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FedEx buys Dutch delivery service TNT for 4.4 billion euro

Yesterday FedEx announced that it wants to buy the Dutch delivery company TNT for $4.8 billion (4.4 billion euro) to strengthen its ground delivery options in Europe. Currently FedEx is already active in 220 countries but in Europe it’s still a relative small company. With TNT it could become one of the major players in the ecommerce logistics industry, at least in the B2B market.

FedEx is active in 220 countries, delivering 4 million parcels a day with over 600 airplanes and 50.000 road vehicles. The turnover of FedEx last year was over 27 billion dollar. The company is a major player in logistics but mainly across the ocean, in Europe it is mostly known for its air freight and is processing just 10 percent of the logistics in Europe.

It announced to acquire TNT. With TNT, the marketshare will raise to 25 percent and it might get the ambition to possibly compete to DHL, which is part of Deutsche Post. TNT is originally a Dutch company but was split off PostNL due to political reasons in the Netherlands. Since it was split of its mother company, TNT has always attracted the attention of possible takeovers. In January 2013 there were rumors of it being bought by UPS for 5.2 billion euro but due to questions of the European commission UPS decided not to proceed any longer.

FedEx and the former possible buyer UPS both are having similar difficulties of getting ground on the B2C-parcels, especially in Europe. B2C packages, such as ecommerce parcels, are rarely processed by these American companies and this is an important growth section of the market. The entire market is growing with just 2 percent, so being able to do B2C parcels as well would mean a big deal to both companies. It seems FedEx might be the winner in this battle although it first has to get the approval of European authorities as well.

New competition in ecommerce logistics? Experts are having their doubts
Experts in the market say that PostNL might get a new competitor in the long run, although with the takeover PostNL will get a lot of cash first as well. It still owns a big amount of shares in the company. TNT had to be sold one day, so PostNL probably isn’t getting worried yet. Wolther Ploos van Amstel, a Dutch logistic expert, said to the Dutch techsite Emerce that it probably takes a combination of both FedEx and UPS together to become a real competitor to players such as PostNL in the Netherlands, or DHL (Deutsche Post) in Europe. New trends such as deliveries on Sundays and evenings or pick up points strengthen the local players even further.

He sees the biggest changes in the B2B industry. Both FedEx and TNT are already a major player in that market and Van Amstel estimates that it is already about five times larger than the B2C market. If everything goes as planned the merger will probably be concluded somewhere early next year.