The shipping industry, long plagued by overcapacity, will benefit from the consolidation and government-led financing solutions currently afoot in Asia. But the reprieve will be temporary at best.

Japan's three biggest shippers—Nippon Yusen KK, Mitsui OSK Lines and Kawasaki Kisen Kaisha—announced a merger of their container shipping businesses on Monday in an attempt to stay competitive amid the industry's sharp downturn. The new entity would be the world's sixth-largest player, yielding $1.05 billion in annual cost benefits and $19.1 billion in combined revenues, according to an official statement.

A Mitsui OSK Lines (MOL) container ship at a shipping terminal in Tokyo on Oct. 31, 2016. Japan's three biggest shippers agreed to spin off their container operations and merge them to create the world's sixth-largest box carrier as the global container-shipping industry continues to shrink. Akio Kon - Bloomberg - Getty Images

"The aim of becoming one this time is so none of us become zero," said Nippon Yusen president Tadaaki Naito at a news conference. A mix of slow global trade, increased shipping freight capacity and record-low freight prices have hit the industry, producing a wave of consolidation this year. In June, CMA CGM SA, the world's third-largest container shipper, assumed control of Singapore's Neptune Orient Lines in what was the industry's biggest acquisition ($2.5 billion) in nearly a decade. Hapag-Lloyd and United Arab Shipping agreed in July to merge to become the fifth-largest container shipping company. And last year saw China Ocean Shipping Group and China Shipping Group combine to create China Cosco Shipping Corp. With current conditions unlikely to change in the near-term, more deals are widely expected. "While freight rates have been (recently) trending upwards, research shows the gap between supply and demand is going to persist for at least the next two years," said Greg Knowler, Asia editor of maritime and trade at IHS Markit. He believes Taiwan's Evergreen Marine and Yang Ming are potential M&A targets given their poor operating margins. But corporate coupling can only do so much in the face what experts anticipate is a long-term issue of low demand. Mergers created a stabilization base through economies of scale and efficiency, but they were no silver bullet, warned Trinh Nguyen, senior economist at Natixis.

