Wellard bought or leased five transporters, including the world's largest purpose-built livestock carrier. The company can ship 60,000 cattle or 224,000 sheep from Fremantle, Townsville and Darwin to just about anywhere in the world, meaning Wellard can't be squeezed by the shipping companies hired by exporters which charge $US10,000 to $US50,000 a day.
One of the skills of shipping cattle and sheep is finessing pick-up and delivery schedules. If a customer, such as a food producer in Kuwait, wants 20,000 sheep to arrive a few weeks later than originally agreed, an exporter may have to renegotiate access to a transport ship.
Shipping owners, dominated by the 120-year-old Dutch Vroon group, are adept at exploiting last-minute changes to jack up lease rates. Wellard avoided this problem by taking out long-term leases and building ships. The latest, the nine-deck Ocean Shearer, joined the fleet a few months ago.
None of its Australian competitors own ships and Wellard promoted the fleet as a key advantage over rivals. "Vessel ownership provides flexibility to take advantage of higher margin opportunities," the prospectus said.
But the strategy wasn't cheap. Wellard's latest ship, the Ocean Shearer, was built in China for about $US90 million. A single shipment of around 20,000 cattle is roughly worth $20 million.
Developing economies are buying more beef, but growth isn't rapid. Global beef consumption grew 1.1 per cent a year from 2004 to 2014.
Paradoxically, a boom in cattle prices was bad news for Wellard investors.
After a few years of little rain that depleted cattle herds in Queensland, many graziers decided to build up their stocks instead of selling.
With little supply available, the price skyrocketed. The Eastern Young Cattle Indicator beef benchmark hit $7.26 a kilogram last month, its highest ever.
Operating large ships it couldn't afford to leave empty, Wellard desperately needed cattle. It became the most aggressive buyer in the market, according to three industry sources, and would offer 5 to 15 per cent more than its competitors, one of those sources said.
In Indonesia, China and elsewhere, consumers aren't wealthy and couldn't afford to pay more for cattle from Australia. The company couldn't pass on its price increases to its customers, the industry sources said, and was forced to accept lower profit margins.
Wellard was caught in the classic traders' squeeze: forced to buy from reluctant wholesalers and sell to price-sensitive consumers.