RampTramp
28th May 2008, 13:20
Hot off the press, the DPWN release regarding the US network -
Bonn, May 28 2008: Deutsche Post World Net, the world’s leading transport and logistics
company, today announced a plan to restructure its DHL U.S. Express business by
working with UPS for airlift capacity and reducing costs in its ground infrastructure. Under
the plan, DHL and UPS have agreed to develop a contract whereby UPS will provide air
uplift for DHL Express U.S. domestic and international shipments within North America. In
addition, DHL will align its U.S. Express infrastructure to existing shipment volumes by
redesigning its ground linehaul network to better match capacity with customer
requirements. The impact on service levels will be minimal with less than 4 percent of
shipments affected. DHL remains focused on delivering international and domestic
Express products, offering an attractive alternative for U.S. customers and keeping a
strong commitment to the U.S. market.
The restructuring plan will lead to sustainable improvements in financial performance and
provide a sound starting point for a more efficient and customer-oriented business in the
future. In 2008, the company expects an underlying EBIT loss of $1.3 billion in U.S.
2/4
Express. Through the expected cost savings of around $800 million in 2010 and around
$1 billion in 2011, underlying EBIT will improve accordingly. First positive effects of the
plan will start showing already in 2009. The company expects to spend up to $2 billion to
finance the restructuring plan. Due to the uncertain economic situation in the U.S.,
Deutsche Post World Net is reducing its guidance for underlying EBIT in the EXPRESS
Corporate Division in 2008 to around 400 million euros from around 500 million euros.
Subsequently, the Group’s full-year guidance before non-recurring effects and
restructuring costs will be reduced slightly by 100 million euros to around 4.1 billion euros.
“We have promised to relentlessly focus on improving financial performance and
delivering on our Roadmap to Value program. I am confident we have found a sustainable
way forward for U.S. Express in the best interest of customers, employees and investors,”
said Deutsche Post World Net Chief Executive Officer Frank Appel at a press conference
in Bonn. “Taking a pragmatic approach, we will go on to be a smarter player in the
challenging U.S. Express market. We will continue to offer premium service to customers
who rely on DHL as the leading network operator across the globe. And we will continue
to leverage our express, logistics and mail offerings, which in combination make DHL
unrivalled as the world’s leading logistics company.”
DHL is taking action both in its infrastructure network and in aviation with a restructuring
plan that focuses on three main elements:
1. Reducing infrastructure network capacity by approximately 30 percent through the
following detailed measures:
o Consolidating and closing smaller sorting facilities into modernized, larger
stations, resulting in reductions of approximately 34 percent
o Rationalizing pickup and delivery routes by 17 percent, including new courier
routing plans to enable better route planning and avoiding peaks in the
operation, as well as making changes to staffing plans
o Ground linehaul network rationalized by 18 percent through improved capacity
utilization and footprint reductions in some remote areas.
2. A proposed contract between DHL and UPS whereby UPS will provide air uplift for
DHL Express U.S. domestic and international shipments within North America
3. Reduction in overhead and other administrative costs
3/4
As one central part of its restructuring activities, DHL and UPS will pursue a contract to
provide air uplift, creating a single airline partner for DHL Express in the U.S. DHL will
continue to operate its courier and ground network as well as pickup and delivery services
to its customers across the country. The proposed agreement, in character and scope
representing an efficient model in the express industry, will extend for 10 years. The
commencement of UPS service into the DHL network is expected to begin later this year.
The proposed contract provides both DHL and UPS substantial economic benefits in the
U.S. Express market, which remains one of the most challenging marketplaces worldwide
in light of the current economic downturn. DHL will continue to compete in the U.S. market
under its own brand, offering attractive value to customers. The restructuring action in no
way diminishes DHL’s commitment to retaining a significant presence in the U.S. market,
which is key to DHL’s global network.
“Our future focus will be where customers have told us they need to do business the most.
Our entire network restructure will enable us to bring a new level of reliability and
increased service performance to our international and U.S. domestic customers while
cutting unnecessary costs such as maintaining infrastructure that customers don’t ask for,”
said John Mullen, Deutsche Post World Net Management Board Member and Chief
Executive Officer of DHL Express.
DHL’s strategic priorities in the U.S. will be to continue to provide record service reliability,
and accelerating growth in more profitable segments of the market through leveraging
innovative sales channel strategies like the recently announced Walgreens partnership. In
addition, DHL will be more selective in accepting business from a small number of
scarcely populated areas and take advantage of capacity and cost reductions to grow a
leaner and more focused ground business.
To drive the implementation of the restructuring plan, DHL recently announced the
appointment of long-time DHL senior executive, Ken Allen, as CEO of DHL Express U.S.
Allen has extensive experience executing restructuring plans within DHL. In his previous
role as CEO of DHL Express Eastern Europe, Middle East and Africa (EEMEA), Allen has
doubled revenue growth and margin within two years. In addition, his experience as CEO
of DHL Express Canada resulted in turning many years of negative performance into what
is now positive financial development for the company.
