TNT plans UK expansion

Logistics group TNT NV said it is considering plans to intensify its challenge to the UK”s state-owned postal group Royal Mail as it declined to comment on speculation that it is planning a bid for Deutsche Post AG.

Chief executive Peter Bakker said TNT is conducting pilot schemes in a number of UK cities to assess the financial viability of setting up “end-to-end” mail networks, which would enable TNT to deliver mail as well as collect and sort it.

The move potentially represents a further headache for Royal Mail, which is losing lucrative corporate mail business as firms contract out the work to private companies.

Earlier this month, TNT”s mail unit TNT Post announced it had won deals to collect and sort mail for Centrica PLC and BT Group PLC, bringing the number of such contracts that the group has secured to about 30.

However, under the terms of the 134 mln eur BT contract, state-owned Royal Mail will remain responsible for final deliveries of the mail and also for collecting, handling and delivering BT”s parcels and first class letters.

Bakker told AFX News in an interview on the sidelines of the World Economic Forum in Davos that TNT is conducting experiments in Manchester and Glasgow to assess whether it can generate sufficient mail volumes to make end-to-end networks viable.

“I think the volume is big enough to roll it out to other major cities in the UK,” he said. “Then we”ll give Royal Mail a real run for its money.”

TNT is does not believe a situation in which the state-owned operator would continue to perform the final leg of the mail”s journey is sustainable, Bakker said.

Royal Mail enjoys lower costs for delivering the mail compared to those faced by private firms, making the creation of private end-to-end networks unviable without massive volumes, he said.

Meanwhile, the company refused to comment on speculation that it is interested in German logistics giant Deutsche Post AG.

Shares in the latter outperformed the market on Jan 18 amid the rumours, although one Frankfurt-based trader said he thinks the rumours are unrealistic because TNT is much smaller than Deutsche Post.

A spokesman for TNT later told AFX News at Davos: “We don”t comment on speculation like that.”

Bakker said, meanwhile, that TNT is undertaking a number of initiatives to try to reduce carbon emissions from its planes and trucks.

It is experimenting with biofuel-powered lorries in Amsterdam and with zero-emission electric trucks in the UK.

Bakker, who is speaking about the issue of climate change in Davos, said industry, governments and others needed to co-ordinate their response to the challenge of global warming.

He said TNT supported the inclusion of aviation in European emissions trading arrangements, but said there was a problem with green taxes because they may not be imposed worldwide, thereby creating an uneven playing field.

“There”s no point in the Europeans cleaning up their act if the rest of the world doesn”t do it,” he said.