FedEx bids for TNT - market control or fair play?

Last month, delivery titan FedEx made a bid to acquire rival company TNT, with an offer of $4.8 billion. As a result, the European Commission launched an investigation to determine if FedEx would violate regulations by dominating the market—specifically, the delivery of small packages in some European countries.

So why does FedEx's domination of the European market matter to the Commission?

Healthy competition

The principle behind the regulations of the European Commission is one of healthy competition. FedEx and TNT are two of four giant global delivery companies—the other two are UPS and DHL. If FedEx acquire TNT, the concern is that they will become too powerful and risk controlling too much of the market.

In 2012, UPS made a similar bid, attempting to purchase TNT for $6.8 billion. Antitrust regulators rebuffed this attempt because it risked ‘duopoly'. This is because at the time DHL was considered the only viable competition.

Is it really an issue?

FedEx insists that it's not the same situation as last time. They say they don't have a large market share in Europe, and therefore they won't disrupt market dynamics with the acquisition. Currently their market share in Europe is only 5%, one of the smallest, while TNT's is third place with 12%, after DHL and UPS. If the deal is made, the FedEx-TNT merger would put them in second place.

Some industry experts, such as Roger Sumner-Rivers of ParcelHero, who spoke to Forbes, believe that the merger will actually result in stronger competition in Europe and around the globe. The idea is that as TNT will make up for FedEx's weakness in Europe, while FedEx will bolster TNT's less strong American network.

This is different from the proposed UPS-TNT merger, where UPS already had a strong European presence and would have bagged 30% of the market.

To be continued...

FedEx's offer expires at the end of October. Pending regulatory approval, the transaction would be made in the first half of 2016. The EU will make their decision by mid-January—an extension of the original timescale.

We'll be keeping up with news of the merger. To stay apprised, you can follow industry updates on the Transglobal website.

(Image credits: BriYZZ, EDDIE under a Creative Commons 2.0 license.)

TNT to offer discounts to SMEs for European exports

Parcel carrier TNT has said it it to launch a key marketing push throughout Europe to entice small business customers to expand their sales on an international scale. TNT is to offer a 20% discount to new customers if they export shipments of up to 250kg to any of nine key European countries. These countries include UK, France, Luxembourg, Belgium, the Netherlands, Germany, Austria, Switzerland and Italy.

The offer is due to run for three months with day-definite delivery services by air and road qualifying for the discount. Existing customers of TNT will also benefit from the reduced prices. TNT has said 70% of its goods are exported within Europe are sent to countries within its "Blue Banana" zone, named after an expression which is regularly used to describe the densest business region in Europe stretching from England to Italy.

Managing Director for TNT International Europe, Ian Clough, has said: "TNT's initiative will encourage European SMEs to look beyond their domestic markets. Exporting to Europe, and particularly to the "Blue Banana" countries, has become one step easier with TNT.

TNT lands contact with Dutch fashion company

TNT has recently been awarded with a two-year contract with Dutch fashion company, Mexx. The parcel delivery company will provide international delivery services to the fashion group.

TNT will be trusted to transport design samples between Mexx's supplier in Asia and the Middle East, as well as its Amsterdam headquarters.

Additionally, TNT will also transport sales from the fashion company's distribution centre in Voorschoten, the Netherlands to Asia. TNT will ensure the next-day delivery of the sales sales to various showrooms across Europe for the presentation to potential retailers, with the most key destinations including Germany, France, Belgium and the Nordics. The parcel delivery company will use its European Road Network to transport the majority of the shipments.

Mexx is said to have been influenced to use TNT due to its reputation of reliability, short lead times and the choice of time-guaranteed express products.

Senior Purchase Manager of Mexx, Sjoerd Kampinga, has commented: "TNT's guaranteed delivery services and short lead times help Mexx Europe meet fashion seasonal deadlines and expand its competitive position. The control and visibility help us to focus on our core business." Kampinga also added: "We are happy to have engaged a new part
ner who has confidence in this beautiful company and helps us meet our challenging objectives."

UPS to rebrand Kiala locations to expand delivery options

UPS has announced it will be making efforts to rebrand various Kiala locations throughout Spain to make these co-branded as UPS Access Point locations. This will be an initial step in the bid to transform all Kiala locations to UPS Access Point locations, which is due for completion in 2016.

Online retailers in France, Germany, the Netherlands, Spain and the UK can now have their goods shipped directly to a UPS Access Points/Kiala location as an alternative to home delivery, in addition to providing an opportunity for retailers and consumers to meet with growing cross-border e-commerce.

Within Spain, consumers who are not available for a residential delivery will be able to have their parcels and package re-directed to a UPS Access Point/Kiala location, giving them opportunity to pick up their shipments at their own convenience. In most instances, shipments will be able to be collected from the location point the same day.

