Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
UPS Inc.'s proposed $6.8 billion buy-out of Dutch express delivery firm TNT Express may be experiencing more than just a passing squall.
On Friday, Atlanta-based UPS said it received a "statement of objections" from the European Commission (EC), the executive body of the European Union, to the proposed purchase of TNT Express, based in Hoofddorf.
In a statement released Friday, UPS said the document—the contents of which have been kept confidential—"addresses the competitive effects of the intended merger on Europe's international express market."
UPS called the document a routine part of the 27-member EC's regulatory review process and said that both companies are expected to respond to regulators' concerns within the next couple of weeks.
Peggy Gardner, a UPS spokeswoman, said the EC statement "helps to further focus the areas of discussion moving forward" and that it doesn't "prejudge the outcome."
Still the statement of objections has forced UPS to extend the deadline to complete the transaction for the second time since both companies formally agreed to the deal on March 19. The initial deadline was Aug. 31, which was then pushed back to Nov. 9 due to competitive concerns raised in Europe. On Friday, UPS said the deadline has now been extended to early 2013. Initially, UPS had not anticipated any regulatory static over the deal.
UPS said it remains committed to the acquisition. The issue is likely to be raised tomorrow during UPS' scheduled analyst call to discuss its third-quarter results. Given the hush-hush climate surrounding the deal, however, it is likely executives will provide no new information.
The main sticking point could be a disagreement over the size of the European parcel market. That wouldn't be surprising, since analysts have proffered conflicting market share estimates since the transaction was announced in February. One estimate that appears to stick was made by New York-based investment firm Wolfe Trahan & Co., which pegged TNT Express as the market leader with 18 percent, followed by DHL Express with 16 percent, UPS with 14 percent, and FedEx Corp. with 4 percent.
The EC's review process comes as the Euro-zone grapples with a major financial crisis mostly afflicting its southern region. Given the current turbulence, David G. Ross, transport analyst at Stifel, Nicolaus & Co., surmised that the EC might be loath to approve any transaction that eliminates a competitor from the market. Ross added, however, that the body rarely vetoes deals like this one.
He did speculate that as a condition of approving the deal, the EC might require a divestiture of assets in countries where the two firms have significant market concentration. He would not comment on which countries would be ripe for divestiture.
UPS said in its statement that parcel competition in Europe is already brisk because it involves "multiple players who offer similar services." UPS said the combined entity would actually enhance the continent's competitive landscape by creating a "more efficient logistics market."
TNT Express' strength is its intra-European business, though it also serves the intra-China, Southeast Asian, and Brazilian markets. Its U.S. operations are confined to connecting the country to international markets. And even there, the company's footprint is almost nonexistent.
Ross, for one, is not keen on the deal, saying that beyond the cost of the purchase, the subsequent integration would be expensive and more difficult to execute than UPS assumes. UPS already has a significant and profitable presence in Europe, and the company would be better off growing its Asian and Brazilian operations in-house instead of buying TNT Express' "second-rate operations" in those markets, he said.
Keep away from FedEx?
Many of those following the deal have speculated that UPS' move on TNT Express was partly motivated by a desire to keep it out of FedEx's hands and block its rival from establishing a major foothold in Europe via a major acquisition.
FedEx, for its part, has expressed no interest in a counter-offer, saying it could grow nicely in Europe through organic expansion and smaller, more targeted acquisitions known in the trade as "tuck-ins."
The other major player in the market, DHL, has been silent on its intentions so far. Experts say it is doubtful DHL will make a bid for TNT Express for fear of raising the ire of European antitrust regulators. However, DHL and its owner, German postal and logistics giant Deutsche Post, wield significant influence in Brussels. Both could use their combined heft to either get the deal blocked or force conditions on UPS that could dilute the impact of controlling more than 30 percent of the intra-European parcel market.
DHL could have other, more personal motivations to block a UPS-TNT Express deal. In 2003, UPS opposed DHL's proposed acquisition of Airborne Express, then the third-largest U.S. parcel carrier. The transaction was eventually approved. According to those close to the transaction, UPS' opposition still rankles, even though in retrospect DHL would have been better off walking away as the acquisition set the stage for six years of multi-billion dollar losses that eventually led DHL to abandon the domestic U.S. market.
If the current deal is blocked, it would be hard to fathom TNT Express' staying independent for long as its competitiveness has faltered in recent years. When the company was split off from the Dutch postal system in May 2011, rumors swirled that it was put on a standalone basis to prep it for sale. By mid-2011, TNT Express' stock had plunged to multi-year lows as it sustained large losses due to the contraction in Europe and operating costs that spiraled out of control.
In addition, Marie-Christine Lombard, who was CEO at the time the deal was announced, suddenly resigned at the end of September to pursue interests outside the industry. The timing of her decision was not warmly received by the company's supervisory board. "It is regrettable that Marie-Christine has decided to leave TNT Express now," said Antony Burgmans, its chairman, at the time her resignation was announced.
These events seem to have affected the company's internal culture as well. A parcel industry executive who spoke on condition of anonymity said inertia has set in as TNT Express waits to be sold. In the meantime, the company risks becoming—if it already hasn't--the fourth player in a three-chair European parcel game.
"I think TNT had been on cruise control for a long time just waiting to be sold to somebody, and therefore has lost vision and mission and internal leadership," the executive said. "The senior guys just want their [compensation] packages so they can get on with life."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”