TNT Express plans to expand volume of regional freight

TNT Express expects to increase the volume of freight carried on its Middle East road network this year, a senior company official has revealed.

The company anticipates carrying 34 million kilogrammes compared with 19.7m kg last year – a rise of 42 per cent.

And road freight's contribution to TNT's overall revenues in the region is set to rise from 17.5 per cent in 2007 to 19.5 per cent this year.

"We see a strong move to road freight by our clients this year," said Bryan Moulds, TNT's Country General Manager for the UAE. We attribute this to the increasing fuel costs for airfreight and an increase in cargo volumes in the region.

"Most clients are now looking at a multimodal approach to transporting their goods as a result of increasing rates for air transport. We see this giving a boost to road freight in the region."

The Middle East is the fastest growing of all TNT's road freight networks worldwide. The company uses 90 vehicles spread across the region including 60 40ft trailers and box trailers that carry goods ranging from retail to high-tech products.

The company covers all the emirates and usually delivers within the country in one day. It is hoping to increase its share of the road freight market in the region to around 19 per cent.

"The road network is the backbone of TNT's regional strategy and we want to streamline it to make it more reliable," added Moulds. "We offer a Day Definite service which guarantees customers the exact number of days to delivery. For example we are capable of transporting goods from the UAE to Kuwait in just two days and to Jeddah in Saudi Arabia within three days."

TNT is hoping to expand its fleet in the coming months to cope with the increasing cargo volumes. Moulds said the sea-road modal service was growing faster in the region than sea-air as clients regarded road as the cheaper option.

Another TNT official said that though airfreight rates had risen sharply as a result of increasing jet fuel costs the drop in demand had been marginal because more clients required express deliveries.

"Due to increasing competition among businesses there is an increasing need for express deliveries of goods and parcels," said James Edgeworth, National Major Account Manager at TNT's Gulf Head Office. "Road freight works perfectly for clients who are not in a hurry to have goods delivered. However, the express delivery business is still vibrant with more clients showing interest."

Edgeworth said increasing traffic congestion – particularly in cities – and changing customs regulations were major challenges to road freight in the region.

"Customs rules keep changing and this slows down the movement of trucks as we try to get accustomed to new rules. Although the GCC customs union was intended to allow the free flow of goods between member countries and has been in existence for some years, we still face hurdles at border points, which sometimes cause delays in deliveries."

Edgeworth believes that once the GCC common market is fully implemented it will boost the performance of road freight in the region by reducing transit time.

TNT, through a partnership with Net Holding, has extended its road network into Lebanon, which it considers the key to the company's Levant region development because of its position as a European gateway.

TNT's operations and revenues in the UAE have grown organically at an average of 31.2 per cent in the past eight years compared with the overall group's growth of 13.8 per cent – and the company hopes to achieve the same level of growth this year.

The company's main source of revenue in the region is the express delivery of documents and international parcels weighing less than 30kg to more than 220 countries.

It intends to streamline its express logistics service and has no immediate plans to enter the third-party logistics market. The airfreight service enables clients to send goods of more than 30kg within three to five days to any part of the world.

In the UAE the company picks up, transports, sorts, handles, stores and delivers documents, packets, parcels and freight. It combines physical infrastructure such as depots and trucks, electronic infrastructure such as billing and track-and-trace systems and commercial infrastructures.

TNT has facilities at Dubai International Airport and its growth looks set to continue, thanks to new facilities in Jebel Ali, Abu Dhabi and the Dubai World Central aviation development.

Four TNT planes operate from the UAE while commercial uplift is used for some goods delivered to other parts of the world.

The company employs more than 161,000 people worldwide. It reported revenues of $17.6 billion in 2007 and operating income of $1.9bn. TNT is listed on Euronext Amsterdam.

FedEx Corp, the second-largest US package-shipping company, is in preliminary talks to buy TNT, according to media reports. However, TNT officials have declined to make any comments.