Dutch postal services group TNT announced yesterday it will focus on express and postal services in China after it agreed to sell its logistics arm.

 

The company agreed on August 23 to sell its logistics unit to Apollo Management, a US-based investment fund company, for US$1.9 billion. But the company will keep the night delivery service and freight management business of its former logistics unit, potentially integrating them both into its express division.

 

"The deal will enable TNT to integrate its efforts in express and postal services. It also reduces the complexity of our business in China to sharpen our competitive edge in the rapidly developing market," the company said yesterday.

 

"The express and postal business will generate more revenue than the logistics business for TNT," said Chen Yanhong, an analyst with InterConsulting, a Shanghai-based consulting firm. "After TNT sells its logistics services, it will become more focused on its core business including the express and mail service in China."

 

TNT CEO Peter Bakker said in a statement that TNT was strongly committed to China.

 

"TNT aims to establish China as the second home market after Europe," said a TNT China spokesperson who preferred not to be named.

 

TNT China, with its regional headquarters in Shanghai, already operates in around 500 Chinese cities with 4,600 employees.

 

The company also announced a significant change in its management in Asia yesterday to facilitate further expansion in the region.

 

Michael Drake, the current regional managing director of TNT Southeast Asia, will take charge of TNT's business in China on September 8.

 

Ken McCall, the current chief executive officer of TNT China, will be promoted to monitor the company's Asia business.

 

"The Board of Management recognized Ken McCall's pivotal contribution to the development and execution of the China strategy," the company said. "And the change of management will not influence TNT's strategies in China."

 

TNT expects its revenue from express services in China to grow at three to four times the country's economic growth rate over the next five years, Bryan Chan, managing director of TNT's International Express business in China, was recently quoted as saying.

 

TNT began a new direct service between China and Europe this year with two Boeing 747-400 freighters. It's also developing its door-to-door express delivery service in Asia.

 

The TNT spokesperson told China Daily the firm plans to complete its acquisition of China's leading freight and parcels transportation operator HOAU Logistics Group by the end of this year.

 

The acquisition will pave the way for TNT to become one of the largest privately owned transportation networks for freight and parcels in China. HOAU has over 1,000 operating centers in the country serving around 16,000 customers.

 

"The acquisition will largely help the company to expand its business in China, especially in the smaller cities other than Beijing, Shanghai and Guangzhou, where HOAU has established a sound transportation network and a good relationship with local clients," said Ming Qiao, an analyst with Shanghai-based Huaming Consulting Co Ltd.

 

TNT expects its China network to expand to more than 100 branches by 2010 and aims to provide its express and direct mail services to 1,000 cities in China.

 

(China Daily August 31, 2006)