What’s Next for TNT Express?

After more than a year of serious flirtation the planned take-over of TNT Express by UPS is over. The EU decided that a future UPS with TNT Express would have too strong a market presence which would limit market workings in the International Express arena within the EU. The share price of TNT Express crashed more than 50% in a single day. Its key shareholder PostNL also saw its share price drop by 40%. All in all a bad day which saw the capital value of both companies drop dramatically.

Looking back, it is sad to see the demise of TNT Express and PostNL. Less than 2 years ago PostNL and TNT Express still formed a single company. Several years earlier CEVA Logistics was also part of the company TPG (TNT Post Group) which at some point had a vision to be one of the key global players in Logistics, Post and Express. A strategy which was copied by the Deutsche Post and later by other European Postal companies as they tried to differentiate beyond the declining postal market alone.

However, when Ad Scheepbouwer left the company the new management of the company never seriously pursued the original strategy to build a global logistics company and develop a single end-to-end logistics service provider. TNT Logistics was subsequently sold and less than 2 years ago Peter Bakker left the company amidst financial question marks around the company’s pension fund and its future strategy. The company was subsequently split between PostNL and TNT Express. And thus an end came to twelve years of trying to build a global logistics company.

So how will both companies move forward? PostNL has indicated that regardless of what has happened with UPS that it wants to cash in on its 30% share of TNT Express. It will seek to pursue a strategy of protecting its Dutch market position and develop its e-commerce delivery business. It may attempt to develop strategic alliances into other markets such as Belgium and develop niche markets such as healthcare distribution.

TNT Express seems to have betted heavily on a future within UPS. Its French CEO left several months ago amidst the takeover discussions so the company will first have to rebuild its Board of Management and develop a new strategy forward. In the short term, the company remains a strong player in Europe especially as it combines parcels and pallet shipments into a single network operation. Apart from  its European network the company still has some other jewels such as its strong Parcel operations in Australia, China, Brazil and Chile which are all strong growing markets. TNT Express has also developed some interesting service capabilities such as its Cold Chain business.  However, its activities in many other markets around the world are small in comparison to its competitors UPS, DHL and Fedex. It will need to address its strategy around these positions.

The bigger question will be whether TNT Express will have the capital to survive by itself to manage and maintain its global network operations. Here there may be an opportunity in the short term for a private equity fund to come in and take a controlling stake now that TNT’s share price is relatively low. Another alternative would be for a logistics company to come in and make a bid. For sure it would not be an Express company. Maybe a company like Kuehne + Nagel would be interested in a bid or one of the large Asian players such as Nippon Express or COSCO.

Eelco Dijkstra, Senior Strategy Consultant at Buck Consultants International