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