‘Big Brown’ takes on an orange hue

Scott Davis, UPS’ CEO thinks big. By acquiring Dutch competitor TNT Express NV for an amount of €5.16 billion both express shippers will generate combined revenues of €45 billion annually. While synergies are the aim of the game, many challenges and strategic questions face UPS management. Heiner Siegmund reports.

UPS and TNT Combined

According to the plan, the entire deal is set to be accomplished by the end of September this year, should regulators give the green light. If so, it will be a completely new ball game for the industry with the global express business dominated by only three competitors – DHL, UPS and FedEx. By adding Dutch TNT Express to its portfolio, ‘Big Brown’ not only inherits a massive European road network and some 480,000 staff, but also gets a significant air cargo capacity boost by taking over 44 freighters operated by TNT, if not deciding selling at least some of them.

But perhaps most importantly, the move fills in the long-existing white spot in UPS’ global network through absorbing the package firm’s wide-spread European road feeder services (RFS). This acquisition “will further expand UPS’ portfolio of solutions and geographic footprint. The complementary strengths of both organisations will create a customerfocused global platform and a leader in the logistics industry,” UPS said.

The takeover also follows a flurry of recent European expansion by UPS. The company is expanding its European air hub in Cologne, Germany and it recently acquired Belgium-based  Kiala, which provides a platform that allows e-commerce retailers to deliver goods to a retail location for pickup. In 2011 UPS also acquired Italian pharmaceutical logistics company Pieffe Group.