The logistics industry continues its consolidation crunch, with the news that Germany's Deutsche Post is in talks to buy British logistics giant Exel. At press time, industry sources reported that Exel had opened its books to Deutsche Post in an effort to move closer to a $6.6 billion deal. The combination would create the world's biggest logistics firm. "We think there are clear scale advantages to be had in freight forwarding and suspect Exel's logistics know-how would be a real positive for the Deutsche Post logistics operation," analysts at CSFB said in a note.

But CSFB also said Deutsche Post would risk overpaying if a second bidder emerged and that second bidder, in most speculators' minds, would be UPS. Some European news agencies report that UPS has hired bankers to look at the issue but UPS has not made any formal statements on its interest in Exel. But UPS is seeing increased competition from Deutsche Post family member DHL in the U.S. market and may use the Exel deal as a way to limit that competition.

dhannon@reedbusiness.com