TNT Express has unveiled a two-year plan to target higher margin business, which includes palletised freight and larger, heavier parcels, and improve its profitability.

TNT has been evaluating its business following the collapse of its proposed merger with UPS in January.

One analyst believes that moving into pallets would be a challenge for the parcel carrier – which saw pre-tax profit in its UK business dip to £3.49m for the year ended 31 January 2011 (2010: £8m) – but will help improve its performance.

Mark O’Bornick, analyst at Analytiqa, told MT: “In a volatile market, commercial flexibility offers opportunities for service providers.

“While TNT won’t want to be ‘all things to all men’, a focus on services and customers that support higher margins will differentiate the firm and help a turnaround in its performance.”

Delivering profit

The profit improvement programme, called ‘Deliver!’ aims to “create a more focused, efficient and profitable TNT Express” between now and 2015.

It is expected to cost €150m (£128m), but is hoped to generate €200m in investments and a €220m reduction in costs by 2015.

TNT said the programme will boost EMEA adjusted operating profit by 8% and increase sales by 2%.

The firm aims to reduce costs by consolidating and creating shared service centres, concentrating depots and hubs within certain regions and improving productivity by changing sort and load activities.

Its current management structure will also be shaken up and regional units will report directly to chief executive Tex Gunning, who will assume his new role on 1 June.

TNT interim chief executive Bernard Bot said: “Successful execution will be critical to improving our performance.”

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