By Staff writer
World’s No. 1 package delivery company is now playing catch-up after deal fell through
EU antitrust regulators blocking of a $7 billion bid by United Parcel Service (UPS) for TNT Express dented the world No. 1 package delivery company's hopes of expanding its presence in the Middle East, one of the company’s key executives told Arabian Business.
“Our original strategy to get here [Dubai] today was to buy TNT out of Europe,” said Jim Barber, president of UPS International. “It was, because of materiality, subject to competition commission approval in various markets, including the EU. When it got to the EU, they didn’t quite agree with the way we looked at it and effectively they wouldn’t let the deal pass its structure, so we had to walk away from it,” he added, conceding it was a missed opportunity to boost UPS’ growth in the region.
The deal, its biggest ever, would have given it access to Dutch peer TNT's stronger networks in fast-growing Asian, Middle Eastern, African and Latin American market and increased its non-US revenues to 36 percent of total sales from the current 26 percent.
However, the European Commission said UPS had not offered adequate concessions to ensure the deal would not hurt consumers and shelved the deal in early 2013.
The company has a colossal $55 billion turnover and employs over 400,000 worldwide, but its numbers in the Gulf are relatively small. Last year, UPS doubled its warehouse capacity in Dubai with a new full service contract logistics facility in Jebel Ali Free Zone, bringing the total space to 150,000 square foot, which is still quite small when compared to the 31 million sq ft in the UPS worldwide network.
There are plans to grow beyond its current 315 employees and 118 vehicles in Dubai.
And Barber’s latest visit to the emirate, his third in a year, is an indication of how seriously the company is looking to expand here.
“Up until now we have looked at the market [in the GCC] somewhat as a niche market — a market that has very specific characteristics that we have generally tended to fly through, and get out of in a very effective way,” Barber said.
Building towards establishing its base in Dubai, UPS has recruited a number of key personnel — in brokerage, marketing and sales, plus a general manager.
“The biggest thing is this team we’ve put in place. We’ve gone out to the market and acquired — half the team here has come from outside UPS and so part of my role is they’re tasked with defining strategy and looking forward for us.
“If I don’t spend the right amount of time with them, it’s not fair and I’m not doing my job, because I’m going to help make the decisions with them on where we go. That’s the majority of what I’m spending the time on here,” Barber said.
He’s also spending a lot of time working on Expo 2020, and making sure that UPS is at the forefront if and when contracts become available.
UPS brings a wealth of experience when it comes to logistics solutions for major events, with a long history of association with the Olympic Games, dating back to the 1996 Games in its US home town of Atlanta.
Most recently, it handled more than 30 million deliveries during the 2012 Games in London, something it hopes will spur further growth in the Gulf region.