APRIL 19, 2012
RICHARD G. HAMERMESH
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 America shipping lanes. It had announced in late 2007 that it would exit the vessel operations business to concentrate on its much larger terminal-management operations, and it was selling 16 ships with an average capacity of 4,500 TEUs1 each. Meli Marine was a leading container carrier in the intra-Asia market, but it had no presence on the major Asia-North America sea lanes. Initial discussions with Teeh-Sah indicated that pricing for the 16 vessels would be attractive. The question that David Tian had not yet answered was whether entering the Asia-North America market was the right move for Meli Marine.
The Container Shipping Industry
The cargo shipping industry provides the links required for global commerce, making physical international trade possible. Rail, road, and air transport are used where geography or cargo-type permit, but global trade relies primarily on trans-oceanic shipping. This industry is comprised of four main segments: (1) container shipping, (2) roll-on, roll-off (also known as “ro-ro”) used especially for vehicles, (3) industrial or bulk shipping for commodities such as steel and grains, and (4) tanker shipping for natural gas, oil, and chemicals. Container shipping, provided by Danish giant Maersk, France’s CMA-CGM, and many other firms, can be used for any cargo that can be boxed into a shipping container: consumer goods, food products, industrial machinery, intermediate goods, and more.
1 TEUs is the industry acronym for “twenty-foot equivalent units” and is the unit of measurement for vessel capacity. FEUs (“forty-foot equivalent units”) is commonly used to measure shipment volume. Both TEU and FEU refer to standard container sizes of 20’ and 40’, respectively.
________________________________________________________________________________________________________________ HBS Professor Richard G. Hamermesh and writer Sunru Yong prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration. Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
This document is authorized for use only in STRE5603 - Global Business Strategy and Management s1.2013 by Allya P Koesoema at University of New South Wales from February 2013 to August 2013.
4426 | Meli Marine
The shipping container first came into use in 1956. The innovation provided shippers with a standardized steel “box” that kept goods sealed and secured. Furthermore, it was intermodal, meaning it could be quickly unloaded and easily transferred between ship, rail, and truck. The trend towards “containerization” accelerated in the 1980s and 1990s, and by the early 2000s, approximately...