Fedex is looking to become a truly global player in the express logistics market with its latest takeover. The European Commission has given its approval of the acquisition by FedEx of TNT Express.
This follows an investigation into the effect such an acquisition would have on competition in the express parcel sector inside the European Union. The two businesses together would be in direct competition with DHL and UPS, who are the largest players in the express freight market in Europe.
Industry analysts are saying this $6.9 billion deal would see the combined Fedex/TNT operation as big enough to take on the other two dominant players in the global express market. Currently, Fedex is a strong competitor in both the North American and Asian markets but less so in Europe. On the other hand TNT Express remain strong in Europe and also have a, smaller, global presence.
The deal gives Fedex a foothold in Europe and will give TNT Express customers access to Fedex’s strong global air freight fleet, freight forwarding and contract logistics.
The TNT Express business has been struggling to maintain profits for some time, so the Fedex deal is likely to see a number cost centres removed from the business as it integrates into the global Fedex machine.
The sheer size of the combined operation will allow Fedex to square up to both DHL and UPS in any market. In the past, the Fedex operation has had a very strong presence in the US market where it can go toe-to-toe with the big boys, but missed out on a chance of broader competition in an international context. This deal changes everything.