Logistics

With TNT in bag, FedEx may create a duopoly in India

Mamuni Das New Delhi | Updated on January 23, 2018 Published on April 09, 2015

It and DHL can get pricing power

US courier services giant Fedex’s acquisition of the Dutch TNT Express will create synergies and economies of scale, but from an Indian perspective, the international express logistics space may become a duopoly.

Fedex and DHL being the two major players, can drive pricing power, says an industry expert.

Weaker rivals

“In the Indian market, the top four players include DHL, Fedex, TNT and UPS, of which UPS has a very small presence. So, for Indian players in the logistics market, the pricing power will be controlled by these two players. This is what we need to watch out for,” said Sanjiv Kathuria, co-founder of Dotzot, a start-up in the e-commerce delivery space, which delivers 20,000 packets a day.

“Fedex has a weaker network in Europe, while TNT has a strong road network within Europe. Also, in India, TNT has a strong international network. This is where the two firms will synergise,” said Kathuria, who had earlier spent nine years in TNT India as the Country-Sales and Marketing Director.

Meanwhile, companies like Apollo LogiSolutions, a contract logistics player, which ships high-value cargo through air, feel there would not be much of an impact as it uses airlines, such as Lufthansa, Air France and Emirates.

“There will not be much of an impact in contract logistics, with most of our cargo being handled in the domestic segment, and most of the exim cargo being shipped. The exception is high-value cargo, for which we use various players,” said Raaja Kanwar, Vice-Chairman and Managing Director, Apollo LogiSolutions.

Strengthening of network

Fedex expects the acquisition to help serve its customers better globally, including in India.

“FedEx and TNT have operations across the globe. TNT is among the top four global express transportation companies in India and serves more than 200 country destinations with its worldwide network,” David Ross, Regional President-Fedex Express-Indian subcontinent, Middle East, Africa, told BusinessLine in an e-mailed response.

TNT, the Dutch express logistics firm, which exited its domestic road network operations a few years ago, has about 800-1,000 employees in India engaged in its international operations, say industry sources.

“The details of how our operations will work together will be determined through the integration planning process,” said Ross.

The press statement says that parties (FedEx and TNT Express) have agreed to respect the “existing employment terms of TNT Express”.

Earlier, UPS’ attempt to acquire TNT had been thwarted by the European anti-trust regulator.

However, FedEx and TNT are confident getting a green signal from the EU’s anti-trust body because of the relative sizes of two parties and because TNT’s aviation segment will be divested.

Published on April 09, 2015
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