Clarksons Platou Securities is calling on beleaguered OSV owners to step up merger efforts to boost the sector.

In a somewhat tongue-in-cheek reference to the US declaration of independence, its managing director of equity and credit research, Turner Holm, urged shipping companies to take his "oath of consolidation".

It runs thus: "In an age of low dayrates, we hold this truth to be self-evident: consolidation is badly needed.

"Hence we urge all OSV owners to pledge the following oath: We the People of the OSV Industry, in Order to form a more perfect Market, establish equity Value, ensure rational competitive Behavior, provide for the common sharing of fixed costs, promote high Dayrates, and secure the Blessings of low Capital cost to ourselves and our Posterity, do ordain and establish this Consolidation."

As a back-up to the rhetoric, the company's research shows the average figure for annual selling, general and administrative expenses (SG&A) for active OSVs is an "all-too-high" $900,000 per ship.

This means owners have to clear $2,500 per day if the vessel works every day.

It describes this as "a big ask", with North Sea earnings at $8,000 per day, giving little margin for companies.

Costs have been slashed, however, with US giant Tidewater's figure dropping from $204m in the second quarter of 2014 to $104m in the same period of this year, excluding restructuring expenses.

But there is still a cost problem, Holm said.

Economies of scale

"Almost universally owners tell us they could run more vessels without adding much overhead, so the simple solution is to increase the denominator without adding to the numerator," he added.

"Given a theoretically easy solution to a pressing issue, you would think consolidation would have already begun in earnest, but you’d be wrong. Outside of some creditor-enforced actions in Norway, the industry has thus far seen little consolidation, largely because companies have been too busy wrangling with banks and bondholders to consider M&A."

But he believes now is the time, as owners emerge from restructuring.

Holm outlines several possibilities, including investor chatter linking GulfMark and Tidewater, Hornbeck to Harvey Gulf, and SD Standard Drilling to anyone.

GulfMark could achieve synergies of $175m through a merger, Clarksons Platou estimates.

But it added that historically in OSV and shipping more broadly, acquisitions have tended to target specific vessel types or specific geographies.

"Corporate M&A is the exception rather than the rule," it said. Deals for specific parts of fleets could still be done, although this involves absorbing more costs.

Overall, the likelihood of deals within a year is a "safe bet," Holm said.