UPS to take over flying DHL packages in Europe and Asia? [Archive]

Rock_On

29th Jul 2008, 23:06

Pilots file suit against DHL - Atlanta Business Chronicle: (http://atlanta.bizjournals.com/atlanta/stories/2008/07/28/daily47.html?ana=yfcpc)

Tuesday, July 29, 2008 - 5:59 PM EDT
Pilots file suit against DHL

Atlanta Business Chronicle

The Air Line Pilots Association International (http://atlanta.bizjournals.com/atlanta/related_content.html?topic=The%20Air%20Line%20Pilots%20Assoc iation%20International) (ALPA) announced Tuesday it has filed a lawsuit against DHL Holdings USA (http://atlanta.bizjournals.com/atlanta/gen/DHL_Holdings%20USA_86539765E43545E09B54139DAB80E39B.html) on behalf of ASTAR Air Cargo (http://atlanta.bizjournals.com/atlanta/gen/ASTAR_Air%20Cargo_990A794BEA254067B759F3759ED78FF0.html) Inc. pilots.
In a suit filed in the Court of Common Pleas in Clinton, Ohio, ALPA alleges that DHL breached its contract with ASTAR pilots. It also accuses DHL of fraudulent inducement. DHL is owned by Deutsche Post World Net, and its United States operations are based in Wilmington, Ohio.
DHL is in negotiations with Atlanta-based United Parcel Service (http://atlanta.bizjournals.com/atlanta/gen/United_Parcel%20Service_ACD85F0193C649368C9E0A63AC0A27D2.htm l) Inc. (NYSE: UPS) to take over its North American air service from ASTAR Air Cargo, which was formerly DHL Airways.
ALPA alleges DHL is in violation of certain job security assurances under ASTAR pilots’ labor agreement.
The pilots also claim that DHL “fraudulently induced” the pilots union to drop lawsuits against the parcel company by promising job security assurances while the pilots argue the company was in discussions about switching service to UPS, according to a news release.
The pilots union has asked the court to enjoin DHL from switching service to UPS. ALPA also asks for compensatory damages and attorney’s fees.
"We're going to fight this agreement in every way we can-including in the courts," said Capt. John Prater, president of ALPA. "Ten thousand hard-working Americans are depending on us to help save their jobs and communities. DHL has let them down-we won't."
ALPA says 10,000 pilots and other DHL employees will lose their job with the switch to UPS.
An after-hours message left with a DHL spokeswoman was not immediately returned.
Representatives with UPS declined to comment.

hvydriver

30th Jul 2008, 01:10

Yes, we are busy little beavers. It's just a shame we have to file against DHL. What we'd really like to do is file against DPWN. It's all their little game.

Rock_On

30th Jul 2008, 23:12

DPWN owns DHL which owns 49% of ASTAR so isn't this kind of like suing yourself? Wouldn't it make just as much sense for ALPA to file a lawsuit against ASTAR because because DHL dropped ASTAR?

I guess I don't understand what you guys are tring to achieve, force DHL to continue losing money? Maybe the state of Ohio could subsidize DHL USA?

I wish you guys good luck with your futures, but I have a feeling you guys are fighting an uphill battle and the hill is rather steep if not vertical.

hvydriver

30th Jul 2008, 23:25

I'm rushed for time Rock, but the short answer is, no, it's not like suing yourself. It's suing one of your owners with a seat on your BOD to honor the contract that was negotiated, and had to wait on DHL for approval. It is indeed an uphill battle, but the stated reasons DPWN has made for their reasons to go with UPS are at best, a flat out lie. We'd sue DPWN if we had the legal recourse, but we have to go through DHL. You are right in that it is an uphill battle, but it is one we're going to fight till the end through any legal means necessary. Political, lawsuits, public pressure, etc.

Rock_On

31st Jul 2008, 21:14

Hvydriver, thanks for the info! Looks like DPWN does not appear to be change course yet.