Christoph Atz, Managing Director for UPS Spain has said: "These additional services address the results of our 2013 Pulse of the Online Shopper survey in which consumers indicated that they want more control over when and where their purchases are delivered, and a convenient returns process. Additionally, it contributes to our sustainability efforts by reducing the number of return trips a driver needs to make to an address, which lowers carbon emissions."

E-commerce strengthens as rules for EU purchase returns change

Recent news has revealed that as of June 13th, new rules regarding consumer rights will be launched across the European Union, offering online shoppers a longer period for cancelling an online purchase. The new rule is set to provide even bigger business for postal operators and parcel carriers throughout Europe.

The new ruling is due to take place as of June 13th
throughout Europe

The new ruling will enable consumers with the right to cancel their order within 14 calendar days from the day the purchase received, including the opportunity to send it back. The new "cooling off" period is an extension of the original seven days. Following the change of rules, retailers will now be expected to provide a refund within 14 days of the order's cancellation, in additional to the refund of any shipping charges paid for as part of the order.

However, the new ruling will not apply to tickets or hotel bookings, in addition to those companies that provide regular food and beverage deliveries, such as supermarkets.

Additionally to the new return period of 14 days, consumers will also have the right to a a full year to decide if they are to keep their purchase if the retailer does not inform them correctly and clearly of their rights to return.

Business manager at Itella, the Finnish postal company, Anders Falck, has said: "An online store should make it clear whether returning is subject to a charge or not, and how it is done in practice."

DHL to expand its Packstation system throughout Europe

Deutsche Post DHL has recently announced its plans for expansion of its network of parcel locker terminals, referred to as Packstations. The parcel delivery company has been offering an alternative delivery point for parcels throughout Germany since 2001 in the form of its Packstations. The company is now looking to expand its distributions of the delivery stations throughout Italy and the Netherlands.

DHL is currently using 2,650 of the Packstations which are in operation across a total of 1,600 town and cities within Germany, which equals to approximately 250,000 individual lockers. DHL has reported that 90% of German residents live within 10 minutes of a DHL Packstation.

DHL will be introducing a new look Packstation
in the near future

It is expected for a further 300 Packstations will be added to DHL's German network by the end of 2014. While Austrian firm, KEBA, has been responsible for providing the current parcel terminals, DHL is said to be sourcing new input from design agency Polygon. The new designs by Polygon will supposedly provide various compartment sizes, as well as the "latest security standards."

Deutsche Post DHL's Board Member for Parcels and E-Commerce, Jürgen Gerdes, has commented: "We have decided to bundle the know-how we have acquired during our more than 10 years in the market in Germany to an even greater degree and continuously refine and improve the lockers ourselves." Gerdes also added: "The expansion of our network in Germany is an important part of our strategy to be the clear leader in terms of market share and innovation in the German parcel market."

The firms sees its next step will be to export its German business model to foreign parcel markets that offer "similar market structures and comparable growth rates." Gerdes explained: "The Packstation is an important pillar in our market success in Germany. We will examine the use of these automats in European markets very closely and selectively use them to establish our..operations in other countries."

Expansion sees FedEx Express open four new stations in Spain

FedEx Express is due to open four new stations, three to be situated within the Basque region of Spain with the fourth being on the south-east coast in Alicante. The European expansion will increase movement within their Spanish network, creating approximately 32 new job roles throughout the additional stations. This growth will expand on the 90 new stations FedEx has already positioned within Europe.

The courier company has said the Basque country is depicted as one of the most constantly developing areas of Spain with regards to business interest. There are around 158,000 businesses positioned in this area, in places such as San Sebastian and Vitoria. The expanding network will give customers within this area the opportunity to ship worldwide with expected transit times of one or two working days.

FedEx Express are due to create job opportunities in their
expansion plans.

There is now a demand in the export market for local businesses since the Spanish economy has started to recover. FedEx can see this increasing demand, seeing that the Basque region reached 13.8 billion Euros last year, a 5.4% increase from the previous year. FedEx Express began operating with Spain back in 1989 and now has employed approximately 445 people there. With their local headquarters based in Madrid, FedEx has a gateway at Barajas Airport which links to its main European hub at Paris’ Charles de Gaulle Airport.

FedEx will be creating 12 new jobs within their Alicante station where more than 129,000 businesses are currently based. Businesses based in this area are in industries such as textiles, shoe, marble and toy manufacturing. Within the first eight months of 2013, exports from this particular area were said to have been valued at a staggering three billion Euros.

Senior Manager of Operations for FedEx Express Spain, Ian Silverton, has spoken of how the company will be offering its expertise to local Spanish businesses: “Now we are even better placed to give our customers the local expertise they need to go grow their businesses globally.”

Silverton has also commented on the advantages in opening stations in the Basque region and Alicante: “The Basque business community has made a name for itself for driving research and innovation, creating a thriving business community with a strong entrepreneurial spirit.” He also described Alicante as being “known for its strong industrial research and development.”