FedEx follows DHL on European Facility Updates. Who’s Next?

Last week CargoForwarder Global reported extensively on DHL’s new state-of-the-art cargo handling facility at Leipzig Airport.
An impressive program and development which is aimed at trying to se-cure DHL’s global position as a leading package delivery company.
Now, FedEx has revealed plans to do the same, but on a somewhat larger scale, at their Paris hub. Is this also food for thought for others to gain a piece of the cake? There are some indications that Chinese giant Alibaba is interested in taking over European package handler DPD. Just a rumor or is there more to it?

Future FedEx facility at Paris Charles de Gaulle  -  courtesy FedEx
Future FedEx facility at Paris Charles de Gaulle - courtesy FedEx

French PM gives FedEx the honour
It was announced at a ceremony held in Paris last week that the Memphis based parcels handling giant is aiming to invest a total of €1.4 billion into their Paris, France handling hub.
This move - and that of DHL - certainly shows that both parcels giants are taking the fast spreading e-commerce market very seriously and are aiming to get ahead of other aspirants by investing huge sums into their hub operations.
Francois Hollande, the French President, honoured FedEx’s move by personally attend-ing the event and in his speech, lauded the move by the Memphis-based company.

High investment and additional jobs
The long-term €1.4 billion investment is said to also include the building of a brand new  €200 million handling facility extension at Paris CDG airport.
This is planned to open in 2019 and will according to FedEx statements mean that an additional 400 jobs will be generated at the French capital’s airport.
The money being invested it seems is being well spent.
FedEx plans that when finished, the complex will in their view be able to handle up to more than 40 percent on volume and will be seen as one of the most advanced of its kind.
This will also include a fully automated cargo sorting system for large and outsized cargo which is aimed at accommodating the trend in e-commerce for the transport and delivery of larger packages.

Is dpd, here van standing near the German Reichstag, becoming part of the Alibaba empire?  -  photo: dpd
Is dpd, here van standing near the German Reichstag, becoming part of the Alibaba empire? - photo: dpd

More European focus
FedEx went through quite a tough period when waiting for the final EU OK for them to take over TNT Express.
That finally came about earlier this year and has it seems given the FedEx top management more confidence on expanding operations within the European arena. David Binks who is the top man at FedEx Europe as well as CEO of TNT commented at the ceremony that “this strategic expansion in Paris is an example of how we will continue to invest to move goods faster and more reliably across borders. This means that our customers can decrease costs, improve their supply chain and identify new opportunities for growth and profitability.”

 

When will others consider jumping on the bandwagon?
FedEx, DHL and UPS - three household names in the small package / e-commerce field.
All investing heavily in Europe, Asia Pacific and the USA in order to secure their future footholds and dominate the e-commerce business which according to market experts will grow by 20% per annum.
If the above is the case, then how long will it take before other aspirants want to join in and ensure their share?

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One important “could-be” competitor springs to mind!
Alibaba, the Chinese small packages giant which has got a good hold on the Chinese market as well as recently having spread its wings throughout South-East Asia by participating partly or wholly in smaller e-commerce orientated companies.
But, what about Europe?
Surely a target area in their future planning.
But, who can they tie up with? The FedEx’s of this world would have no interest in a cooperation with new market entrants, as it would make little sense.
Then, it only leaves companies such as Alibaba to look out for and quickly acquire one or two European package handlers in order to gain a present market share and be able to expand on it.
There are not that many out there at present.
One of those which could be a suitable candidate is the Dynamic Parcel Distribution (DPD), of which almost 94% is owned by France’s GeoPost which in turn belongs to the French postal service, La Poste and which has quite an interesting European network which runs partly with franchise partners.
The company was founded by eighteen German freight agents in 1976 and was named Deutsche Paketdienst. It was in 2001 that GeoPost took over.
In comparison to their other European competitors, DPD or their owners, GeoPost, have not been really active in investing in new facility management during the past few years.
On the contrary, one could argue that they have stepped back somewhat from this field.
Does this maybe make them a suitable takeover candidate for such companies as Alibaba?

We’ll have to wait and see, but can imagine that Alibaba, or one or two others, may well have a European shopping list in their bag.

John Mc Donagh

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