Japan Post agrees to sell Toll Global Express business

Summary

  • Japan Post has finally agreed to sell its courier division, Toll Global Express business, to concentrate on Toll’s global logistics services.
  • Toll recorded a net operating loss of A$116 million during June quarter, with loss majorly attributed to poor business performance of Toll Global Express business.
  • The business was impacted because of the reduced demand for its services, especially from retailers as they had to shut their stores.

Japan Post Holding Co is looking for the potential sale of Toll Global Express business, the battered courier division of its Australian logistics subsidiary Toll Holdings Ltd. By selling this business, Japan Post aims to concentrate on making Toll’s global logistics services a leading logistics company operating in the flourishing global logistics services sector.

Toll Group, in its media release, highlighted that the announcement of a potential sale of the Toll Global Express business would not have any impact on Global Logistics and Global Forwarding businesses. While this process continues to be under progress, Toll Group business units would focus on providing services to its customers and would implement the strategy to improve the business performance.

Toll Group aims to solve any challenge related to logistics, transport or supply chain. The business has been operating for over 130 years and has a network spanned across 1,200 locations in 50 countries, served by 44,000 people.

The group has appointed J.P. Morgan and Nomura as financial advisors to manage the sale process.

Reduced demand took a hit on Toll Global Express business

Toll Global Express business operates in Australia and New Zealand and provides services like documents and parcels, consumer and business deliveries, palletised parcel consolidations, exports and imports and eCommerce parcel delivery to Australia

Japan Post decided to sell the courier division after it was unable to rebuild Toll’s domestic business in New Zealand and Australia because of the slowdown in the economy as a result of the COVID-19 outbreak.

Another big reason for the decision to sell the business unit was the significant operating loss of Toll Group in the June 2020 quarter.

During this period, Toll experienced an operating loss of A$116 million, which was mostly because of poor performance by it’s express business which was plagued by weak home delivery business in Australia.

Toll Global Express had been struggling even before the pandemic. The firm’s troubles intensified during the pandemic because of the reduced demand for its services, especially from retailers as they had to shut their stores. Further, there were added challenges because of the faulty information technology system. The business was hit by two cyber-attacks this year.

In 2015, Japan Post had spent 620 billion yen through a subsidiary to purchase the Australian company to flourish its international operations. However, Japan Post incurred a loss of over 400 billion yen in Fiscal year 2016 due to poor performance by the courier division.

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