Premium Essay

Meli Marine Case Study Ans 1) Factors for Attractiveness of the Shipping Industry - as Global Trade Is Always on a Rise, and It Is Primarily Dependent on Trans-Ocean Shipping; Thus There Will Always Be a High Need for

In: English and Literature

Submitted By TTgong
Words 332
Pages 2
Meli Marine Case Study

Ans 1) Factors for attractiveness of the shipping industry

- As global trade is always on a rise, and it is primarily dependent on trans-ocean shipping; thus there will always be a high need for the industry.
- Relatively easy to enter the industry; which is a threat to existing companies.
- Most companies offer similar services at competitive prices; therefore a client is at an advantage and can negotiate more suitable rates as he has many options to choose from.
- Rival companies fight for a greater market share and companies have started to resort to undercutting of prices, giving low prices and overall industry cooperation has reduced.
- Changing price of oil plays a huge impact as it constitutes a huge part of fixed costs.
- Buyers (eg- Walmart and Target) can dictate terms and prices as they constitute the bulk of trans ocean freight services. And companies, to avoid losing the business to rivals, negotiate the prices.
- Concentration of manufacturing in Asia means ships leave from Asia at full capacity, and charge high prices; on the other hand, they depart from USA/Europe half empty and charge a fraction of the cost.

Ans 2) How does Meli marine compete
-New CEO trimmed down size of its fleet, negotiated long term contracts with charters; sold old, inefficient ships. - Deal with a limited set of customers and focus on a limited good instead of shipping each and everything they can get their hands on.
- They diversified from being a spoke and feeder line to an intra-Asia line service and also started to provide their own door to door, freight forwarding service; this allowed them to take charge of logistics from the start to the end.
- Introduced specialized insulated and refrigerated containers for shipping of chemicals and perishable foods and soon became the market leader in this segment.
- Meli Marine focused on…...

Similar Documents

Free Essay

Shipping Industry

...SHIPPING TRENDS Capt. S. Pullat BA, MCIT, MCIArb, FICS AUMNI Shipping Consultants In the midst of technological developments, its application and futuristics, the Customers seem to be relegated to the back seat. Beware, if one does not treat them like a King or at least a la Prince, they could be King makers, and any case has a decisive role to play in all our endeavours for success. For, if we are driven by technology alone –as predominantly this forum is- we must ensure that it is affordable, safe, has redundancy and environmentally and user friendly as well. Technology per se does not solve problems, it enables problem solving and must be proactive too so that obsolescence can be planned and replacement provided for. Perhaps there is a lot to learn from the Computer industry, software sector in particular, as to how upgradation or newgradation is to be effected frequently. A cyclical and capital-intensive industry such as shipping has been slow to change and innovate, so much so it is driven by regulators and not industry itself. Such hindsight methodology has considerable time lag before ushering in corrective measures and in the interim the industry’s image and perception has suffered in the eyes of users and the public at large. Handful are the cases where ships are built to higher specifications than the bare minimum that Class calls for. A major operator recently citing experience criticised the need to shell out huge sums to overcome the cost saving nexus...

Words: 1659 - Pages: 7

Premium Essay

Meli Marine

...1. Overview Meli Marine is a leading player in the container shipping industry on intra-Asia routes and has built a strong presence in the market and demonstrated very high operating margins and operating ROA from 2002 – 2007 compared to its main competitors. As Meli Marine’s CEO, David Tian seeks to steer the company towards expansion in 2008, with an option to acquire 16 vessels from Teeh-Sah Holdings. With these ships, he plans to expand to the trans-Pacific market. However, we believe this deal will not be in Meli Marine’s best interest at the moment, and the company will be better off without the acquisition. 2. Prelude to Acquisition Consideration 2.1 Market Attractiveness: Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options;......

Words: 2505 - Pages: 11

Premium Essay

Meli Marine Paper

...Week #1 Assignment Meli Marine Case Study Jess F. The attractiveness of the container shipping industry is influenced by many factors and it’s important for carriers to have clear strategies and a distinct position in the market. Some of these factors are positive while others create hesitation for companies to enter or expand within this industry. A key feature which once added to the appeal of this industry was the demand for international shipping. Five years ago when most industries shrunk during the financial crisis of 2008, the container shipping industry, particularly international shipping, experienced growth. However, when the financial crisis finally caught up with the shipping industry, combined with other factors, we saw a significant decline in this growth. Combined with economic factors like increasing fuel prices or capital costs associated with operating and maintaining technology advances, and political forces requiring shipping companies to be mindful of the affects their ships have on ocean waters, this once appealing industry has now lost its allure. Despite this recent lack of appeal, the industry still does have some positive features which can attract businesses. Since global commerce trade is primarily dependent upon trans-ocean shipping, and within the container shipping supply chain there are several segments to integrate or expand your business, it creates opportunities for these companies to grow or enter the market. We can also look at Michael......

