Consultant’s Insight: FedEx extends TNT’s road network strategy

FedEx ’s introduction of regional services in the Middle East is likely a precursor to similar action in Southeast Asia and South America, and utilizes the road network strategy of the former TNT Express . FedEx acquired TNT in 2016, expanding its international presence and receiving one of the largest road networks, at that time, in Europe, as well as other road networks in Asia and South America. Before the acquisition, TNT was replicating its European road network strategy worldwide through acquisitions and partnerships. These networks aimed to provide day-definite deliveries by ground transport, typically a lower-cost delivery service compared with air transport. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] TNT’s first road network outside Europe was its Middle East Road Network (MERN), established in the early 2000s. FedEx plans for Middle East expansion Back in 2016, David Binks, at the time the FedEx Express regional president for Europe, the Middle East and Africa, referred to the company’s European trucking network as “the jewel in the crown of TNT” in an interview with regional publication Gulf News. “The excellent trucking network that TNT has established in the Middle East and Southeast Asia … will be notable additions to our network and will give us more opportunities to get more customers to more of a network solution of both express and ground-based services,” Binks added. “While [most integration] work will be European, there’s also a significant integration activity and program that will need to take place in other parts of the world. We see this very much as a global effort.” Indeed, due to these global efforts, FedEx introduced FedEx Regional Economy and FedEx Regional Economy Freight services earlier this week “to cater to the increasing demand for cross-border trade in the Middle East,” according to a company release. The deferred, day-definite road services offer businesses, including small and medium-sized enterprises (SMEs), cost-effective shipping solutions for less urgent shipments within key countries in the Middle East. FedEx plans to use the MERN to connect Bahrain, Jordan, Kuwait, Oman, Saudi Arabia and the United Arab Emirates. Real-time tracking, express clearance and transit times between three to five business days for Regional Economy and four to six business days for Regional Economy Freight are available — similar to what TNT offered in the early 2000s. “MERN has delivered an impressive 60% annual [revenue] increase over the last three years,” MERN Operations Manager Steve Barrett told the regional publication Khaleem Times in 2005. “Such success reflects the need to expand in response to market demand.” Will FedEx be able to replicate TNT’s success? It’s difficult to say. TNT benefited by being an early player in the Middle East market. Since then, DHL , Kuehne+ Nagel , DSV via its acquisition of Agility , and others have developed various regional road network capabilities. However, in 2006, TNT announced plans to link markets in the Middle East with those in Europe through its road networks. There’s no evidence that this was achieved, but perhaps the plan still exists with FedEx. A strategy such as this could be a potential game changer for FedEx if it’s ever implemented — successfully that is. TNT’s other road networks The success of MERN resulted in the introduction of TNT’s Asia Road Network (ARN), which connected Southeast Asian countries Malaysia, Singapore, Thailand and Vietnam. In 2011, TNT joined the network to its China road network, made possible through its 2007 acquisition of Chinese freight and parcels delivery firm Hoau Logistics Group . Like TNT’s China road network, its South America Road Network (SARN), connecting Argentina, Brazil and Chile, was also built on acquisitions: LIT Cargo in 2009 and Expresso Aracatuba in 2008. TNT’s investments finally caught up with it and the express provider sold Hoau in 2019. By then, TNT was in the process of being acquired, first in a failed attempt by UPS and then successfully in 2016 by FedEx. Thanks to TNT’s road network strategy, FedEx has the basis for building and expanding upon the road networks in South America and Southeast Asia, allowing it to focus on e-commerce, SMEs, and manufacturing/sourcing trends and shifts. Join Air Cargo Next for its second annual Air Cargo Tech Summit on Sept. 18-19 in Brussels, sponsored by Unisys and Brussels Airport and featuring a fireside chat with Brian Hodges, managing director, American Airlines Cargo. For more details and to register, click here .

Consultant’s Insight: FedEx extends TNT’s road network strategy

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