1) Problem Statement 5) Decision Criteria

2) Core Objectives 6) Recommendations

3) Situational Analysis 7) Risk Mitigation

4) Alternatives 8) Alignment with

Objectives

Our plan

To grow and maintain Meli Marine’s position as a

leading container carrier in the face of increasing

competitor intensity, cascading effects and low

returns on vessel operations.

Meli’s Conflict

1. Grow business

2. Reduce risk

3. Increase profits

What is our goal?

While maintaining high touch, responsive customer

service

• 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

Competitive Landscape

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

Notes Customer service and

Billing

80% Revenues from

Top 15 firms

Terminal Charges are

20% of cost for carrier

Where do we compete?

What choices do we have to make?

• Buy

• Don’t buy

• Buy and lease

Ships

• Intra-Asia

• Asia-North America

• Asia-Europe

• Niche

• Combo

Markets

• Current

• Focus on shipment origination

• Expand into terminal operations

• Partnership with Evergreen

Operations

What options do we have?

Profitability/Growth Potential

Alignment with Core Competencies

Ease of Implementation (Feasibility)

Competitor Landscape

What are we basing our decisions off of?

Buy Ships & Expand to Trans-Pacific

Buy Ships & Focus on Intra-Asia

Don’t Buy Ships & Partner with Evergreen

Don’t Buy Ships & Focus on Shipment Origination

Which options seemed the most feasible?

Great upside, but quite risky

• Gain a larger percent of current

customer business

• Significant volume opportunities and

rapid growth

• Diversification of markets

• Interfere with competitor profit pool

• 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

Pros Cons

Safe bet, but too passive

• Lower VC per container

• More stable rates on a per TEU-

kilometer basis

• Significant share at each port

• Greater ability to compete with larger

boats

• Increase in capacity

• Increased impact and threat of

cascading

• Missing out on significant volume

opportunities & rapid growth

• Lack of diversification

• Higher fixed costs

Pros Cons

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

• Gain a larger percent of current

customer business

• Instant access to more customers

• Significant volume opportunities

and rapid growth

• Diversification of markets

• Loss of autonomy

• Conflicting company cultures

• Reliant on a successful deal

Pros Cons

Focuses on strengths, but neglects core business

• 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

Pros Cons

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

How we’re going to win

Rationale

Rationale

Rationale

Shipment origination provides high available returns as well as synergistically grows our

customer base for vessel operations

Rationale

1. Finance purchase of 16 vessels

2. Establish relationships with NA customers

1. Further development of shipping origination and

acquisition of customers in Asia market

2. Phased-in entry to NA

3. Leasing of idle capacity

1. Monitor & evaluate NA operations for

profitability and quality

What’s our plan moving forward?

• 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

• 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

What do we need to be aware of?

Risk Mitigation Strategy

Why does our plan work?

Grow Business Reduce risk Increase

profitability

• Defends against cascading

• Diversifies and grows revenue streams

• Invests in higher ROIC activities

• Improves VC per container

• Gradual market entry reduces implementation risk