Words: 1506 - Pages: 7

Premium Essay

Case Study Marine

...The attractiveness of the container shipping industry is influenced by many factors and it’s important for carriers to have clear strategies and a distinct position in the market. Some of these factors are positive while others create hesitation for companies to enter or expand within this industry. A key feature which once added to the appeal of this industry was the demand for international shipping. Five years ago when most industries shrunk during the financial crisis of 2008, the container shipping industry, particularly international shipping, experienced growth. However, when the financial crisis finally caught up with the shipping industry, combined with other factors, we saw a significant decline in this growth. Combined with economic factors like increasing fuel prices or capital costs associated with operating and maintaining technology advances, and political forces requiring shipping companies to be mindful of the affects their ships have on ocean waters, this once appealing industry has now lost its allure. Despite this recent lack of appeal, the industry still does have some positive features which can attract businesses. Since global commerce trade is primarily dependent upon trans-ocean shipping, and within the container shipping supply chain there are several segments to integrate or expand your business, it creates opportunities for these companies to grow or enter the market. We can also look at Michael Porter’s Five Forces Model and create a Competitive......

Words: 278 - Pages: 2

Premium Essay

Meli Marine Case

...1. Overview Meli Marine is a leading player in the container shipping industry on intra-Asia routes and has built a strong presence in the market and demonstrated very high operating margins and operating ROA from 2002 – 2007 compared to its main competitors. As Meli Marine’s CEO, David Tian seeks to steer the company towards expansion in 2008, with an option to acquire 16 vessels from Teeh-Sah Holdings. With these ships, he plans to expand to the trans-Pacific market. However, we believe this deal will not be in Meli Marine’s best interest at the moment, and the company will be better off without the acquisition. 2. Prelude to Acquisition Consideration 2.1 Market Attractiveness: Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options; these...

Words: 2505 - Pages: 11

Premium Essay

Current Trends in Maritime Shipping Today and the Latest Issues Faced by Shipping Industry

...Current trends in maritime shipping today and the latest Issues faced by shipping industry Contents Page Introduction 2 Trends • Containerization 2-3 • Green Logistics 3-4 • Intermodalism 4-6 • Freight rate 6-7 • Tanker (ship) 7-9 Issues • Piracy 10-11 • Pollution 12-13 • Bunker fuel price increase 13-14 • Shortage of container ......

Words: 4810 - Pages: 20

Premium Essay

Shipping 360

...2.1 Market Attractiveness: Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options; these could enlarge the volume of outgoing freight flows. 2.3 Tit-for-Tat Strategy against Competitors’ Cascading: On a macro level, an expansion move to Asia-NA route will be a strong hit on their competitors “on their profit pool”, and also serve as a possible strategic tool to thwart competitors’ threat of cascading. However, when the financial crisis finally caught up with the shipping industry, combined with other factors, we saw a significant decline in this growth. Combined with economic factors like increasing fuel prices or capital costs associated with operating and maintaining technology advances, and political forces requiring shipping companies......

Words: 400 - Pages: 2

Free Essay

Shipping Industry

...Indian shipping industry growth and constraints The Indian shipping industry accounts for 95% of the Indian trade by volume and approx. 70% of Indias trade by value. This industry mainly relies on Indian exports and imports and has been severely impacted by the recession of 2008-09 as felt by the Indian industries. The main components of industry include Dry cargo which is required for the import of iron ore , coal etc ( accounting for 66% of indias shipping trade). and the wet cargo which includes crude oil etc (34.7%).The Indian shipping industry with its fleet of 1029 ships as on 2012 is the 15th largest in the world and has grown at a CAGR of 3.3% since 1970’s, but however there are plenty of new opportunities for growth as well as severe constraints facing the industry. With the liberalization of the Indian economy and during the period of economic boom, there has been an ever increasing demand for LNG to be imported in the country in order to sustain Indias fertilizer and power plants. This is followed by a need to integrate and develop multimodal logistics in order to ensure that the cargo once unloaded is delivered to the desired location in a speedy manner. This is being taken up by India by planning 16 multimodal logistic parks along Delhi to Mumbai highways and also with the Modi government’s vision of connecting all the rivers in India in order to boost up intra country trade. Another opportunity for growth for the Indian shipping industry which is primarily......

