Revenue contraction among ocean carriers is putting them under enormous pressure to reduce costs and is driving mergers and acquisitions activity.

First-half revenue from companies studied by Drewry’s Container Forecaster was down an average of 18 percent. If that trend holds true for the rest of the year, carrier income will shrink by $29 billion against 2015. That, in turn, would mean the industry has fallen below its depth during the global economic crisis in 2009.

M&A activity in the container market has perked up recently, with the Chinese state carriers Cosco and China Shipping merging, French carrier CMA CGM buying NOL/APL, and Germany’s Hapag-Lloyd merging with United Arab Shipping company (UASC). The carriers have also developed bigger alliances to pool their resources and find more cost savings.

“All of these moves are defensive strategies forced upon carriers by the weak state of the market,” the Drewry report said

The latest results indicate that the carriers’ positions weakened in second quarter as compared to the first quarter of this year. The earlier quarter results suggested “that the quarter-on-quarter deterioration had been arrested, giving hope that better times might be here soon.” But the second quarter burst that balloon, and, worse than that, the third quarter, historically regarded as ocean shipping’s peak season, may end up a “washout.”

Numbers which offered hope earlier in the year are now bringing distress to the carriers. Traction on spot market freight rates continues “but not at the anticipated speed,” according to Drewry. Bunkers are also becoming more expensive, to the point where “unit costs are now in excess of unit revenues.”

“The distance between the two will very likely have expanded sharply in the second-quarter 2016 when all of the data becomes available,” Drewry noted, “hence the bigger losses.”

Drewry also questioned whether the carriers, having implemented austerity measures years ago, will be able to find any more costs to cut. The obvious alternative is to look for acquisitions, as witnessed but the recent Hapag-Lloyd-UASC deal, which is estimated to generate $400 million in cost cuts.

“But such savings,” Drewry warned, “are not guaranteed nor will they happen overnight.”