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TNT NV 'deal' could trigger antitrust review for UPS

United Parcel Service Inc. (UPS) would likely face antitrust scrutiny on both sides of the Atlantic if its reported interest in Dutch rival TNT NV turns into a fully-fledged deal.

TNT shares rose on weekend media reports of renewed interest from UPS which, like smaller U.S. rival FedEx Corp., has courted the logistics and mail specialist several times in recent years.

Both U.S. companies prize TNT’s express delivery business in Europe and expanding Asian presence to counter a slowdown in their domestic activities.

Adding the 8 pct share of the European Union express delivery market held by UPS to the sector-leading 17 pct held by TNT would reach a level that normally triggers interest from competition officials at the European Commission. FedEx has a market share of just 2 pct in the EU.

Interest from the U.S. rivals has in the past faltered on valuation and the future of TNT’s domestic-focused mail division, which accounted for EUR4.3 billion of its EUR11.5 billion group sales last year.

Scott Davis, UPS chief executive, last month declined comment on any specific interest in TNT, though his remarks on its acquisition priorities indicate the Dutch group remains a potential fit.

TNT Chief Executive Peter Bakker said last month that the company could continue its independent strategy, but UPS was linked with the Dutch group again at the weekend. A report in the London-based Sunday Telegraph that said both sides had hired advisers.
Its shares later declined Monday after a UPS executive told Reuters any deal would hit the U.S. group’s valuation. However, the company said the executive was “misquoted”, and called for a correction.

UPS and TNT both declined official comment on the speculation.

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UPS dismisses TNT bid interest, TNT shares fall

A senior executive of United Parcel Service on Monday dismissed talk of a USD 15 billion takeover bid for Dutch rival TNT as a ‘rumour’, saying an acquisition would devalue its own shares.

The comments pushed TNT shares down by nearly 10 percent on Monday, erasing earlier gains posted after a source familiar with the talks told Reuters the U.S. company was in the early stage of discussions with Europe’s number 2 mail and logistics group.

‘That rumour again?’ Dan Brutto, president of the company’s international business, told Reuters in an interview.

‘I look at that (TNT share price) and said, ‘someone says we’re going to buy something that devalues our shares too at the same time’,’ he said, adding however that acquisitions were not something he oversaw directly.

‘But we always look at different things and try to fit (them) into the puzzle.’ He said UPS hoped to make some Chinese acquisitions.

Earlier on Monday, shares in Europe’s number 2 mail and logistics company gained more than 6 percent after a source told Reuters on Sunday that UPS was in the early stage of discussions with TNT.

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ATSG reports second quarter results

Air Transport Services Group, Inc. reported a 40 percent increase in second quarter revenues, and a loss for the quarter, principally due to certain unreimbursed overhead expenses as a result of the recent arbitration ruling.
ATSG’s revenues were USD 394.9 million for the second quarter of 2008, compared with USD 281.3 million in the second quarter of 2007, an increase of USD 113.6 million.

Second-quarter DHL revenues from expenses subject to markup decreased 11 percent, as ABX Air operated fewer aircraft and managed fewer facilities for DHL than a year ago.
As previously reported, arbitrators ruled that ABX Air’s general overhead expense, excluding certain corporate costs, should be reimbursed in full with mark-up by DHL through the end of 2007 per the commercial agreements, but reimbursed only in part based on a negotiated allocation formula starting in 2008.

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Multi-carrier certified shipping solution

OutBound Shipping System, a provider of automated carrier certified shipping software and solutions, has now integrated the U.S. Postal Service (USPS) Global Shipping Solution (GSS) interface into its enterprise shipping software. This integration allows customers to access the easiest method for shipping international USPS parcels. The software streamlines the oftentimes difficult process of generating the correct paperwork for international shipping with USPS. The module can accomplish this by capturing the required information for international shipping, including product codes, value, and requirements of the destination country.

OutBound Shipping System’s multi-carrier certified shipping solution now encompasses USPS, FedEx, DHL, and UPS products and services, and also has a less-than-truckload (LTL) module. The latest edition also features increased application functionality in addition to the integration with USPS.

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DHL Oman: ‘We want to be everybody’s first choice’

As DHL completes 30 years, its Country Operations Manager, Oman, Geoff Walsh explains to OER’s Visvas Paul D Karra the reasons that have made DHL a trusted name for its customers

Can you shed light on some of DHL’s pioneering services?
I think the biggest thing we have pioneered is the use of ease. We are present all over Oman in 16 locations, which includes all the major towns. One of the biggest initiatives in the Middle East is our Import Express, so you can have an account here and request for a collection from Timbuktu or from Sydney. We take care of all the paper work and ensure that you get your shipment. You can have one user account and you can do export, import and even door-to-door freight service.