Words: 610 - Pages: 3

Free Essay

Meli Marine Case Study

...Ans 1) Factors for attractiveness of the shipping industry - As global trade is always on a rise, and it is primarily dependent on trans-ocean shipping; thus there will always be a high need for the industry. - Relatively easy to enter the industry; which is a threat to existing companies. - Most companies offer similar services at competitive prices; therefore a client is at an advantage and can negotiate more suitable rates as he has many options to choose from. - Rival companies fight for a greater market share and companies have started to resort to undercutting of prices, giving low prices and overall industry cooperation has reduced. - Changing price of oil plays a huge impact as it constitutes a huge part of fixed costs. - Buyers (eg- Walmart and Target) can dictate terms and prices as they constitute the bulk of trans ocean freight services. And companies, to avoid losing the business to rivals, negotiate the prices. - Concentration of manufacturing in Asia means ships leave from Asia at full capacity, and charge high prices; on the other hand, they depart from USA/Europe half empty and charge a fraction of the cost. Ans 2) How does Meli marine compete -New CEO trimmed down size of its fleet, negotiated long term contracts with charters; sold old, inefficient ships. - Deal with a limited set of customers and focus on a limited good instead of shipping each and everything they can get their hands on. - They diversified from being a spoke and feeder......

Words: 606 - Pages: 3

Free Essay

World Shipping Council Partners in Trade

...Best Management Practices for Protection against Somalia Based Piracy InterManager WORLD SHIPPING COUNCIL PARTNERS IN TRADE BMP4 Best Management Practices for Protection against Somalia Based Piracy (Version 4 – August 2011) Suggested Planning and Operational Practices for Ship Operators, and Masters of Ships Transiting the High Risk Area i Printed August 2011 ISBN: 978 1 85609 505 1 Terms of Use The advice and information given in this booklet (“Booklet”) is intended purely as guidance to be used at the user’s own risk. No warranties or representations are given nor is any duty of care or responsibility accepted by the Authors, their membership or employees of any person, firm, corporation or organisation (who or which has been in any way concerned with the furnishing of information or data, the compilation or any translation, publishing, supply of the Booklet) for the accuracy of any information or advice given in the Booklet or any omission from the Booklet or for any consequence whatsoever resulting directly or indirectly from compliance with, adoption of or reliance on guidance contained in the Booklet even if caused by a failure to exercise reasonable care on the part of any of the aforementioned parties. W IT H E RB Y A B LI SHI R NG G Published in 2011 by Witherby Publishing Group Ltd 4 Dunlop Square Livingston, Edinburgh, EH54 8SB Scotland, UK Tel No: +44 (0) 1506 463 227 Fax No: +44 (0) 1506 468 999 Email:......

Words: 14343 - Pages: 58

Premium Essay

Shipping Logistics

...Abstract This chapter analyses the freight rate mechanism in the shipping market. Sea transport is a derived demand where shipping demand occurs as a result of seaborne trade. The demand determinants affecting sea transport include government and political factors, the world economy, seaborne commodity trade, average haul, and transport costs. On the other hand, determinants for shipping supply are fleet size and operational efficiency. The shipping supply function shows the quantity of shipping services by sea transport carriers that would be offered at each level of the freight rate, whereas the shipping demand function shows how shippers adjust their demand requirements to changes in freight rates. In the shipping market, the supply and demand curves intersect at the equilibrium price, where both carriers and shippers have reached a mutually acceptable freight rate. Furthermore, the concept of the “shipping cycle” is introduced in this chapter. A shipping cycle starts with a shortage of ships and increases in freight rates, which in turn stimulates excessive ordering of new ships. The delivery of new ships leads to more supply in shipping capacity. The shipping cycle is a competitive process in which supply and demand interact to determine freight rates. 2.1 Demand for Sea Transport The shipping business uses the market mechanism to regulate supply and demand. Demand for freight transport is determined by demand for physical commodities in a given......

