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APRIL 19, 2012

RICHARD G. HAMERMESH
SUNRU YONG

Meli Marine
It was past midnight, but David Tian, CEO of Singapore-based Meli Marine, could not sleep. The next board meeting was just two weeks away in early February 2008. Edwin Chang, the founder of the company and chairman of the board, had called earlier to hear Tian’s assessment of a potential acquisition. “This could be the biggest turning point in Meli’s history,” Chang had said. “Are we ready to become a global player?” Tian had to admit that he had not yet reached a conclusion.
The acquisition under consideration was of the vessel assets of an indirect competitor, Teeh-Sah
Holdings. Tee-Sah operated a container carrier business in the trans-Pacific, Asia-to-North …show more content…

Pureplay freight forwarders such as Expeditors or Schenker fulfilled a sales and marketing function with exporters and procured shipping capacity without owning or operating the vessels themselves.
Container carriers such as Maersk, MSC, APL, or Meli Marine competed in vessel operations, providing the actual shipping service itself. Most used a mix of owned and chartered (i.e., leased for specific shipping lanes) vessels ranging in size from less than 3,000 TEUs for “short sea” regional shipping to “super-sized” containerships of over 10,000 TEUs. These players were also the most likely to be integrated across multiple segments of the shipping value chain. For example, Maersk also had terminal operations, freight forwarding, and shipyard operations. The value of controlling container capacity and throughput and the relatively low returns of operating vessels made other segments attractive adjacencies to enter (see Exhibit 2 for an overview of value chain economics).
While there were over 100 container carriers globally, the industry had consolidated, with the top 15 players accounting for approximately 80% of volume, concentrated primarily in the Asia-Europe and
Asia-North America shipping lanes.

Challenges in the Container Shipping Industry
“I cannot think of a better way to get ulcers,” Tian liked to joke about leading a container carrier company. “The faint of heart need not apply.” Through four decades in shipping, he had seen the
industry