Bloomberg.com: Worldwide (http://www.bloomberg.com/apps/news?pid=20601087&sid=aFH0N8I_3j0o&refer=home)

Deutsche Post Profit Falls 11% on DHL U.S., Postbank
By Jann Bettinga
July 31 (Bloomberg) -- Deutsche Post AG (http://www.bloomberg.com/apps/quote?ticker=DPW%3AGY), Europe's biggest mail carrier, said second-quarter profit fell 11 percent on costs to revamp the DHL Express division's U.S. unit and after writedowns hurt earnings at Deutsche Postbank AG.
Net income fell to 254 million euros ($396 million), or 21 cents a share, from 285 million euros, or 24 cents, a year earlier, Bonn-based Deutsche Post said in a statement today. Sales rose 5 percent to 16.2 billion euros.
Chief Executive Officer Frank Appel (http://search.bloomberg.com/search?q=Frank+Appel&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) forecast in May that the DHL U.S. express-delivery unit will suffer a loss of $1.3 billion this year as a slowing U.S. economy hurts demand for air shipments and the business struggles to compete with United Parcel Service Inc. and FedEx Corp. Postbank, the retail bank Deutsche Post may sell, reported yesterday a 21 percent drop in quarterly profit due to writedowns on debt-related investments.
``The reorganization in the U.S. is a big issue,'' Jochen Rothenbacher (http://search.bloomberg.com/search?q=Jochen%0ARothenbacher&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Equinet in Frankfurt, said today. ``It will remain very, very difficult'' for the postal operator's U.S. express-delivery business, he added.
Deutsche Post fell (http://www.bloomberg.com/apps/quote?ticker=DPW%3AGY) 45 cents, or 2.9 percent, to 15.09 euros in Frankfurt trading. The stock has declined 36 percent this year.
The company announced plans in May to limit losses at the U.S. express-delivery operations by shrinking the network, firing workers and transferring air deliveries to Atlanta-based UPS. The revamp will cost the mail carrier $2 billion through 2009, it forecast at the time. Appel said today the unit's reorganization is ``on track'' and that talks with UPS over a final contract are making satisfactory progress.
Postbank Sale
Deutsche Post is in talks with ``various potential partners'' about a possible sale of Postbank, Appel also told reporters today, adding that the postal operator hasn't yet decided if or when the business would be sold. ``We will not sell Postbank hastily,'' and Deutsche Post is under no pressure, the CEO said. ``The appetite for major acquisitions is limited,'' he said on a conference call with analysts today.
Deutsche Post, which owns 50 percent plus one share of Postbank, announced June 25 it's holding ``exploratory'' talks about a disposal of the lender as it focuses on mail, express- deliveries and logistics.
Postbank said yesterday that second-quarter net income fell to 119 million euros from 151 million euros a year earlier after writing down the value of securities by 143 million euros. The quarter's markdowns bring Postbank's total losses related to the U.S. subprime-mortgage-market collapse to 429 million euros. Earnings before interest and taxes at Deutsche Post's financial services unit, which comprises the Postbank holding, dropped 26 percent to 185 million euros in the quarter.
Postbank's Value
Postbank may fetch 9 billion euros to 11 billion euros, Carsten Werle (http://search.bloomberg.com/search?q=Carsten+Werle&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Sal. Oppenheim in Frankfurt, wrote to investors this month. The bank has a market value of about 7.5 billion euros after the stock dropped 25 percent this year.
Reorganizing the U.S. express-delivery business cost the postal service 47 million euros in the quarter, causing Ebit at the Express unit to drop 52 percent to 31 million euros. The division is facing a ``weakening economic environment'' in the U.S., with customers switching to cheaper express-delivery shipments, Deutsche Post said, echoing statements from competitors such as UPS.
Appel today stuck to a full-year target that Ebit, excluding one-time costs or gains, will reach about 4.1 billion euros, provided there's no ``significant worsening'' of the global economy. The figure is expected to rise to about 4.7 billion euros in 2009, he said, repeating an earlier target.
Higher Dividends
The postal operator anticipates raising dividends ``broadly in line with underlying earnings in coming years,'' it said today. That corresponds to an average annual increase of about 10 percent, Deutsche Post added.
UPS, the world's largest package-delivery company, reported on July 22 a 21 percent drop in second-quarter net income as fuel costs rose and the cooling U.S. economy damped domestic shipments. FedEx, the second-biggest shipper of packages in the U.S., reported its first quarterly loss in 11 years on June 18 because of rising fuel costs and a writedown on its Kinko's copy shop unit. FedEx said earnings are ``difficult to predict'' because of volatile fuel prices and an ``uncertain economic outlook.''
Deutsche Post bought DHL in 2002, adding a global express- delivery service to its network. The company expanded U.S. operations with the purchase of Airborne Express in 2003 and hasn't made a profit in the country since then. Deutsche Post said in May the U.S. business will continue losing money at least through 2011.
Previous turnaround efforts at DHL have been hampered by delivery delays in 2005 at a new package-sorting hub in Wilmington, Ohio. Deutsche Post scrapped a 2009 breakeven target for the U.S. division last year and wrote down the value of the unit by 594 million euros in the fourth quarter.
To contact the reporter on this story: Jann Bettinga (http://search.bloomberg.com/search?q=Jann+Bettinga&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Frankfurt at [email protected] ([email protected]).

