Every year, supply chains grow and companies expand their reach into new regions. When it comes to global corporations, there’s a noticeable reliance on third party logistics providers, better known as “3PLs,” to provide expertise in many areas: customs, lowest cost logistics, assistance in reaching suppliers in remote locations, reliability in delivery and flexibility in terms and conditions.
In many cases, a company is better off using a 3PL rather than trying to organize its own transportation service for its goods — not every company can have the right supply chain expertise in-house. This is key in an age when certain products or subcomponents are being manufactured over in Asia and the consumer or final assembly facility is in Europe or America. (The three main regions in the world of logistics are Asia, Europe and the Americas.)
In the industry, there are power players whose services are localized and then, there are those whose services are worldwide: DHL, UPS, FedEx and TNT.
Take a look at the market share break down for Europe, the Americas and Asia Pacific, from GuruFocus:
Europe’s market size is $6.5 billion
| 3PL Provider | DHL | UPS | FedEx | TNT | Other |
| Market Share | 41% | 25% | 10% | 12% | 12% |
The Americas’ market size is around $7.4 billion.
| 3PL Provider | DHL | UPS | FedEx | TNT | Other |
| Market Share | 18% | 32% | 46% | 3% | 1% |
Asia Pacific’s market size is around $7.4 billion.
| 3PL Provider | DHL | UPS | FedEx | TNT | Other |
| Market Share | 44% | 11% | 20% | 4% | 21% |
Consider those numbers as you hear this news: FedEx recently announced they’ll be buying out Dutch rival TNT Express. “This merger will most likely succeed because FedEx and TNT are a shrewder fit than UPS and TNT were,” Forbes reports. “They complement each other without overlapping significantly.”
It appears the market is in approval with the buy-out, with the stock of both companies rising after the news; however, one of the biggest benefits to arise out of this will be for the consumer. The biggest plus? It’s not a hostile takeover — TNT stocks will be receiving a premium on the buy-out price and the merger is not producing a monopoly in the market. Even combined, FedEx and TNT will still have less of a market share than its rivals. However, the company will now be more competitive and be a major driver (especially in the European market) to keep consumer costs competitive as well.
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