What Does UPS’s Purchase of TNT Express Mean for UPS Delivery Services?

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In March, 2012, UPS announced that it reached a deal to purchase the Dutch company, TNT Express, for $6.8 billion dollars. TNT Express is a relatively unknown company in the United States. However, the express courier has extensive rail and ground operations throughout Europe and has made a significant investment internationally in emerging markets throughout Asia, South America, and Australia. Due to this international infrastructure, TNT Express has been a takeover target by the other major courier services. This move is certain to improve UPS delivery services worldwide and help keep them competitive in markets that have been dominated by Fedex and DHL.

TNT Express was part of the Dutch mail and courier company, TNT NV. Similar to DHL Deutche Post, TNT NV is a private postal firm that is based in the Netherlands, but also delivers mail in other European countries. TNT Express is the express courier arm of TNT NV that delivers internationally. In recent years, TNT Express’ profits suffered due to decreased demand for express delivery services given the recessions first in the United States and then in Europe. In May of 2011, the two companies split and TNT NV became PostNL. The prolonged downturn lead TNT Express to suffer a loss during 2011, and a falling stock price left the company vulnerable to a buyout.

Through its purchase of TNT Express, UPS was able increase its international revenue from 26% of yearly profits to 36%, according to company executives. This move will improve UPS delivery services internationally by giving it the largest market share in Europe and greatly expanding their presence in Asia and South America. The emerging markets of India, China, and Brazil represent the markets with the greatest for potential growth, not only for UPS, but also for the millions of small and midsized companies that use the courier to reach new customers.

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