Corporate Strategy – Meli Marine case study

Giovanni Costa Corporate Strategy - Individual Assignment 7th International MBA Part Time

1

Corporate Strategy - Meli Marine case study

Giovanni Costa

Giovanni Costa Corporate Strategy - Individual Assignment 7th International MBA Part Time

2

1) Container shipping industry has consolidated over last years from over 100 carriers to just 15

global players accounting today for roughly 80% of volume, mostly concentrated in Asia-Europe

and Asia-North America shipping lanes (see exhibit 1 for details about volume growth over

2002-2012 decade).

Entering trans-oceanic container shipping market for a regional established company relatively

small compared to its main competitors (e.g. Meli Marine with respect to competition, see

exhibit 2 for details) is a strategic decision that needs to take into account many factors. In

particular, aspects affecting attractiveness of container shipping industry will be explored trough

following Porter's five forces analysis:

 New entrants: - One of the most significant barriers to enter the trans-oceanic container shipping

market (e.g Asia-North America and Asia-Europe) is for sure the large initial

investment needed to acquire big-size vessels fleet. The average size of container

shipping vessel had reached 10,000 TEUi as of 2007 and is continuously growing

driven by top players race to improve their per-container profit figure. The shipping

industry is heavily asset-intensive and its fixed costs (e.g. fleet ownership,

maintenance and insurance costs, terminal charge and overhead) account for roughly

half of total costs structure.

Super-sized vessels fleet implies, of course, large initial investment as well as lager

fixed costs that need to be compensated by optimal utilization of increased capacity.

- In fact, only top players already well established in major ports of Asia, Europe and

North America can profitably leverage on economies of scale and mitigate

imbalanced loading factor over trans-continental routes, due to current trend of

western companies continuously relocating...