FedEx may acquire TNT

Global - FedEx is rumoured to be in talks to acquire TNT, a deal which, if successful, is expected to shake up the industry, analysts say.

The global economic downturn seems to have spurred talks to acquire TNT as FedEx tries to gain a footing in the US market on which it is heavily reliant, said Erk van Baaren, Datamonitor's logistics and express senior analyst.

"It now appears to be looking for radical ways to improve its position in the global express sector," he said.

FedEx's possible move to acquire TNT has also been seen as a way for FedEx to deal with the partnership between DHL and UPS for a 10-year US$10 billion contract for airlift capacity announced in May, Jerry Hempstead, president of Hempstead Consulting told the Financial Times.

Either way, a merger between the two is expected to greatly boost FedEx's position in the European market, analysts agree. A report from Datamonitor seems to suggest a strategic alliance between the two makes strategic sense as FedEx and TNT have reciprocal geographic strengths.

However, should the tie-up be completed, the effects would be far-reaching, says Van Baaren. "Significant pressure would be placed upon DHL and UPS, given that they would have to compete with a global player capable of exploiting greater economies of scale and serving the needs of globally operating companies more efficiently as further internationalisation of the industry takes shape."