Our plan

1) Problem Statement 2) Core Objectives 3) Situational Analysis

5) Decision Criteria 6) Recommendations 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
Well-priced ships for sale that provide economies of scale Fast growing terminal operations and Shipment Origination sectors Trans-pacific volume opportunities and growth

No presence outside of Intra-Asia Higher costs Higher prices

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

Where do we compete?

Revenue ROIC CAGR

$8B 9% 11%

$32B 50% 10%

$102B 3% 7%

$35B 25% 11%

$28B 34% 7%

Players

Manufacturers Meli Marine Evergreen Other

Maersk Meli Marine

All Players

Maersk Evergreen Wan Hai Yang Ming Tee-Sah

Terminal Charges are 20% of cost for carrier

Maersk Meli Marine

Notes

Customer service and Billing

80% Revenues from Top 15 firms

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

Cons
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. 1. 2. 3. 1.

Finance purchase of 16 vessels Establish relationships with NA customers Further development of shipping origination and acquisition of customers in Asia market Phased-in entry to NA Leasing of idle capacity 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