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UPS to purchase TNT Express

March 19, 2012
Combination won’t dramatically affect U.S. trucking operations

United Parcel Service’s $6.77 billion all-cash plan to buy out Europe-based rival TNT Express N.V. won’t alter the U.S. trucking landscape much at all, according to experts. Rather, the impact of this deal will be most keenly be felt in the global air freight markets and in Europe.

“Any impact in the states is likely to be concentrated in the air market since it would be going international,” Jonathan Starks, director of transportation analysis for FTR Associates, told Fleet Owner.

Starks noted that the parcel market is relatively small from a “big picture” perspective, representing just under 5% of the total U.S. trucking market by loadings, according to FTR’s data. “So, overall, [there’s] not much of an impact in the U.S. truck market,” he said.

By contrast, however, the deal will make UPS a much larger air freight player and significantly beef up is transportation presence in Europe. UPS said the post-transaction amalgam of itself and TNT should result in a company generating $60 billion annually in revenue and that a key feature of the deal is the integration of TNT Express’ intra-Europe road freight network into UPS’ logistics operations on the continent.

“With this combination, both UPS and TNT Express will significantly enhance their ability to serve our combined customers’ complex global logistics needs,” noted Scott Davis, chairman & CEO of UPS in a statement.

“The additional capabilities and broadened global footprint [from the TNT acquisition] will support the growth and globalization of our customers’ businesses,” he added, “At the same time, this positions us for future growth, which will benefit our employees and shareowners.”

Davis pointed out that following the transaction, around 36% of the combined group’s revenues will be generated outside the U.S., up from 26% today at UPS.

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