Fast mover

Express is planning to add five new destinations to its Middle East road network next year and to double its regional road service revenues within three years.

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By  Laura Barnes Published  September 6, 2005

|~||~||~|TNT is drawing up ambitious plans to grow its express operations in the local market. The Dutch-owned integrator already has a significant road network in the region, but it is now set to add five new destinations within the next year, including a trucking service to Europe, as it looks to double its regional road revenues over the next three years. The company is also launching new customer service initiatives in order to capture a large share of the region’s fast-growing express market. “According to our research [the express] market is growing somewhere between 12-20%… which is remarkably fast compared to Europe and North America. The region is a market where we have a lot of opportunities and a market that is being taken increasingly serious by our competitors,” says Mark Gunton, regional director, IBU-Americas, Africa and Asia, TNT Express. “However, the Middle East is also a market where we see a lot of available competitive advantages opening up for us, whether this be through our road network or through our customer service,” he adds. TNT Express, which is one of three divisions at the company, along with mail and logistics, has reported strong growth on the global level. Its revenues were up over 10% to US $3.1 million in the first half of the year, and its operating income in the second quarter was also up 28%. The express division is also one of the most profitable for TNT, with the company predicting that it will achieve a 10% operating margin in 2007. However, with TNT having already secured a strong position in its home European market, the major growth opportunities for the company are in emerging markets, such as the Middle East. “Our corporate strategy is to be number one in emerging markets, and this region is an ideal place for us to be market leaders due to our experience and our history here,” says Gunton. Key to the company’s Middle East strategy is its regional trucking network. Road services play an important role in TNT’s operations around the world, and it has a global network of 900 hubs and depots as well as operating over 18,000 road vehicles. However, road haulage is a particularly appropriate means of transport for all-but the most time-sensitive express deliveries in the Gulf, because of the size of the countries in the local market. This small geography limits journey times within the region, which means that road links are not much slower than air shipments, but they cost a fraction of the price. TNT’s road network, which is based in Abu Dhabi, currently covers nine other destinations across the region, including Doha, Muscat, Bahrain and Dhahran. The company utilises these road links by offering customers daily door-to-door customs-cleared delivery, as well as a global express service and a guaranteed 09:00 and 12:00 express delivery. It also offers day-definite services with short transport times, such as Dubai to Kuwait in two working days, and from Abu Dhabi to Jeddah in three. ||**|||~||~||~|“We provide one of the fastest day definite services in the region as well as providing city pair transit times faster than anyone else. It is really hard to achieve this — providing both a good service and also a certain level of customer care — but we have looked at our European operations to see how they work,” says Gunton. “However, when you can guarantee a time and day definite service that has a one or two day advantage over the competition, then it is very sellable,” he adds. TNT is now looking to double its Middle East road service revenues over the next three years with the launch of five new routes in 2006, as well as opening up links to neighbouring regions. This expansion will not only widen the company’s reach in the market, but also improve its transit times and help it to implement an effective cost management process. “The road network is the backbone of TNT’s regional strategy and we plan to launch routes linking the Gulf countries with the wider Middle East and Europe next year. We have already delivered an impressive 60% annual increase over the last three years for the Middle East road network and we expect this to grow further,” predicts Gunton. Alongside expanding its road network, TNT is also highlighting its customer service levels. For instance, many of the express company’s customers come from the high-tech, automotive and telecom industries, where time definite and guaranteed delivery is paramount. TNT aims to support these needs and in a manner that fits the customer’s specific requirement. “We feel that our customer care separates us from the rest,” says Gunton. “Customer relations is a driving factor here and if you ask any of our clients the reason why they stay with us, it is because we have a greater amount of flexibility and understanding. It is a case of we try and tailor to our customers’ requirements, not the other way around,” adds Gunton. However, as well as services, sheer volumes will also be key for the future development of TNT in the region. Greater size and reach both locally and internationally will give the company greater economies of scale and also the ability to fight off new and smaller players entering the market. “Industry trends are leading towards further consolidation as express is fundamentally a scale driven industry,” he says. “Basically, there are so many benefits to be had by having reach and size, it is the big and mighty that will win in the region.”||**||

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