Our plan

1) Problem Statement

5) Decision Criteria

2) Core Objectives

6) Recommendations

3) Situational Analysis

7) Risk Mitigation

4) Alternatives

8) Alignment with
Objectives

Melis Conflict

To grow and maintain Meli Marines position as a

leading container carrier in the face of increasing
competitor intensity, cascading effects and low
returns on vessel operations.

What is our goal?

1. Grow business
2. Reduce risk
3. Increase profits
While maintaining high touch, responsive customer
service

Competitive Landscape

Strong customer relations

Leader in on-time delivery
Specialized containers
Capabilities in logs and
transhipments
Flexible cost structure

No presence outside of Intra-Asia

Higher costs
Higher prices

Well-priced ships for sale that provide

economies of scale
Fast growing terminal operations and
Shipment Origination sectors
Trans-pacific volume
opportunities and growth

Cascading
Upward cost pressure from commodity
prices and regulation
Competitors operate terminals
Global trade imbalance
Dependant on niche clients

Where do we compete?

Revenue

$8B

$32B

$102B

$35B

$28B

ROIC

9%

50%

3%

25%

34%

CAGR

11%

10%

7%

11%

7%

Players

Manufacturers
Meli Marine
Evergreen
Other

Maersk
Meli Marine

All Players

Maersk
Evergreen
Wan Hai
Yang Ming
Tee-Sah

Maersk
Meli Marine

Customer service and

Billing

80% Revenues from

Top 15 firms

Terminal Charges are

20% of cost for carrier

Notes

What choices do we have to make?

What options do we have?

Buy
Dont buy
Buy and lease

Intra-Asia
Asia-North America
Asia-Europe
Niche
Combo

Current
Focus on shipment
origination
Expand into terminal
operations
Partnership with Evergreen

Ships

Markets

Operations

What are we basing our decisions off of?

Profitability/Growth Potential
Alignment with Core Competencies
Ease of Implementation (Feasibility)

Competitor Landscape

Which options seemed the most feasible?

Buy Ships & Expand to Trans-Pacific

Buy Ships & Focus on Intra-Asia

Dont Buy Ships & Partner with Evergreen
Dont Buy Ships & Focus on Shipment Origination

Great upside, but quite risky

Pros
Gain a larger percent of current
customer business
Significant volume opportunities and
rapid growth
Diversification of markets
Interfere with competitor profit pool

Cons
Difficult to maintain strong customer
relations in North America
High possibility for inefficient backhaul
Greater fixed costs
Uncompetitive long-haul boat capacities
Downturn in global trade

Safe bet, but too passive

Pros
Lower VC per container
More stable rates on a per TEUkilometer basis
Significant share at each port
Greater ability to compete with larger
boats
Increase in capacity

Cons
Increased impact and threat of
cascading
Missing out on significant volume
opportunities & rapid growth
Lack of diversification
Higher fixed costs

Potential to grow the business non-organically, but become highly reliant

Pros
Gain a larger percent of current
customer business
Instant access to more customers
Significant volume opportunities
and rapid growth
Diversification of markets

Cons
Loss of autonomy
Conflicting company cultures
Reliant on a successful deal

Focuses on strengths, but neglects core business

Pros

Cons

Leverages customer loyalty

Reinforces key competencies &
builds stronger relationships
High return on capital employed

Quality of service may not be scalable

No risk mitigation of cascading

How were going to win

Arriving at Recommendations
Recognize the inherent strengths, opportunities, challenges
Develop a plan that optimizes profitability and growth potential
Plan of Action
Invest in vessels and lease idle capacity
Continue to grow business in Asia
Slowly pursue NA market
Grow shipment origination

Rationale

Rationale

Rationale

Shipment origination provides high available returns as well as synergistically grows our
customer base for vessel operations

Rationale

Whats our plan moving forward?

1.
2.

Finance purchase of 16 vessels

Establish relationships with NA customers

1.

Further development of shipping origination and

acquisition of customers in Asia market
Phased-in entry to NA
Leasing of idle capacity

2.
3.
1.

Monitor & evaluate NA operations for

profitability and quality

What do we need to be aware of?

Risk

Mitigation Strategy

Hedge against fuel prices

Lease idle capacity

Grow customer base via shipment origination

Allocation of ships [size] based on customer needs (urgency, perishables etc.)

Focus on core competencies & sustain customer loyalty

Cascading: Compete using & time efficiency

Freight Forwarding: Critical growth step for managing customer relationships
Offer Lower Prices: Focus on relationship management. Offer freight
forwarding & container specialization

Why does our plan work?

Defends against cascading

Diversifies and grows revenue streams
Invests in higher ROIC activities
Improves VC per container
Gradual market entry reduces implementation risk

Grow Business

Reduce risk

Increase
profitability