There is a rumbling of an escalating dispute between transport sector trade unions and Netherlands-based express and logistics company TNT over labour issues, notably in Australia. This follows TNT's decision to sell its international logistics division, which includes a joint venture in China and other Asian operations, to a private equity firm.

Union leaders have warned that "member frustrations could easily boil over if the company continues to undermine stable industrial relations in the run-up to and beyond the sale".

TNT, which originally signalled its intention to dispose of its logistics activities at the end of last year as part of a new corporate strategy focussing on the running of delivery networks, announced last month that it had agreed to sell the business to US/UK international investment organization Apollo Management LP.

The total value of the transaction, said TNT, would be US$1.89 billion on a cash and debt-free basis, of which just over $19 million would be received in the form of a five percent equity stake in the planned new company. The group added that while the intended sale was still subject to acceptance by TNT's shareholders and the customary approval by the European Union and other regulatory bodies, it expected the transaction to be completed before the end of the year.

Expanding on those details, a TNT spokesman told Cargonews Asia that Apollo Management had already publicly stated that it planned to continue running the whole logistics division as one company under the same management. In that context, he said, the current group managing director of TNT Logistics, Dave Kulik, would resign from the TNT board once the deal was completed to become chief executive officer of the new company.

A UK-based partner with Apollo Management, Gareth Turner, confirmed that the intention was to further expand TNT Logistics, which has approximately 36,000 employees and 7.3 million sq m of warehouse space under management. "We see it as a clear platform for growth and are happy that the management team has committed themselves to work with us on achieving that," he added.

Apollo's previous involvement with the logistics sector has included investment in prominent US intermodal freight service provider Pacer International.

In 2005, TNT Logistics generated total revenue of just over $4.55 billion, of which Europe accounted for 69 percent, North America just on 19 percent and the rest of the world, including Asia, 12 percent. Worldwide, TNT Logistics has operations in 28 countries, including six in Asia - China, Indonesia, Malaysia, Singapore, South Korea and Thailand. In China, TNT Logistics has a well established joint venture with the Shanghai Automotive Industry Corporation Group called TNT-ANJI. Through that venture, claimed TNT, it was the largest automotive logistics service provider in China.

"The planned sale of TNT Logistics has no implications for the joint venture because it will simply transfer to the new company," said the TNT spokesman.

Two days before the planned TNT/Apollo Management deal was announced on August 23, trade unions in Australia and the UK launched a campaign aimed specifically at customers of TNT Logistics in support of their efforts to retain existing Australian transport sector labour laws, notably those stipulating minimum rates of pay.

The Australian Transport Workers Union, supported by the UK's Transport and General Workers Union, said it intended to "warn" those logistics customers about the impact on quality and service - and resulting liability risks for customers - that could result "if TNT succeeds in its recent attempts to persuade the Australian Senate to reverse long-standing, industry-supported safe transport rate laws".

The two unions argued that those laws fostered safe working systems and lowered highway accident risks.

They are also unhappy about what they claim is TNT's refusal to consult with them at national level in the UK and elsewhere about the sale of its logistics division "and the impact it could have on safe operating systems and job security, as well as on pay, pensions and other key conditions of employment".

The unions, which are being supported by the powerful Teamsters union in the US among others, added that they were not opposed to the sale but were urging both TNT and the prospective buyer to enter into "meaningful talks" about the issues concerned.

(Original source: Cargonews Asia)