FedEx acquisition of TNT Express expected to put pressure on Aramex in Mena

People walk out of Aramex branch in Abu Dhabi. Silvia Razgova / The National

FedEx’s acquisition of rival logistics firm TNT Express will increase pressure on Aramex in the Middle East and North Africa region, according to an industry analyst.

The impact will be felt most keenly by Aramex, the region’s second-largest player behind Deutsche Post’s DHL, according to Joel Ray, the head of consulting at Transport Intelligence.

“Combining TNT and FedEx should put some pressure on Aramex … but it’s unlikely that DHL will be affected too much,” said Mr Ray. “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.”

FedEx announced the €4.4 billion (Dh17.57bn) acquisition of TNT Express on Tuesday, sending the Dutch company’s shares soaring by 28 per cent.

The deal still requires approval from European regulators, which withheld permission for a similar takeover attempt of TNT by UPS and prompted the latter to abandon talks in early 2013.

“It’s going to be very difficult for them this time around to claim that the deal is uncompetitive,” said Mr Ray.

“They’re two businesses that complement each other well. TNT has retrenched in recent years and become much more of a European operator, while FedEx has largely become an inbound and outbound European operator. Even though TNT will have to sell its airline, the two companies fit well together.”

The sale of the airline may affect the cargo operations of Dubai’s Emirates, which signed a codeshare agreement with TNT in May 2012 to use space on TNT’s freighter planes on the courier’s New York JFK to Liege and Hong Kong-Dubai-Liege routes.

But Mr Ray said that the impact of the deal on Emirates would be limited.

“I’d imagine that any cargo carried by TNT’s planes would just be transferred over to FedEx’s planes.”

A spokeswoman for Emirates said that Skycargo was aware of developments, “but has no comment at this point in time”.

FedEx was recently among a handful of aviation companies defending open skies agreements struck by Emirates, Etihad and Qatar Airways in the US, agreements attacked by numerous US airlines as anti-competitive.

“The US should not capitulate to the interests of a few carriers who stand ready to put their narrow, protectionist interests ahead of the economic benefits that open skies provides,” FedEx’s Express air cargo chief executive David Bronczeck said in a February letter to the heads of the US departments of state, transportation and commerce.

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