TNT plans for life without Airborne

TNT Express is confident it can find an alternative US delivery network if its arrangement with Airborne falls through.
TNT is not expecting to renew its partnership with Airborne when the contract expires in December 2004, following the acquisition of Airborne by DHL.

But group MD Alan Jones said he has contingency plans if it proved impossible to see out the current contract.

The integrator uses Airborne for deliveries outside major US cities. Analysts have questioned whether TNT can maintain its position in the world’s biggest market if the partnership ceases.

One told IFW: “I can’t see DHL allowing Airborne to continue working with its rival.

Airborne is the third biggest express operator in the US, with DHL number four, so I can’t see where else TNT can go.

“How can it compete for global contracts without a meaningful US presence?” TNT Express handles all imports into the catchment areas of major US business centres through its own depots, with Airborne handling around 50% of the remainder, equivalent to around 25% of total imports.

“The duration of our contract with Airborne allows us ample time to put in place an alternative delivery system, ” said Jones.

“Our options include partnering with reliable local ground-based operators.

Equivalent arrangements exist with partners in many other countries we serve.” He added that TNT received few export consignments from Airborne and believed new ground delivery partners could generate additional business for its global network.

“Nearly all our outbound business generated in the US comes from the catchment area of our own depots.

“We are exploring the option of continuing to use the independently owned Airborne express linehaul network to move consignments overnight to and from our local ground delivery partners, but every opportunity will also be taken to speed up the service by using suitable commercial airlines on selected routes.” However, the analyst was sceptical. “If this was such a good solution, TNT would have done it before.” US airline ownership laws mean Airborne’s airline must be operated as a separate US-owned company if DHL completes its proposed purchase.

Responding to suggestions that it was losing out to DHL in the US and global markets, Jones said: “An independent transit test conducted towards the end of 2002 revealed TNT Express was the fastest and most reliable delivery service provider for consignments sent to and from the US – most of which are not handled by Airborne – and on many global routes.

“TNT Express has achieved positive revenue quality yields in the last 14 quarters, enabling us to make the investments that are necessary to maintain our global leading position.”

Posted: 19/05/2003

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