearer going forward,” Wallenius Wilhelmsen said, estimating the cost savings per vessel in cold layup at $3,000 to $4,000 per day.

Wallenius Wilhelmsen additionally announced it will suspend dividend payments this year and next to save an estimated $60 million.

“Our strong focus on synergies and cost efficiency over the past years have put us in a solid liquidity position, but we are taking early precautionary steps now to preserve cash,” Jasienski said.

The Wallenius Wilhelmsen board had proposed dividend payments of 7 cents per share in April and in 2021.

“We now see a situation that is evolving rapidly across the globe,” Wallenius Wilhelmsen said on its website. “Even as matters improve in Asia, they are escalating in Europe and the U.S. Factories are shutting down, borders are closing and supply chains are being hit hard.

“The world has changed dramatically over the past weeks, and we are all feeling the effect. The consequence these events will have on the world economy and global supply chains remains unpredictable, but it is increasingly clear that there will be longer-term impacts,” it said.

Wallenius Wilhelmsen said in its ocean business, “service demand is unlikely to follow normal patterns and we will adjust schedules and capacity accordingly. We see that both frequency and lead time will be impacted.”

The company said its crews have been affected by restrictions on going ashore during the pandemic.

“Travel restrictions have also made it necessary to stop crew changes and shore leave. This puts both crew on board and on shore in a difficult position,” it said.