Since the past couple of years, we are also doing the time definite pre-nine, pre-12. If you want a shipment to be sent to the UAE by 9 am the next day, you pay a small premium and we guarantee to deliver it before 9 am otherwise you get your premium back. So, it gives a scale of prices and scale of services.

How do you view your competitors in Oman?
There are the usual global competitors like Fedex, TNT, UPS, etc, and then the local ones like Aramex, besides other small players. Our advantage lies in our knowledge of Middle East customers because we are here since the last 30 years and that stands us in very good stead. We have to give the best service and best performance consistently. I think that is what separates us. All our competitors get business but if a customer has got something important to be delivered and needs to guarantee it reaches there, they will come to us.

DHL’s logistics chain has acquired a global reputation. What accounts for this?
We have 250 trailers moving around the Middle East and these go into Africa and Europe. Sometimes 10-15 of them pull automotive parts. And then, we charter an aircraft if it is needed. We are also the only company in the Middle East which has an airline of its own. We have a plane based in Bahrain.

And then we have our couriers, they are not just delivery or collection boys. They do the scanning, they know the importance of the shipment and they get to know the customers because of the training we give them. It is a whole package oriented towards the ‘first choice’ motto.

What is your opinion about Oman as a market?
Oman is diversifying from oil to non-oil revenues. This is attracting a lot of investments and the country is growing. We have been a significant cog in the growth. The big multinational companies, like banks and other manufacturers who come into Oman, need infrastructure and DHL can help and support them to get it. Being here and supporting the growth is important. It is what I said about providing solutions. We want to be everywhere and everything for everybody. We want to be everybody’s first choice.

What are your expansion plans in the Sultanate of Oman?
Our investment in Oman is increasing. At the moment I am drawing up the budget plan and I know that what I am going to invest now is more than what has been invested in the last 10 years.

We are going to have a brand new country office in Seeb in the final quarter of 2009. We are looking for a larger warehouse facility in Ghala area. On other locations, we have Express centres where people can just walk into, like a shop. This is what I call the retail strategy. We want it to be easy to use DHL, as easy as walking into a supermarket or a store to buy milk. To be a customer’s first choice, we have to be easy to use, we need to be reliable, and have quality and consistency.

How secure is a parcel sent by DHL?
We do everything to make sure that every shipment is secure. Every shipment is treated exactly the same way. Similarly, all our offices and express centres have CCTVs and all our courier boys are vetted and trained to follow strict security procedures. Therefore, our shipments are as safe as you carry your own luggage on a holiday.

Has there been any major inciden

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UPS plots bid for TNT

United Parcel Service (UPS) is plotting a EUR 10bn (GB 7.8bn) bid for Dutch rival TNT, a move that could herald the long-awaited consolidation in the global express-delivery business.

UPS has made an informal approach to TNT, its European rival and one of Royal Mail’s biggest competitors in Britain. Despite initial reluctance from TNT, early-stage talks about a potential tie-up have been held in recent days, The Sunday Telegraph has learned.

Soaring fuel costs have hit global courier businesses hard. The share prices of the main firms – UPS and FedEx in American and TNT and DHL in Europe – have suffered in recent months, making consolidation both cheaper and compelling.

UPS, which has a market value of USD 66.24bn and dominates the American delivery market with rival FedEx, has appointed investment bank Morgan Stanley as adviser.

The American company has also brought in strategy consultants AT Kearney to carry out a detailed report on a potential deal with TNT.

Insiders said that AT Kearney has now finished its report and delivered to Morgan Stanley, whose bankers are now spearheading discussions with TNT.

Both UPS and FedEx have eyed TNT’s parcel business for several years but are said to have been put off bidding for the firm because of its slower-growing postal division.

Sources said that UPS’ plans to buy TNT could include selling its postal division, possibly to a private equity buyer. It may instead decide to team up with a buyout firm. It is thought CVC, the European buyout giant, could be interested because it already owns stakes in Belgium postal operator De Post-La Post and Post Danmark, a Danish postal company.

A deal with TNT would deliver to UPS substantial cost savings as well as a vast European reach – something it has been trying to slowly build up in recent years. The company recently forged closer ties to TNT’s main rival, DHL, through its agreement to ferry the Deutsche Post unit’s packages between North American cities.

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