Bonn, May 28 2008: Deutsche Post World Net, the world’s leading transport and logistics
company, today announced a plan to restructure its DHL U.S. Express business by
working with UPS for airlift capacity and reducing costs in its ground infrastructure. Under
the plan, DHL and UPS have agreed to develop a contract whereby UPS will provide air
uplift for DHL Express U.S. domestic and international shipments within North America. In
addition, DHL will align its U.S. Express infrastructure to existing shipment volumes by
redesigning its ground linehaul network to better match capacity with customer
requirements. The impact on service levels will be minimal with less than 4 percent of
shipments affected. DHL remains focused on delivering international and domestic
Express products, offering an attractive alternative for U.S. customers and keeping a
strong commitment to the U.S. market.
The restructuring plan will lead to sustainable improvements in financial performance and
provide a sound starting point for a more efficient and customer-oriented business in the
future. In 2008, the company expects an underlying EBIT loss of $1.3 billion in U.S.
2/4
Express. Through the expected cost savings of around $800 million in 2010 and around
$1 billion in 2011, underlying EBIT will improve accordingly. First positive effects of the
plan will start showing already in 2009. The company expects to spend up to $2 billion to
finance the restructuring plan. Due to the uncertain economic situation in the U.S.,
Deutsche Post World Net is reducing its guidance for underlying EBIT in the EXPRESS
Corporate Division in 2008 to around 400 million euros from around 500 million euros.
Subsequently, the Group’s full-year guidance before non-recurring effects and
restructuring costs will be reduced slightly by 100 million euros to around 4.1 billion euros.
“We have promised to relentlessly focus on improving financial performance and
delivering on our Roadmap to Value program. I am confident we have found a sustainable
way forward for U.S. Express in the best interest of customers, employees and investors,”
said Deutsche Post World Net Chief Executive Officer Frank Appel at a press conference
in Bonn. “Taking a pragmatic approach, we will go on to be a smarter player in the
challenging U.S. Express market. We will continue to offer premium service to customers
who rely on DHL as the leading network operator across the globe. And we will continue
to leverage our express, logistics and mail offerings, which in combination make DHL
unrivalled as the world’s leading logistics company.”
DHL is taking action both in its infrastructure network and in aviation with a restructuring
plan that focuses on three main elements:
1. Reducing infrastructure network capacity by approximately 30 percent through the
following detailed measures:
o Consolidating and closing smaller sorting facilities into modernized, larger
stations, resulting in reductions of approximately 34 percent
o Rationalizing pickup and delivery routes by 17 percent, including new courier
routing plans to enable better route planning and avoiding peaks in the
operation, as well as making changes to staffing plans
o Ground linehaul network rationalized by 18 percent through improved capacity
utilization and footprint reductions in some remote areas.
2. A proposed contract between DHL and UPS whereby UPS will provide air uplift for
DHL Express U.S. domestic and international shipments within North America
3. Reduction in overhead and other administrative costs
3/4
As one central part of its restructuring activities, DHL and UPS will pursue a contract to
provide air uplift, creating a single airline partner for DHL Express in the U.S. DHL will
continue to operate its courier and ground network as well as pickup and delivery services
to its customers across the country. The proposed agreement, in character and scope
representing an efficient model in the express industry, will extend for 10 years. The
commencement of UPS service into the DHL network is expected to begin later this year.
The proposed contract provides both DHL and UPS substantial economic benefits in the
U.S. Express market, which remains one of the most challenging marketplaces worldwide
in light of the current economic downturn. DHL will continue to compete in the U.S. market
under its own brand, offering attractive value to customers. The restructuring action in no
way diminishes DHL’s commitment to retaining a significant presence in the U.S. market,
which is key to DHL’s global network.
“Our future focus will be where customers have told us they need to do business the most.
Our entire network restructure will enable us to bring a new level of reliability and
increased service performance to our international and U.S. domestic customers while
cutting unnecessary costs such as maintaining infrastructure that customers don’t ask for,”
said John Mullen, Deutsche Post World Net Management Board Member and Chief
Executive Officer of DHL Express.
DHL’s strategic priorities in the U.S. will be to continue to provide record service reliability,
and accelerating growth in more profitable segments of the market through leveraging
innovative sales channel strategies like the recently announced Walgreens partnership. In
addition, DHL will be more selective in accepting business from a small number of
scarcely populated areas and take advantage of capacity and cost reductions to grow a
leaner and more focused ground business.
To drive the implementation of the restructuring plan, DHL recently announced the
appointment of long-time DHL senior executive, Ken Allen, as CEO of DHL Express U.S.
Allen has extensive experience executing restructuring plans within DHL. In his previous
role as CEO of DHL Express Eastern Europe, Middle East and Africa (EEMEA), Allen has
doubled revenue growth and margin within two years. In addition, his experience as CEO
of DHL Express Canada resulted in turning many years of negative performance into what
is now positive financial development for the company.