FedEx to expand its presence in APAC and the Middle East

The potential acquisition of TNT will propel FedEx into a very nice position among leading global providers. In particular, FedEx will acquire a pan-European road network that will be beneficial to its e-commerce plans and within Latin America it looks likely FedEx will further expand its presence in Brazil.

In addition, as noted in the announcement, the acquisition will be beneficial to FedEx’s strategy relating to Asia Pacific, the Middle East and Emerging Markets. Indeed, the acquisition will expand FedEx Express’ global capabilities with additional routes along traditional lanes and add new route pairings.

However, a look further into the Asia Pacific region finds that TNT’s presence has somewhat diminished. While it has maintained its domestic B2B operations in Australia, it has divested its Chinese and Indian domestic operations to focus on its international businesses in those two countries.

China remains the company’s largest operation in AMEA where it maintains a network of 34 depots and three international hubs in Beijing, Shanghai and Shenzhen. Within India, TNT noted in 2011 that it would continue to offer inbound and outbound India services, via its globally interconnected networks. It would also continue to provide customer-specific special services, in particular to the healthcare and service logistics segments.

Meanwhile, TNT’s road network throughout South East Asia seems to have remained intact and supports the company’s international priorities. This network will prove a useful means for FedEx to advance further into this growing part of Asia should the company choose to keep it.

Within the Middle East, FedEx should also see some gains. In fact, UPS had anticipated growth within this region when it attempted to acquire TNT two years ago. “Our original strategy to get here [Dubai] today was to buy TNT out of Europe,” said Jim Barber, President of UPS International in an interview with Arabian Business in 2014.

Ti’s head of Consulting, Joel Ray, expects the Middle East will likely see an increase in competition with impact being felt most by Aramex, its second-largest player behind Deutsche Post’s DHL. “Combining TNT and FedEx should put some pressure on Aramex … but it’s unlikely that DHL will be affected too much,” said Ray in a recent interview with The National. “There’ll probably be some fallout, with some TNT clients moved over to FedEx, who won’t want to work with an American firm and will move over to DHL or Aramex instead. But the impact won’t be massive.”

While the primary focus of this acquisition appears to be TNT’s pan-European road network, the global benefits are far reaching with advantages in numerous regions and the added connectivity to bring each of these regions into a single network.