Peter van Laarhoven on growth
“Emerging markets are not places where you go in and set up a profitable business within a year or so. We have to cultivate these markets for the long term.”
“Calculate the future”
If you want to know what the future holds for TNT, Peter van Laarhoven is the man to talk to. While he doesn’t have a crystal ball in his office, Van Laarhoven does have a uniquely advantageous perspective on TNT’s business. As Group Director Strategy, Van Laarhoven is privy to a storehouse of knowledge about the state of TNT’s business. And he’s also extremely well informed about nascent market trends likely to affect TNT. He knows precisely where TNT stands today and where it wants to be tomorrow.
A former mathematician who still takes a calculating approach to his work, Van Laarhoven is one of the architects of TNT’s Focus on Networks strategy, which was adopted in December 2005. Focus on Networks concentrates TNT’s resources on its core competence of running delivery networks and aims to deliver one thing above all else—growth. That focus is already yielding results and will continue to do so, says Van Laarhoven, because TNT’s networks are scalable, enabling TNT to increase profits through greater economies of scale; and they are replicable, allowing TNT to grow its business by repeating in new markets the actions that made it so successful in Europe.
TNT continues to improve economies of scale in its Mail network in the Netherlands and in its Express network around the world, but its most fertile fields for growth are those where TNT is replicating itself to capture new business. These include the countries of Europe that are slowly opening their mail markets to competition and emerging economies where demand for express delivery is starting to blossom. China, India and Brazil are among the countries at the top of that list.
With the recent acquisitions of Hoau in China, Speedage in India and Mercúrio in Brazil, TNT is making big strides toward recreating a key strength of its business in Europe—its unrivalled road network. TNT Express connects more than 200 countries across continents with its 46 aircraft, but it is on the ground that TNT really beats the competition. And it is on the ground where TNT is cultivating the big growth that will take it into the future.
While TNT already operated in each of the countries where acquisitions took place, the purchases put it in a leading position on the ground in each market. In China, TNT Express now has 3,000 vehicles and more than 1,250 depots across the expansive geography. In India, Speedage added 730 vehicles, 514 depots and 26 hubs, giving TNT Express coverage in all parts of the country. And in Brazil, where Mercúrio had a 15% share of the national market for domestic delivery, TNT Express now boasts the country’s largest road network with nearly 2,500 vehicles and more than 100 depots.
As TNT Express integrates these networks into its business, Van Laarhoven points out that focusing on road networks is not only about repeating past success. It’s also about anticipating the future. Until now, growth in these markets was driven predominantly by exports. But that trend is set to shift.
“In these markets, strong middle classes are blossoming and acquiring more purchasing power. Going forward, growth will be much more driven by domestic consumption within China and Brazil themselves,” says Van Laarhoven. “In the near future, these domestic sectors will need better transportation and express networks on the ground. We’re building those networks today.”