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October 12, 2017 2:00 PM, EDT
Belgian Postal Operator Enters E-Commerce Race With $820 Million Purchase of Radial
Koen Van Gerven Van Gerven by TriangleMS via YouTube

In one of the largest transactions ever for a U.S.-based logistics firm, Radial Inc. has been acquired by Belgian postal and parcel carrier bpost for $820 million.

The deal is the latest indicator of the growing interest throughout the world in the rapidly expanding market for goods purchased online and combines two companies that together can ratchet up global competition for e-commerce delivery.

Radial, based in King of Prussia, Pa., shipped 306 million units for retailers from its 24 fulfillment centers in 2016 and ranks No. 23 on the Transport Topics Top 50 list of largest logistics companies in North America. The company is expected to generate revenue of between $970 million and $1 billion in 2017, according to bpost officials.

“The acquisition of Radial will allow bpost to become a leader in the advanced e-commerce logistics industry, and reinforce bpost’s successful international parcels strategy,” bpost CEO Koen Van Gerven said in an interview with TT last week. “This allows us to capture a greater share of the emerging cross-border e-commerce logistics market, which is expected to grow at a rate of over 25% per year, as well as tap into the roughly 20% of all e-commerce orders that flow between the U.S. and the European Union today.”

Van Gerven said Radial’s management team will remain in place, and the company will become part of a newly formed group called Parcels & Logistics Americas that will be led by an unidentified bpost senior manager in Belgium.

In 2016, bpost generated revenue of 2.4 billion euros. The company, which handles 8.6 million letters and delivers 175,000 parcels every day, has ramped up its efforts to create a global e-commerce logistics network and challenge companies such as Amazon.com, FedEx Corp. and UPS Inc. Over the past year, it has purchased a stake in two startups that use technology to help with last-mile delivery services.

One is Parcify, which uses the geotracking facility on smartphones to deliver parcels to recipients when and where they want. The other is de Buren, which runs a network of parcel lockers in the Netherlands. It also launched bringr, a service that allows smartphone users to find a driver for delivering goods as part of a hybrid network.

In addition, bpost added to its international parcel business, which operates as Landmark Global, with the purchase of Freight Distribution Management in Australia and last-mile delivery and fulfillment firms Apple Express and Matt’s Express in Canada.

bpost

With respect to bpost’s North American strategy, Van Gerven said Radial will continue to use UPS, FedEx and the U.S. Postal Service to make deliveries, but he noted that bpost would “evaluate and make investments in emerging delivery methods on an ongoing basis.”

Meanwhile, Amazon continues to make moves to expand its logistics offerings. The Seattle-based online retailer has begun testing a program called Seller Flex in which it oversees pickup of packages from warehouses of merchants who sell online but don’t use Amazon’s fulfillment centers.

The service began two years ago in India and is being offered on a trial basis in West Coast states with a broader rollout planned in 2018, according to Bloomberg News, which cited unidentified sources familiar with the program.

A spokesman for Amazon told TT that the program is not intended to replace current delivery service providers.

“We are using the same carrier partners to offer this program that we’ve used for years, including UPS, the U.S. Postal Service and FedEx,” Amazon spokesman Ernesto Apreza said in Seattle.

UPS issued a statement in response to the Bloomberg article, stating that Amazon “is a valued UPS customer” and that the company expects “to expand these relationships further in the future.”

FedEx officials could not be reached for comment.

Parcel industry expert Satish Jindel, owner of SJ Consulting Group in Sewickley, Pa., said he’s not surprised by any of the moves because the growth of e-commerce is outstripping the capacity of delivery firms. Amazon needs to supplement, not replace, services provided by parcel carriers and the U.S. Postal Service, he said, adding there appears to be enough business to support growth for everyone.

Amazon reported net product sales of $24.7 billion in the three months ended June 30, an increase of 17.2% from $21.1 billion in the same period in 2016. Amazon spent $5.2 billion on fulfillment activities in the period compared with $3.9 billion in the prior year. Shipping costs jumped 38% to $4.6 billion in the second quarter of 2017 from $3.4 billion in the same period in 2016.