This came out yesterday-sounds like UPS may be handling ALL DHL packages, not just air, and that DHL is in talks to deliver 50% of DHL's packages in the US!!!
Parcel shipping: FT report indicates DHL may need to delay US restructuring plan by up to eight weeks
Jeff Berman, Group News Editor -- Logistics Management, 9/12/2008
BONN, Germany—A report published by the Financial Times Deutschland indicated that Deutsche Post World Net (DPWN), the parent company of express and logistics services provider DHL, will have to delay its restructuring schedule for DHL Express USA by approximately eight weeks.
DPWN announced its restructuring plan on May 28. It is comprised of:
a ten-year, $10 billion contract with UPS for airlift capacity to reduce its ground infrastructure operations costs (this deal is not yet completed, and the House Committee on the Judiciary held a hearing on it this week focused on competition in the package industry; the House Committee on Transportation and Infrastructure is holding a separate hearing on this matter on Tuesday, September 16);
rationalizing infrastructure by 34 percent by closing and consolidating US stations in low density and remote areas, low density areas in multiple station locations, and nearby stations in multiple station locations;
reducing pickup and linehaul delivery routes by 17 and 18 percent, respectively; and
expanding DHL’s partnership with the United States Postal Service, which will enable DHL to continue delivering to more rural parts of the US, among others.
The FT report indicated that DHL’s US operations, which have long been facing an uphill battle for market share competing against industry titans UPS and FedEx, “have been running worse than expected over the last few months” which is delaying negotiations with UPS. The UPS-DHL contract was originally expected to be finalized by August, industry analysts are suggesting it may take at least another two months, with UPS to commence handling DHL’s airlift for express US domestic and international shipments from airport-to-airport within North America.
One of the main reasons for the contract being delayed, according to the FT, was that DPWN CEO Frank Appel now wants to “reduce DHL’s delivery capacity [in the US] by 50 percent instead of a third as initially intended. As a result UPS might cover part of DHL’s ground deliveries as well.”
An industry source told LM that there have been rumors that a major announcement will be coming from DPWN next week that will announce downsizings at DHL Express USA. The source added that although DHL has outsourced deliveries to the USPS through DHL@home since 1999—roughly a $300 million annually operation geared for business-to-business residence shippers in which shipments are picked up by DHL and delivered directly to consignees by the local post office—“it may have figured out it can get better service and a lower price from UPS Ground than the USPS.
“DHL needs to pick up the pace at which it is right-sizing US operations,” said the source. “They have to rationalize their expenses with their income far more rapidly than they have been doing it [in his Judiciary Committee testimony this week, DHL Express CEO John Mullen said DHL is suffering operating losses of about $5 million per day], and they might have figured out that it might be better to outsource deliveries to UPS rather than the USPS because of better cost and service.”
“Both parties are committed to reaching an agreement,” a DHL spokesperson told LM. “Discussions between DHL and UPS are ongoing and details about the proposed arrangements and the timing of a final agreement are still subject to negotiation and confidentiality requirements. We regret that we are not in a position to provide more details at this time.”
Parcel shipping: FT report indicates DHL may need to delay US restructuring plan by up to eight weeks
Jeff Berman, Group News Editor -- Logistics Management, 9/12/2008
BONN, Germany—A report published by the Financial Times Deutschland indicated that Deutsche Post World Net (DPWN), the parent company of express and logistics services provider DHL, will have to delay its restructuring schedule for DHL Express USA by approximately eight weeks.
DPWN announced its restructuring plan on May 28. It is comprised of:
a ten-year, $10 billion contract with UPS for airlift capacity to reduce its ground infrastructure operations costs (this deal is not yet completed, and the House Committee on the Judiciary held a hearing on it this week focused on competition in the package industry; the House Committee on Transportation and Infrastructure is holding a separate hearing on this matter on Tuesday, September 16);
rationalizing infrastructure by 34 percent by closing and consolidating US stations in low density and remote areas, low density areas in multiple station locations, and nearby stations in multiple station locations;
reducing pickup and linehaul delivery routes by 17 and 18 percent, respectively; and
expanding DHL’s partnership with the United States Postal Service, which will enable DHL to continue delivering to more rural parts of the US, among others.
The FT report indicated that DHL’s US operations, which have long been facing an uphill battle for market share competing against industry titans UPS and FedEx, “have been running worse than expected over the last few months” which is delaying negotiations with UPS. The UPS-DHL contract was originally expected to be finalized by August, industry analysts are suggesting it may take at least another two months, with UPS to commence handling DHL’s airlift for express US domestic and international shipments from airport-to-airport within North America.
One of the main reasons for the contract being delayed, according to the FT, was that DPWN CEO Frank Appel now wants to “reduce DHL’s delivery capacity [in the US] by 50 percent instead of a third as initially intended. As a result UPS might cover part of DHL’s ground deliveries as well.”
An industry source told LM that there have been rumors that a major announcement will be coming from DPWN next week that will announce downsizings at DHL Express USA. The source added that although DHL has outsourced deliveries to the USPS through DHL@home since 1999—roughly a $300 million annually operation geared for business-to-business residence shippers in which shipments are picked up by DHL and delivered directly to consignees by the local post office—“it may have figured out it can get better service and a lower price from UPS Ground than the USPS.
“DHL needs to pick up the pace at which it is right-sizing US operations,” said the source. “They have to rationalize their expenses with their income far more rapidly than they have been doing it [in his Judiciary Committee testimony this week, DHL Express CEO John Mullen said DHL is suffering operating losses of about $5 million per day], and they might have figured out that it might be better to outsource deliveries to UPS rather than the USPS because of better cost and service.”
“Both parties are committed to reaching an agreement,” a DHL spokesperson told LM. “Discussions between DHL and UPS are ongoing and details about the proposed arrangements and the timing of a final agreement are still subject to negotiation and confidentiality requirements. We regret that we are not in a position to provide more details at this time.”
