Favourable exchange rates, improvements in the European economy, and the recent progress made by
TNT’s new management in turning around the company were among the key factors that caused FedEx to
make a bid for TNT Express, according to FedEx Corp chairman and CEO Fred Smith.
Explaining why now was the right time to make an offer for the company, Smith said: “The
exchange rates are more favourable, and the European economy appears to be growing a bit, fuelled
perhaps by the lower price than oil and the quantitative easing introduced by the European Central
bank. Also, we have to give a lot of credit to Antony Burgmans and Tex Gunning and their management
team, who we have come to know in recent days, and we were impressed with the steps that they were
taking and their Outlook strategy.
“We felt that they were doing the things that needed to be done at TNT. So, all of these things
played their part.”
Asked whether a merger with FedEx could help reverse recent losses in market share suffered by
TNT, Smith said that three factors had contributed to that. Firstly, he said there had been some
deliberate decisions by TNT to let go of some traffic, for example in its attempts to right-size
its Italian business.
He said TNT had also been under competitive attack, because TNT’s “bundle” of services was “not
as broad and competitive” as those of its larger competitors. “This transaction addresses that
issue by giving TNT access to our FedEx portfolio, and also broadens the FedEx portfolio,” said
Smith.
The third factor related to quality issues at TNT, which Smith said the company had been
addressing very successfully. “I have already mentioned the admiration that we have for the new
work that they have been doing to improve things for TNT. At the top of that list was a significant
improvements in service levels that we have seen. It is extraordinary the success that they have
had to get their service levels back up to very high levels,” he said
“So I hope that these three things will mitigate against any market share losses, and once
integrated I would hope to increase our market share there.”
