A slowdown in China has sent commodity prices swooning and dealt a blow to global growth. Now a stuttering recovery in the world's second-largest economy could spark the biggest shipping union in years.
Neptune Orient Lines, owned by Singapore's state fund Temasek Holdings, over the weekend announced that it has entered exclusive talks with, France's CMA CGM—the world's third largest container shipping line—over a potential takeover.
If it goes through, NOL and CMA's merger would be the biggest container shipping deal in years.
Analysts say the deal is a sign of further consolidation in the global shipping industry on the back of a collapse in freight rates as growth in China slows, reducing the country's appetite for commodities just as a backlog of large vessels come into service.
"There is definitely a consolidation trend going on," Singapore Shipping Association's president Esben Poulsson told CNBC's The Rundown on Monday.
"At a difficult moment of the cycle, consolidation is obviously a way for these players to gain greater market share and greater strength toward the customers."
Even so, the price of the merger will "no doubt the price will reflect that we are in a difficult period," said Paulsson.