German Hermes in search of strategic partner in Europe

German logistics services provider Hermes Logistik Gruppe, a subsidiary of the local mail order company Otto GmbH, is looking for a strategic partner in Europe to extend its parcel delivery services range from companies to private persons, the company said on March 17, 2005.

Hermes already negotiates with a number of interested parties and expects to complete the talks by the summer of 2005, company CEO Hanjo Schneider said.

Hermes sees mainly independent logistics companies as possible partners and Schneider ruled out the possibility of co-operation with a large national postal services provider.

He declined to disclose the names of the potential partners.

Hermes is active in France and the United Kingdom with a number of partners. The company aims to significantly boost its sales in the field of private package deliveries, which currently stand at 450 mln euro (USD601.6 mln).

The company’s sales are expected to grow by 20 pct year-on-year to 852 mln euro (USD1.14 bln) in 2005 with the co-operation with Swedish furniture retail chain IKEA in Germany seen as one of the main growth factors. Hermes generates 150 mln euro (USD200.5 mln) turnover from its dispatch services for IKEA in the country.

Hermes currently has to cope with an increased competition pressure by German postal services company Deutsche Post which is striving to attract clients by offering large price discounts of 8.0 pct to 10 pct or between 0.2 euro (USD0.27) and 0.3 euro (USD0.4) per package.

Schneider expressed his concern that Deutsche Post operates with prices, which do not cover its costs.

British parcel distribution company General Logistics Systems (GLS), owned by the British postal service Royal Mail, was also hit by the aggressive discount campaign of Deutsche Post, which also owns the international express courier DHL. The company generated a 10 pct year-on-year increase in turnover to 1.33 bln euro (USD1.74 bln) in 2004. Its German business accounts for more than half of all sales. Pre-tax profit rose by 70 pct year-on-year to 100 mln euro (USD133.7 mln).

Deutsche Post and German regional bank Bayerische Landesbank had to sell their stakes in express delivery company Transoflex to the German financial investor Odewald & Compagnie after the veto of the Federal Cartel Office (FCO) on the complete acquisition and the ruling of the German Supreme Court of Justice (BGH) in favour of FCO’s decision. According to industry sources, Odewald & Compagnie paid 200 mln euro (USD267.4 mln) for Transoflex, which operates in the field of pharmaceutical delivery and carries out the transportation from drug manufacturers to wholesalers. The company generated 430.8 mln euro (USD575.9 mln) sales with 730 employees in 2004.