UPS-TNT Express: An unwanted
package?

UPS Inc.’s proposed $6.8 billion buyout of Dutch express delivery firm TNT Express may be experiencing more than just a passing squall.

On Oct. 19, Atlanta-based UPS said it received a “ statement of objections” from the European Commission (EC), the executive body of the European Union, to the proposed purchase of TNT Express, based in Hoofddorp.

The statement of objections, whose contents were not disclosed, is the latest regulatory headwind that has forced UPS to extend its deadline to complete the transaction, which was announced in March. The original deadline, Aug. 31, was pushed back to Nov. 9 due to competitive concerns raised in Europe. UPS has now extended the deadline to early 2013. Initially, the company did not expect any regulatory static over the deal.

UPS said it remains committed to the acquisition. It called the statement of objections a routine part of the

27-member EC’s regulatory review process.

Peggy Gardner, a UPS spokeswoman, said the EC statement “helps to further focus the areas of discussion moving forward” and that it doesn’t “prejudge the outcome.” The EC’s review process comes as the eurozone grapples with a major financial crisis mostly afflicting its southern region. Given the current turbulence, David G.

Ross, transport analyst at Stifel, Nicolaus & Co., surmised that the EC might be loath to approve any transaction that eliminates a competitor from the market. He added, however, that the body rarely vetoes a deal like this one.

UPS said parcel competition in Europe is already brisk because it involves “multiple players who offer similar services.” It added that the combined entity would actually enhance the continent’s competitive landscape by creating a “more efficient logistics market.” ;

Economist predicts slowdown in
2014, then three years of growth

The economy should grow slowly through the first half of next year before retreating into a mild recession in

2014, an economist said at an annual conference in Little Rock, Ark., sponsored by the Hytrol Conveyor Co.

Alan Beaulieu, president and principal of ITR Economics, said he expects a mild recession in 2014, followed by three consecutive years of good growth. Beaulieu said the next serious downturn would likely not occur until around

2019. He added, however, that it would probably not be as severe as the “Great Recession” of 2008–09.

The conference brought together Hytrol’s integration partners. ;

newsworthy

DC space tightens at U.S.
seaports

After a subpar performance for the last four years, the U.S. industrial property market is showing signs of tightening.

The strongest evidence of that is at U.S. seaports, where space is becoming mighty scarce, according to a study by Chicago-based real estate and logistics giant Jones Lang LaSalle. The annual “U.S. Seaport Outlook” analyzes the industrial markets surrounding the nation’s major container ports. According to the report, only 20 parcels of space remain available for those who need at least 250,000 square feet of warehouse and distribution center space within five miles of a major U.S. port.

Vacancies do increase farther away from the ports, according to the study. There are about 60 available parcels of more than 250,000 square feet within a 15- mile radius of a major port, the report says.

Supply is even tighter for “big box” DCs sized at 500,000 square feet or more. There are only nine ready-to-occupy big box facilities within a 15-mile radius of a port anywhere in the country, says the report.

This scarcity of space means that large-scale users in big markets, like Southern California or the New York-New Jersey-Central Pennsylvania region, will either have to outbid other prospective tenants for prime locations near seaports or be willing to ship more goods to inland port destinations, according to the report.

GOING, GOING, GONE

Not only is space tight at the ports but it’s also going fast, according to Steven J. Callaway, senior vice president and head of global customer solutions for San Francisco-based Prologis, the world’s largest industrial property developer. According to Callaway, this holds true not just for the large “Class A” facilities but also for the smaller, less desirable “Class B” facilities.

Speculative (or “spec”) development—a build-it-and-they-will-come model of development—is also on the rise at many ports, according to Callaway.

Spec development had ground to a halt in late 2008 and early 2009 as the global financial crisis and recession coincided with huge amounts of space becoming available from building projects that had been in the works for several years.

But rents have now risen high enough in the Southern California region, home to the ports of Los Angeles and Long Beach, that they have once again sparked spec development—at least where land is available to build on.