February 26, 2016 | Logistics Blogs
Earlier this year the European Commission unconditionally approved FedEx Corporation’s acquisition of Dutch parcel company TNT Express, based on a forecast that the combined entity (FedEx & TNT) will still continue to face competition from two of its major rivals DHL and UPS and, it would not impact consumers adversely.
With the US authorities approving the takeover earlier, it only leaves Chinese and Brazilian authorities’ approval for the takeover to complete in all aspects. In 2013, the European Commission denied takeover of TNT by UPS citing that it could result in price increase. For FedEx, the relative lack of presence in the intra-European economic area worked to its advantage.
Localized Impacts of the Acquisition
The impact of this acquisition will be different across the globe. Considering TNT’s minimal presence in the U.S., the takeover will have negligible impact in this region. However, a duopoly might be witnessed in the APAC region with UPS having smaller presence when compared with DHL and the combined entity of FedEx & TNT. DHL’s position as a runaway market leader could come under stress and impact pricing in key markets.
In the European market, FedEx’s share will more than double after the takeover, making the combined entity a key contender among integrators. FedEx’s strength in air parcel and TNT’s capability in ground distribution segment will offer stiff competition to UPS and DHL.
In the MENA region, DHL has a major chunk of the market share with Aramex in second position. The FedEx-TNT acquisition could result in heightened competition in MENA region owing to FedEx’s increased clout.
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