HOW come an industry so fragmented, so transparent, and so homogeneous still resists consolidation? The answer lies on those running the companies. But shareholders may have a different point of view, and this time they are getting restless.

One of the underlying themes in this year’s Marine Money Week was “mergers and acquisitions”, a new-found term that seems to have replaced good old “consolidation”.

The shipping industry is no longer a newcomer in capital markets. Yet, despite almost 50 publicly traded international shipping companies on the two major exchanges in New York, only eight of them have current market capitalisations over $1bn.

Industry veteran Mark Friedman told a packed audience at Marine Money that a cocktail of low company valuations, lack of trading liquidity, below-investment grade credit ratings, and high debt leverage, has delegated shipping to a niche area among institutional investors, unlike other areas of the broader transportation sector like rail, trucking, airline, or even the cruise industry.

No real barriers exist to companies merging their shipping activities. Commercial and technical functions are scalable, debt is typically rolled over, and there exist no regulatory barriers, except perhaps in the container sector. 

The impetus to merge should be there given that the bar of getting financing, particularly equity financing, has gotten much higher.

Only company executives resist to acknowledge the obvious. 

Shipping may be a land of steady habits but times are changing, said Mr Friedman. Restless shareholders, many of whom come from the private equity sector, are agitating for change.

Will the industry listen?