DHL's Big Annoucement on Wednesday

[FAVREFAN]

I've read a few articles back in february and since that FDX may be partnering or taking DHL's freight division. DHL has repeatedly stated that US ground operations are critical to the growth of the company in the future. But who knows, everyone is speculating in here and in the media. Let's wait and see.

[DS]

[quote=coldworld;344384]

Originally Posted by worldwide

"Stock analyst Ed Wolfe predicted on May 16 in a research note that DHL could close as many as 90 to 100 of its U.S. terminals, return to its previous life focusing on international service and outsource local deliveries to trucking firms and the U.S. Postal Service.

Wolfe reported that as early as July DHL could begin closing sort and distribution terminals, which tend to combine ground and air products. DHL's big air hub in Wilmington, Ohio, is likely to survive the cutback.

The analyst also forecast that DHL is likely to partner with USPS for last-mile delivery for small ground shipments, and may rely on YRC Worldwide (parent of Yellow Transportation and Roadway among others), FedEx Freight or other motor carriers for line haul delivery between its remaining terminals and USPS local drop-off centers, known as Destination Delivery Units, or bulk regional centers.

The logical place for DHL to outsource is USPS, he said, because it has the lowest cost and they already have a relationship through the DHL @Home Service to do residential last-mile delivery. Under such a scenario, DHL could concentrate delivery operations in large cities, leaving to its partner smaller cities and rural areas where there is limited business but lots of territory to cover.

Wolfe warned that DHL could soon run into service problems with its most demanding customers. "We believe these restructurings will likely lead to untenable service levels for many current DHL Express and Ground customers, and a material amount of existing DHL Air Express and Ground business will likely move to UPS and FedEx," he wrote May 16.

As it prepares to trim its domestic U.S. network, DHL has recently begun to selectively ask some of its largest customers, who previously negotiated deep discounts, for 10 percent to 15 percent annual rate increases or drop non-profitable accounts that decline to do so, Wolfe said in his research note."

this probably wont fly with most of their customers.....it will be interesting to see what happens.

where did you find this?
I didn't want to just cut and paste it
can you give me the link?

[Mike Hawk]

Wolferesearch.com, unfortunately it’s a subscription service that sends out their reports via encrypted pdf files.

[BrownSuit]

This is from Traffic World Today:

DHL, USPS, FedEx to Cooperate
5/27/2008
Robert W. Moorman
Air Cargo World DHL signed a major air freight agreement with the United States Postal Service.
Deutsche Post World Net plans to announce details of the agreement via webcast from Bonn on Wednesday.
The agreement calls for FedEx to carry some air freight on behalf of the USPS. Sources familiar with the agreement said FedEx will take over some unprofitable air routes initially and increase the service gradually.
DPWN Chief Executive Officer Frank Appel is also expected to announce the closing of a quarter of DHL's U.S. stations and the elimination of hundreds of jobs. DHL is expected to redirect its growth efforts on its international service.
FedEx and DHL declined to comment and the USPS was non-committal about the venture.
In January 2001, FedEx and the Postal Service announced two major agreements. One called for FedEx Express to provide airport-to-airport movement of containers holding around 3.5 million pounds of Priority Mail, Express Mail and First Class Mail. That agreement was modified in 2006 to run through 2013. The other part of the agreement involved the drop off of packages at FedEx Drop Boxes nationwide. The venture is expected to generate approximately $8 billion over the life of the agreement.
The USPS declined to say how much it pays FedEx annually.


This is from Dow Jones Newswire:

US Revamp By DHL May Have Little Impact On Rivals

May 27, 2008: 04:59 PM EST


CHICAGO -(Dow Jones)- The long-awaited plans by DHL to shrink its U.S. package delivery unit, which has lost around $3 billion over the past four years, are expected to provide little short-term lift to rivals.
The global logistics group, part of Germany's Deutsche Post AG (DPW.XE), will unveil the fate of its DHL Americas Express unit after a board meeting Wednesday.
Deutsche Post has, despite acquisitions and heavy investment, failed to loosen the grip of United Parcel Service Inc. (UPS), FedEx Corp. (FDX) and the U.S. Postal Service, or USPS, on the delivering of express documents and packages in the U.S.
DHL's market share in the domestic air express market remains below 10%, and is around 2% for ground services, despite the presence in major cities of its distinctive red and yellow delivery trucks.
While speculation since the start of the year has swirled around a possible sale of the U.S. express unit to FedEx or UPS, antitrust issues would make such a move tricky, according to analysts.
Industry insiders expect Frank Appel, Deutsche Post's new chief executive, to eschew selling or closing the U.S. unit in favor of shrinking its footprint and forging partnerships to serve the markets it exits, notably with USPS.
USPS declined to comment on expanding its existing ties with DHL, but a senior executive said it was in a position to expand rapidly after recently securing regulatory approval to offer commercial pricing and contracts to business customers.
"Yes, we have the capacity to take extra volume," said Gary Reblin, vice president for expedited mail at USPS.
DHL declined to comment ahead of Wednesday's announcement, but industry expectations are that it will close as many as a quarter of its 400 U.S. air and ground terminals.
FedEx and UPS are expected to take up the slack of carrying priority documents and packages to and from airports for shipment, and then on to USPS terminals for "last-mile" delivery to businesses and homes.
Some analysts believe DHL could lose as much as a third of its U.S. business from such a move as customers switch providers to avoid a fragmented supply chain. However, even such a scenario would add only 1% to the expected 2008 earnings of FedEx and 1.2% at UPS, according to analysis by Ed Wolfe at Wolfe Research.
Deutsche Post's Happel has already moved to stabilize the loss-making North American express business, last month appointing Ken Allen to head the operation.
Happel has already indicated that the company plans to retain a substantial U.S. presence to support a global logistics and delivery business that ranks as the largest in the world by revenue.
His comments are validated by a new five-year deal with the Teamsters, covering 10,000 U.S. staff. DHL Express Americas also started offering shipping services last month from Walgreen Co. (WAL) stores, and plans to expand to cover almost all of the company's U.S. outlets by the end of the year, doubling its retail presence.

