FedEx and TNT – A bigger force in Latin America

“FedEx has a profitable multi-billion dollar business in Europe. We are very confident in our ability to improve results, primarily through organic growth”. FedEx Chairman Fred Smith, March 26, 2012, UPS to Acquire TNT Express, Double European Presence, Transport Topics.

And after that comment, the company proceeded to acquire Poland’s Opek and France’s TATEX opting to instead piece together its growing European network via tucked-in acquisitions such as these. Fast forward to 2015 and we now see FedEx making a bid for TNT Express. Many analysts have expected this possibility after UPS’ failed attempt to acquire the European company. And so what does this acquisition mean to North and South America?

As noted in the March 22, 2012 Ti briefing, “How Significant will the Americas region be to UPS’ acquisition of TNT”, little, if any changes will be noticed in North America. TNT’s primary focus within North America has been on international express. Perhaps what may be in question will be TNT’s relationship with Mexico’s Redpack. Redpack represents TNT in Mexico and besides international services, the two companies offer LTL and TL service to major cities within Mexico as well as to Laredo, Texas. In addition, Redpack and TNT collaborate on Redpost which allows Mexicans to shop on US online stores by way of obtaining a US address and then having goods deliver to Mexico. Could Redpack be an acquisition target? It’s hard to say as FedEx has invested significantly in Mexico through the years and already has a well-established domestic and cross-border network. In 2011, FedEx acquired MultiPack, a domestic express business to further enhance its Mexican presence.

Of particular interest, however, is Brazil which with this acquisition, FedEx could further expand its reach and offerings within this large South American country and beyond. In 2011 FedEx acquired Rapidao Cometa Logistica e Transportes SA which has allowed FedEx to expand into the Brazilian domestic express market. Meanwhile, in 2009, TNT also made a couple of key acquisitions in South America in which FedEx will benefit. In Brazil, TNT acquired Aracatuba which also provides a nationwide transportation network and also connects Argentina, Uruguay, Paraguay, Chile, Bolivia and Peru. Furthermore, in Chile, TNT acquired domestic express provider LIT. Combined, FedEx will expand its presence throughout South America.

In terms of the Americas, the proposed FedEx and TNT merger will provide synergies within the Latin American region in particular. However, as it progresses with the acquisition and integration, FedEx will need to be careful and not let its eye wander from its gains in North America or else it runs the risk of losing market share to competitors.

To find out more about the Express market in Latin America and how this deal will alter the market there please take a look at Ti’s Latin America Transport and Logistics and Global Express and Small Parcels reports.