Words: 5686 - Pages: 23

Premium Essay

Meli Marine

...Ans 1) Factors for attractiveness of the shipping industry - As global trade is always on a rise, and it is primarily dependent on trans-ocean shipping; thus there will always be a high need for the industry. - Relatively easy to enter the industry; which is a threat to existing companies. - Most companies offer similar services at competitive prices; therefore a client is at an advantage and can negotiate more suitable rates as he has many options to choose from. - Rival companies fight for a greater market share and companies have started to resort to undercutting of prices, giving low prices and overall industry cooperation has reduced. - Changing price of oil plays a huge impact as it constitutes a huge part of fixed costs. - Buyers (eg- Walmart and Target) can dictate terms and prices as they constitute the bulk of trans ocean freight services. And companies, to avoid losing the business to rivals, negotiate the prices. - Concentration of manufacturing in Asia means ships leave from Asia at full capacity, and charge high prices; on the other hand, they depart from USA/Europe half empty and charge a fraction of the cost. Ans 2) How does Meli marine compete -New CEO trimmed down size of its fleet, negotiated long term contracts with charters; sold old, inefficient ships. - Deal with a limited set of customers and focus on a limited good instead of shipping each and everything they can get their hands on. - They diversified from being a spoke and......

Words: 321 - Pages: 2

Free Essay

Indian Scenario in Shipping

...Chapter-1 – INTRODUCTION 1.1 Indian Scenario in Shipping Maritime transport, which plays a vital role in the development of the country, comprises ports, shipping, shipbuilding and ship repair, and inland water transport systems. According to the Ministry of Shipping, Government of India, approximately 95% of the India’s trade by volume, and 70% by value, is moved through maritime transport. India is among the top 20 leading countries having large number of merchant fleets in the world. The Gross Tonnage (GT) under the Indian flag was 10.1 million GT as of 1.09.2010, with as much as 1029 ships in operation. Ports act as an interface between ocean transport and land transport. India has 12 major ports viz. Kolkata (including Dock complex at Haldia), Paradip, Vishakapatnam, Chennai, Ennore, Tuticorin, Cochin, New Mangalore, Mormugao, Jawaharlal Nehru at Nhava, Mumbai, and Kandla, and 187 minor ports. Despite recessionary conditions, traffic handled at major ports has grown on an average by 5.7% in the year 2009-10, over the year 2008-09. However, ports like Haldia (-20.4%), Ennore (-6.9%) and New Mangalore (-3.2%) are few of the main ports that witnessed negative growth in 2009-10. Nevertheless, most of the ports have not achieved their target for the year 2009-10. Mormugao (8.5%), Tuticorin (8.1%) Mumbai (2%), Kandla (2%), and Paradip (1.8%) were the only ports which achieved their growth target for 2009-10. Haldia (-22.1%)...

Words: 30004 - Pages: 121

Premium Essay

The Shipping Industry Accounting Team Case Study

...THE SHIPPING INDUSTRY ACCOUNTING TEAM Summary: Sarah (the name given by us) has been working in McKay, Sanderson, and Smith Associates a mid-sized accounting team located in Boston that is specialized in commercial accounting and audits for past five years. Her specialty is accounting practices for shipping companies, ranging from small to certain big fleets along east coast. About two months ago her company merged with another two other accounting firms which has offices in Miami, Seattle, Baton Rouge, and Los Angeles. They avoided centralizing their business around one office in Los Angeles. Instead they formed a new firm called Goldberg, Choo, and McKay Associates in order to leverage the synergies of their collective knowledge. This merges affected Sarah when she was told that she would be working with the other three members from the other two firms to become the firm’s new shipping industry accounting team, by her boss. The other members were Elias in Miami, Susan in Seattle, Brad in Los Angeles. She had earlier met Elias at a meeting in New York but not the other two. This shipping team activity involved e-mailing each other about new contracts and prospective clients. They were asked to submit the joint monthly statement reports and issues. Sarah submitted her own monthly reports which summarized the activities of her own clients. This coordination of monthly reports took much more time since different accounting documentation procedures across the three firms......

Words: 1693 - Pages: 7

Free Essay

Shipping

...Exclusive Summary Shipping has been an important human activity, especially where prosperity depended primarily on international trade and interregional trade. Transportation has been one of the main factors of globalization, along with communications, international standardization, and trade liberalization. Due to a number of technological, economic, and socio-cultural forces, only limited country can keep itself fully isolated from the economic activities of other countries. Many countries have seen enormous economic growth in the recent past due to their willingness to open their borders and markets to foreign investment and trade. This increased flow of knowledge, resources, goods, and services among world’s nations is called “globalization”, formally defined as the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets. Introduction Marine transportation is an integral, if sometimes less publicly visible, part of the global economy. The marine transportation system is a network of specialized vessels, the ports they visit, and transportation infrastructure from factories to terminals to distribution centers to markets. Maritime transportation is a necessary complement to and occasional substitute for other modes of freight transportation. For many commodities and trade routes, there is no direct substitute for waterborne commerce. The Important of Maritime......

Words: 1767 - Pages: 8