zoomIllustration. Image Courtesy: Pixabay under CC0 Creative Commons license Financially vulnerable carriers could be pushed into M&A by the extra costs associated with the new low-sulphur fuel law, according to shipping consultancy Drewry.Although the rising demand and freight rates in the final quarter of 2018 helped the container shipping industry to return a profit of around USD 1.5 billion, the industry still hasn’t fully recovered from the global financial crash and the devastating losses incurred thereafter.As the deadline for the IMO 2020 mandate draws nearer carriers are inevitably getting jittery about its overall impact, Drewry said. Worries arise whether the carriers are in a position to deal with a myriad of extra associated costs, such as unrecoverable BAFs, capex costs to install scrubbers and extra funding requirement for bunker credit, among others.“Without wanting to be too alarmist, there is the potential for IMO 2020 to inspire another major carrier bankruptcy and/or trigger more defensive M&A. It could turn out that the IMO will inadvertently push industry consolidation along, closer to where it needs to be in order to achieve sustainable profitability,” Drewry said.The last round of M&A that started with the merger of Chinese carriers Cosco and CSCL in 2016 and concluded with the integration of the Japanese carriers NYK, MOL and K Line into the Ocean Network Express (ONE) in the first quarter of 2018, made some headway in the consolidation process to the extent that the leading seven carriers now control approximately three-quarters of the world’s containership fleet.However, while previous M&A has handed near-full control of the global market to a handful of lines, there is still varying degrees of competition at a trade-route level.“Even if IMO 2020 does spur another round of industry consolidation, the chances are that there will still be enough carriers left to prevent the big trades from being highly concentrated. It will require a couple of highly unlikely mega M&As to really move the dial,” Drewry concluded.