Bangkok Shipowners and Agent Association

THE market for mergers and acquisitions has revived - but not in shipping. On Monday, 10 deals worth more than a combined $27bn were announced, according to the Financial Times.

Shipping, although apparently offering fertile conditions for M&A activity, continues to remain aloof from this process.

There have been some recent nods in the direction of consolidation. Heidmar and W-O Shipping, for example, have joined forces in a venture that will manage a pool of chemical and product tankers.

Similarly, Hellespont has just launched a pool for chemical/product tankers and said talks with other owners were at an advanced stage.

But the real meat and drink of consolidation, M&A, has yet to appear on the menu. There are good reasons why shipping has yet to take the plunge.

Even if sightings of the green shoots of recovery in parts of the global economy prove to be a case of 20:20 vision, it does not follow that the gloom will rapidly be lifted in shipping. Some sectors of the industry are facing such extreme levels of over-tonnaging that it will take more than a mild recovery in the global economy and trade to blow away the clouds.

Tai Chong Cheang Steamship's chief executive Kenneth Koo dismissed the dry bulk recovery of the last few months and warned: "We are only seeing the beginnings of the crisis now."

The same can be said about the containership sector.

If this view is borne out, then asset values have further to fall, and those owners with a war chest full of cash are right to keep their powder dry.

Consolidation through mergers will come when stronger owners are confident that asset values have touched bottom and there are solid signs of a genuine recovery in the global economy.

In the meantime, shipping remains a fragmented industry and it would be dangerous for weaker owners to resist M&A overtures because they are emotionally unwilling to relinquish control of their fleets.