GeoPost, the express parcels division of France’s La Poste, is eyeing more freight forwardingacquisitions in Asia and wants to become one of the top 15 forwarders worldwide by 2020, CEO
Paul-Marie Chavanne told CEP-Research in an exclusive interview.The parcels specialist plans to use Tigers, the Hong Kong-based company in which it holds amajority stake, as a platform for organic growth as well as takeovers. The overall aim is toincrease Asia-Europe flows, especially from e-commerce, with delivery in Europe through theDPDgroup network.
The GeoPost chief was speaking on the sidelines of this week’s press conference in Paris toannounce the division’s commercial re-branding to ‘DPDgroup’. In future, GeoPost’s parcelbusinesses – DPD, Chronopost, Seur, Interlink Express – will also use the ‘DPDgroup’ brandidentity, while ‘GeoPost’ will be retained for holding and freight forwarding activities.
In 2014, GeoPost increased turnover by 13.3 per cent to €4.9 billion and volumes by 10.7 percent to 864 million parcels, driven by strong B2C and international volume growth. Tigerscontributed revenues of US$300 million. However, Chavanne hopes to expand freight forwardingrevenues towards US$500 million to US$1 billion in five years’ time, putting GeoPost into the listof 15 top freight companies worldwide.
Explaining GeoPost’s overall mission, which is to contribute profitable growth for La Posteto compensate for the structural decline of the mail business, he said: “In Europe two Posts havemastered the decline of the mail business. Deutsche Post has become a logistics company and PosteItaliane has become a bank. All the others, including France, are in the middle of the river.”
At present La Poste’s parcel revenues through GeoPost and the separate French B2C domesticparcels business Coliposte come to about €6.5 billion, which is about 27 per cent of overall grouprevenues. The mail business accounts for about 45 per cent and the financial services division LaBanque Postale a further 26 per cent.
“The strategy of La Poste is to accelerate the growth of GeoPost and the postal bank as muchas possible,” Chavanne said. The parent company, whose profits slumped last year, “does not have aproblem to finance the growth”, he underlined, while stressing: “GeoPost’s strategy is very muchfocused on the parcel business. We do not intend to go into the logistics business.”
Looking ahead, he said: “If we are to expand, we have to go outside Europe. But the more yougo outside Europe, the more the risk. So my mission is to accelerate the growth worldwide but veryprudently, taking risks into account. But it’s very simple to minimise the risk. We choosecommercial partners, if possible take a minority stake for some years, and then if the shareholderswant to sell, we will take the majority,” he explained.
Chavanne sees freight forwarding as a growth area alongside the core parcel deliveryoperation. In particular, the acquisition of a 63.75 per cent stake in freight forwarder Tigers inlate 2013 was a key expansion move. “The beauty of Tigers is that it’s a small company and there’snot too much risk. Tigers is a platform for organic growth and also acquisitions. But we will avoidbig acquisitions. The integration can be very difficult, and if you lose people, then you losecustomers. So we will try to grow Tigers without taking risks on the integration side.”
The Hong Kong-based company, which puts its revenues at $700 million, offers worldwide airand ocean freight forwarding through a network of branches and various partners. It has madevarious acquisitions in recent months, including WorldLink, a Western Australian logistics firm,Melbourne-based logistics firm Supply-LINQ, and South African freight forwarder LWW.
The GeoPost chief highlighted the extreme fragmentation of the international freightforwarding sector, with “very strong” market leaders such as Kuehne Nagel, Panalpina and Schenkerhaving collectively at most 20-25 per cent of the market. This leaves plenty of space for smalleror specialist businesses to grow around the world and to thrive in niche segments, he pointed out.
GeoPost sees potential in various market segments, especially perishables and small B2Cbrands. “There are a lot of local brands around the world which have no logistics. They need athird-party services provider,” he said.
Moreover, freight forwarding “is a separate business but there will also be some commercialsynergies”, he predicted. For example, international clothing retailer H&M is a Tigers customerbut has also started using DPD in Europe due to the links between the two operations. “They arevery satisfied with us and are giving us more business now,” he commented.
Chavanne was also upbeat about the potential business impact of Japan Post’s forthcomingacquisition of Australia’s Toll Group on the strategic alliance agreed with GeoPost last year.Japan Post acquired a 15 per cent stake in Hong Kong-based firm Lenton, which specialises in airexpress delivery using Cathay Pacific flights, while GeoPost retained a 34.7 per cent stake in thefirm. In addition, Japan Post launched a new export parcel service to Asia and Europe, usingGeoPost’s delivery network. However, in January, Japan Post announced the agreed A$6.5 billion(US$5.1bn) takeover of Toll Group, which has also international express activities in Asia.
On the Japan Post-GeoPost alliance, Chavanne said: “Japan Post wanted access to our network.They wanted an alternative to the integrator networks.” On the Toll deal, he added: “I think JapanPost wanted the Toll deal as a story for their IPO. There were business contacts between Lenton andToll in the past. So if there’s an impact, it will be positive because it will increase volumes.”
