United Parcel Service (UPS) has reached an agreement on its offer for ownership of TNT Express that, once approved, will create a global integrated logistics network with more than $60 billion in annual revenues. UPS raised its cash offer of €9.50 ($12.50) per share to secure the deal and is expected to pay $6.8 billion for the company. Full integration of TNT into UPS is expected to take four years, whereupon the TNT Express business will assume UPS' corporate identity.
The integration, which includes TNT Express' European road freight network, will expand UPS's logistics offering in Europe, including for the automotive industry, and rival DHL's 17.6% share of the market.
"For the manufacturing and automotive sectors, we see great synergy in combining TNT's express road freight network in Europe with UPS's small package, logistics, warehousing, service parts logistics and supply chain management businesses," said UPS spokesperson Norman Black. "UPS will be bringing an unprecedented range of solutions to the table for our customers," he told Automotive Logistics.
TNT Express provides inbound and aftermarket delivery services to the automotive industry, as well as providing a door-to-door transit monitoring service for shipments from its Automotive Control Centres. Its customers are expected to benefit from UPS' access to the North American market as well as increased logistics services, including global freight forwarding and distribution.
The integration is also expected to bolster TNT's services in South America - including its SARN service - which suffered in 2011. TNT made an operating loss in the Americas of €360m in 2011 but UPS maintains that those problems were to do with limited available capital for investment, something UPS is in a better position to provide, said Black. Expanding in the region, including Brazil, was the right move, he added.
UPS has also highlighted the benefits for the development of services for automotive customers in the Asia Pacific region.
"TNT Express has developed an LTL [less-than-truckload] freight trucking network in China, which is a business that UPS has not entered there," said Black. "Both companies handle import/export small packages, and UPS also has applied for a domestic license to operate an intra-China network to move packages inside China. Having this range of services available through one carrier could be quite attractive to customers," he said.
Around 36% of the combined group's revenues will be generated outside the US, up from 26% today at UPS the company stated.
"With this combination, both UPS and TNT Express will significantly enhance their ability to serve our combined customers' complex global logistics needs. The additional capabilities and broadened global footprint will support the growth and globalisation of our customers' businesses," said Scott Davis, UPS chairman and CEO.
One of the benefits that UPS believes it will be able to offer the automotive industry is end-to-end visibility through its position as a lead logistics provider, gained through the amalgamation of TNT services.
