The world shipping industry set to shape up in the coming months

Signs of weaker economic outlook continue to remain clear as the announcement of a merger between Japan's three biggest shipping companies highlighted a formative trend within the industry towards finding efficiency in shipments, a marked shift from an inoperative plan of biding time with a "wait and see" approach in the hope it would buy shipping co's time to weather the global trade storm blown in from the turbulent hard landing felt in China.

The move isn't the first in the industry over the last year but it does cement the position of strategy being utilised by shipping & freight companies in response to a poor patch of earnings that have pressed shareholders to push management to shield them from the devastation that's seen container rates drop dramatically due to a surplus of containers coupled with low demand in trade.

This couldn't have come at a worse time for the shipping industry as it faces the huge task of paying down debt loads taken out just a few years earlier when demand was expected to remain healthy and consistent. We saw South Korea's Hanjin Shipping Co file for bankruptcy protection in September saying it was unable to secure the necessary guarantees from banks to see it through, possibly a reason we saw many in the industry applaud the move to merge so as to avoid fresh fears of imminent insolvencies amongst the top shippers.          

Merger of Mitsui O.S.K. Lines Ltd., Nippon Yusen K.K. and Kawasaki Kisen Kaisha Ltd. will create world’s... https://t.co/eyr6t846P7

— Transworld Group (@TransworldTweet) October 31, 2016

However in as much as the merger will create cost benefits as well as spread the debt burden evenly across the company so it's able to cope easier, the next point of departure will involve the process of turning the business into leaner operations that do away with inefficiencies and returns shareholders decent profit. That requires a restructuring program that'll certainly see the labour force reduced in the hordes which won't be welcomed by labour unions.

More importantly the industry is setting the basis from which policymakers might consider changing stance on the way in which policy is being implemented in the overall economy. If the lack of tenacity in economic activity is hindering the prospects for growth then there's a case for a reversion from the status quo into a system that promotes efficiency over expansion especially when caught in stagnancy.