Tag Archives: TNT

Advertising logistics services on television – when it might work

TNT tries to advertise itself out of trouble, tastefully
TNT tries to advertise itself out of trouble, tastefully

One does not see logistics advertising outside the trade press very often.  Logistics is mainly a business-to-business industry and a television audience is dominated by consumers, and it’s that audience for which one pays; that can’t be cost-effective, although perhaps specialist channels such as Bloomberg might make sense.

But I suppose in the express/parcels business it makes more sense because there is a much greater consumer component.

I thought of this after I saw what I think is a good advert for TNT.  The amusing part is at 0:26 when the TNT people run past a yellow lorry, stuck in traffic and with a less-than-svelte driver swigging his coffee and stunned at TNT’s performance.

Now who can this guy represent?
Now who can this guy represent?

Now who can that lorry represent?  The yellow is a little too pale, I suspect.  Hilarious.

I tried (but failed) to find an advert I saw in the US about ten years ago, which showed a van (Fedex or UPS, I can’t recall which) racing down a road only to be cut off at a level crossing by a long DHL cargo train.  But I did come across a different one.  The tag line?  There’s a new face in domestic shipping – DHL.  Well there was…

UPS of course had a campaign a few years ago (2011?) that actually mentioned the L-word.  That’s a little too twee for me.  I like the ones that have a pop at the opposition.  Much more interesting.

But all this advertising must be dwarfed by DHL’s sponsorship budget.  The mass of yellow-and-red at Formula 1 races is astonishing.

Is it possible that DHL sponsors Manchester United in some way?
Is it possible that DHL sponsors Manchester United in some way?

I am no marketing expert and I am sure DHL gets huge benefit, especially in Asia, from its sponsorship of Manchester United.  Moreover any publicity is good publicity, I understand, and I am sure that the saturated presence of the logo at matches outweighs any negative emotions that stir in supporters of other clubs, for many of whom ‘anyone but Man U’ is a veritable mantra.

The CEVA Story – Part One – Origins and Establishment

CEVA Logistics logoCeva is undoubtedly one of the world’s leading logistics businesses but its history is one of the more unusual and, perhaps, controversial.  It is the largest private equity-owned 3PL and in 2013 it had to pull its planned IPO.  Its story also illustrates some of the strategic challenges European mail businesses face on deregulation and privatisation, and the mistakes that followed.  In this first article we look at the origins of the business.  Subsequent pieces will discuss its performance and the consequences of the failed IPO.

Background

Towards the end of the last century, as free market capitalism took firm hold in the developed world, a couple of themes started to have significant impact on the logistics industry.  The ideological idea was the Thatcherite belief of the evil of public ownership of businesses.  The economic trend was globalisation, which fundamentally changed the supply chain flows that logistics companies were looking to satisfy.

This isn’t the time or place to discuss public ownership but the trend to privatisation had long-term effects on the logistics industry.  In the 1980s the major national postal services were parts of large, state-owned organisations, the scope of which encompassed physical distribution, telecommunications and sometimes even banking services.  As a prelude to privatisation these were broken up.  For example:

  • In the UK the telecommunications arm was split off from the Post Office (previously the GPO, or General Post Office) as British Telecommunications in 1981.
  • Deutsche Bundespost was broken up into Deutsche Post, Deutsche Telekom and Deutsche Postbank in 1995 (Deutsche Bundespost had earlier been restructured on similar divisional line is 1989).
  • In the Netherlands Koninklijke PTT Nederland (where PTT stands for Posterijen, Telegrafie en Telefonie) ultimately became the telecommunications company KPN after TPG was demerged in 1998. TPG eventually became PostNL in 2011.

It is with this last example, the Dutch postal service, that our interest lies, because if it hadn’t been for this environment, Ceva probably wouldn’t exist.

Response of the mail businesses to privatisation and globalisation

In the UK the Post Office and Royal Mail were considered such national treasures that they were retained in public ownership (alternative view: they were basket cases of inefficiency, poor management and union-encouraged poor practices) and while the banking business (Girobank) was sold in 1990, the Post Office remains entirely in state hands.  Royal Mail was part-privatised in 2014.

By contrast our two other examples embraced the challenges of the fast-changing world and sought to develop the scope and size of their core mail businesses to encompass parcels distribution and broader logistics activities.  That’s a strategy that is likely to take deep pockets, as Deutsche Post has shown.

The Dutch Post Office buys a business

I like to support my many assertions with evidence where I can, but my access to archives and time to research are limited.  I can’t find financial statements for TPG prior to 2005, but I did find the following undated quote on encyclopaedia.com:

TNT Post Group’s mission is to achieve a recognized world leadership position in its three business areas—mail, express, and logistics—based on a strong market position in Europe.
“TNT Post Group N.V.” International Directory of Company Histories. 1999. Encyclopedia.com. 25 Oct. 2014 <http://www.encyclopedia.com>.

(TPG changed its name to TNT in 2005, so it clearly predates that, but TPG’s actions in 2005 make that obvious (see below)).

That mission statement is clearly consistent with the acquisition by KPN of TNT for AUS$ 2 bn (at the time about € 1.3 bn) in 1996.  The Dutch Post Office had decided to build a logistics business.

TNTLogo

TNT had been founded in Australia in 1946. It was listed on the Sydney Stock Exchange in 1961.  In the 1980s its focus was on growth in Europe. Although it did have logistics activities it was known principally as a parcels business.

After its 1996 acquisition by KPN a number of further businesses were bought and its air and road networks were expanded. In 1998 the mail, express and logistics business was demerged as TNT Post Group (’TPG’), becoming TNT NV in 2005.

A change of tack

Having a professed strategy of building ‘a … world leadership position in … mail, express and logistics’ (my emphasis) in December 2005 TPG announced a volte face and that it was looking to dispose of its logistics business.  The explanation given was that TPG was ‘successful at designing, implementing and running delivery network businesses. This is our core competency, lies at the heart of our business going forward, and offers us a sustainable competitive advantage and very compelling growth opportunities’ and the company would ‘focus on networks’.  It is possible, though, that this self-perception was influenced by the recognition of the enormous cost of trying to build world leadership in three markets.  Even Deutsche Post, with all its financial might, failed to break into the US express market, despite pouring billions of Euros down the proverbial t.

The logistics business at that point had revenues of € 3.4 bn.  TPG would retain the freight management business (turnover about € 800 mn) and certain logistics activities such as spare parts logistics, where there was clear synergy with the express business.

To complete the story of the Dutch Post Office’s dalliance with business other than mail, in May 2011 the TNT Express business was demerged and the mail business was rebranded PostNL.  PostNL retained 29.9% of TNT’s equity.  TNT has had an unhappy time as an independent company and was of course the subject of a 2012 bid from UPS which was stopped by the EU.

The birth of Ceva

TNT’s logistics business was sold in August 2006 for € 1.5 bn to Apollo Management LP, a private equity fund.  In December of that year the business was rebranded as CEVA Logistics.

EGL logo

In August 2007 Apollo bought EGL, a US-based freight forwarder which had been founded in 1984 and was listed on NASDAQ, and combined it with the TNT logistics business in CEVA.

Next: how the new company looked, and how it performed.