Given these structural shifts in the oil industry, the Alixpartners report says that the global OSV market
is currently oversupplied by about 1,150 vessels.
Alixpartners advises that companies need to be more
ambitious about their cost-cutting plans, by streamlining both operating and selling, general and administrative expenses- some of which could be driven by employing state-of-the-art technology.
Alixpartners further warns that existing financial resources
are likely not enough to sustain operators through the current environment, adding that 34 of 38 companies had Altman-Z scores of less than 1.8, indicating a high likelihood of bankruptcy in the next 12 months.
Elaborating on business combinations, Esben Christensen,
Managing Director and co-leader of Alixpartners' shipping team,
remarked,“Operators who leverage the current market situation to successfully trim their balance sheets are likely better positioned to withstand a prolonged downturn and ultimately potentially drive the consolidation so badly needed within the sector.”.