UPS buys Dutch shipping rival for $6.8 billion

Stacey Vanek-Smith: Shipping giant United Parcel Service (UPS) is acquiring Dutch rival TNT Express for 6.8 billion dollars. It’s all about getting more global along with the companies it serves.

Marketplace’s Scott Tong has that story for us.

Scott Tong: In a business where size matters, UPS is tops in America. But the U.S. market will grow at an anemic pace of 1 percent to 2 percent, says Dutch analyst Andre Mulder, at Kepler Capital Markets.

So the future is global – one reason UPS is gobbling up Europe’s No. 2 deliverer, TNT Express.

Andre Mulder: In Europe we are talking about growth rates of let’s say 3 percent, 4 percent, 5 percent. There is still scope for consolidation in that market.

Tong: Now with a company named TNT, it’s so tempting to go with some explosion metaphor, followed by forehead smack. But the fact is, logistics and delivery is really booming outside Europe – in Asia.

Mulder: That market is growing fastest. We’re looking at growth rates of 15 percent, 20 percent. But there are not that many companies available.

Tong: Meaning there are no big companies in Asia to buy. So to compete there, the world’s biggest firms – UPS, Fedex, DHL – have to grow the old-fashioned way. Build business from the ground up.

In Washington I’m Scott Tong for Marketplace.