[MrFedEx]

Excellent information. Since they basically treat us like mushrooms here at Fred's Place, employees will be the last to know anything definitive. If management follows it's usual course, DHL's semi-demise will be used as a propaganda tool to tell us how "great" we've got it.Tomorrow probably won't be a happy day if you're a DHL driver.

Ah it's too bad DHL is doing bad, they are much better than UPS.

[MonavieLeaker]

Originally Posted by ups420

Ah it's too bad DHL is doing bad, they are much better than UPS.

yet your screen name has ups in it?

[scratch]

Originally Posted by ups420

Ah it's too bad DHL is doing bad, they are much better than UPS.

Your logic escapes me. If DHL is much better than UPS, then why are they doing bad?

[moreluck]

When they don't register, I don't pay too much attention to what they post.

[filthpig]

Originally Posted by satellitedriver

They will retreat back behind the Maginot Line and consider their next assault.
JMHO

Don't you mean the Siegrfried Line?

[CFLBrown]

Originally Posted by MonavieLeaker

yet your screen name has ups in it?

He also has '420' in the name. He was probably high when he posted that.

[BLACKBOX]

Even though they will keep their major hubs open thats still a lot of red and yellow trucks sitting idle around the country.

[trplnkl]

Originally Posted by ups420

Ah it's too bad DHL is doing bad, they are much better than UPS.

Now That's funny, I don't care who ya are!

[feederfrankie]

Check it out.

https://ep.ups.com/upsers/myportal/!...dline+17+under

[edd_tv]

Originally Posted by ups420

Ah it's too bad DHL is doing bad, they are much better than UPS.

i wonder what ups will do with that 1 BILLION dollars in revenue from DHL?

[moreluck]

pay for diesel fuel,,,,,,

[moreluck]

Oh yeah, the extra business will help stave off layoffs and help you keep a job.

[BigBrownSanta]

Originally Posted by moreluck

pay for diesel fuel,,,,,,

At the least it lowers UPS's fuel cost by consolidating flights from both companies on the presort end. Plus UPS gets paid to do it which further offsets the fuel cost.

JMO.

[MrFedEx]

Amazing. After all the hype and speculation about FedEx and the USPS, DHL goes with UPS. The AP article I read said that UPS gave them a better deal than FedEx. Given the current downturn in volumes, I cannot help but think this is a great deal for UPS to utilize excess aircraft capacity and another bad move by Fred Smith.

[MonavieLeaker]

http://www.ups.com/pressroom/us/pres...8,5013,00.html



ATLANTA, May 28, 2008 - UPS (NYSE:UPS) today announced it will work with DHL Express U.S. toward an agreement to provide transportation in its air network for all of DHL's express, deferred and international package volume within the United States. UPS also would provide air lift for DHL packages between the United States, Canada and Mexico.

A final contract is anticipated later this year. The agreement, when finalized, would be expected to extend for 10 years and produce up to $1 billion in additional annual revenue for UPS. The company said it would begin phasing in a limited amount of volume in 2008 with ramp up in 2009.
"We believe this arrangement with DHL would represent a wise use of our assets and network capacity while creating a substantial and profitable revenue stream for our company," said David Abney, UPS's chief operating officer. "We plan to move forward quickly on the final contract."
The agreement would not involve the pick-up or delivery of DHL packages to their customers, only the transport of packages, primarily between airports, in North America. As such, the work will be similar to that currently performed by UPS for the U.S. Postal Service.
UPS will be able to handle much of the anticipated new volume in its existing air network, although additional capacity will be added beginning in 2009 upon full implementation. The total amount of capacity needed will be determined at that time; however, UPS is currently scheduled to take delivery of seven new aircraft in 2008 and another five in 2009. The company is also well along on a $1 billion expansion of its UPS Worldport® air hub in Louisville, Ky.
The arrangement with UPS is part of a broader U.S. restructuring announced today by Deutsche Post World Net at a press conference in Bonn, Germany.
"We want to emphasize that this would be a relatively straightforward air lift agreement and that UPS and DHL will continue to compete in the marketplace under their own brands," Abney added. "UPS brings to customers its own unique value proposition. By providing these services to DHL, UPS will not be diminishing its competitive position or ability to differentiate itself with customers."
UPS (NYSE: UPS) is the world's largest package delivery company and a global leader in supply chain and freight services. With a daily delivery volume of 15.8 million packages, UPS offers the broadest portfolio of package delivery services in the industry and an extensive range of other distribution-related solutions. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide and employs more than 425,000 people. The company can be found on the Web at UPS.com. To get UPS news direct, visit pressroom.ups.com/RSS.