hvydriver

31st Jul 2008, 21:30

Yes, we saw that. DPWN will most likely not change its mind on this course. Airline operations however aren't the reason for the massive losses in revenue they have been experiencing. It's the ground delivery network that has caused that. Late/lost/stolen material on an unbelieveable scale. Loads have dropped tremendously in the past year. Now with the DHL/UPS announcement, they are falling through the floor.

Rock_On

1st Aug 2008, 00:59

Seems like DHL is in big time trouble in the US!

From what I see DPWN basically tried to make DHL profitable by cutting costs, using independent contract drivers and sacrificing customer service, instead of investing to expand the ground network. To further gain market share DHL wooed low margin customers and as reliability faltered even these customers started jumping ship.

Further more, gross mismanagement, for example rushed shifting of the entire DHL sort to Wilmington, coupled with stiff competition from UPS and FedEx as well as lack of ground infrastructure appears to have contributed to DHL’s demise.

Your post now clarifies for me that the flying part (ABEX and ASTAR) are not the culprits of DHL’s problems in the US except for slightly dated equipment.

What you write about rapidly falling volume levels, is to me is an indication that the DHL USA operation is imploding. DPWN is basically pulling the plug on a money losing operation. From what I have read, DHL USA appears to be past the point of no return and the company can be equated to a crumbling house of cards. With rising fuel prices it now makes even more sense for DHL to shift volume to UPS since it is not justifiable to keep flying half empty airplanes in their own system and also pay for a sort. The model they are adapting appears similar to TNT’s relationship with FedEx, where FedEx delivers packages in the US for TNT.

Even if ABEX/ASTAR were to keep flying for DHL, the root cause of DHL’s problems have not been addressed so the question really becomes; is DPWN willing to cough up billions of dollars to start from scratch and build new infrastructure in the US and go toe to toe with UPS and FedEx in an economy that is not firing on all cylinders?

Again, good luck guys!

Rock_On

1st Aug 2008, 16:01

Rumor has it that FedEx has been seen in Wilmington and is interested in purchasing the automated sort equipment and move it to their new sort facility in Greensboro, NC. Any truth at all to this? I really hope for you guys that this is a bogus rumor.

hvydriver

1st Aug 2008, 16:27

According to DHL management, it is a bogus rumor. It doesn't really matter much if they do purchase it or not. DHL in the US is done. We're carrying joke loads now. As one would expect, given the stellar leadership at DPWN.

layinlow

1st Aug 2008, 17:22

And you believe management? Shame, shame!

hvydriver

1st Aug 2008, 18:05

This guy I'd believe. I've played golf with him for 20 years. Let's keep the anger focused on where it needs to be. DPWN.

Rock_On

2nd Aug 2008, 20:53

I am also hearing that DPWN is interested in dumping the 49% stake it has in Polar.

Any chance Atlas at the request of DPWN would sell the Polar -400s since Atlas does not have money to cash out DPWN? This would generate cash for Atlas to purchase ABX if they so desire. With Atlas possibly about to go Teamsters http://atlasforteamsters.com/ and ABX already being Teamsters this might work!

I however don't see any potential buyers for Astar and I think they are soon be history. Again, this is just pure speculation on my part. The airline business is a cruel business where luck plays an important part.

hvydriver

3rd Aug 2008, 00:45

Got me Rock. That's getting way out in left field there.

Rock_On

3rd Aug 2008, 01:52

Seems like DHL might be having some second thoughts about their restructuring.

Deutsche Post Kills Huge HP Outsourcing Deal
The parent company of DHL decided not to proceed with the multibillion-dollar deal after determining the expected cost savings weren't there, <i>InformationWeek</i> has learned.

By Mary Hayes Weier, InformationWeek (http://www.informationweek.com/;jsessionid=VGITPML4JDT32QSNDLPCKH0CJUNN2JVN)
Aug. 1, 2008
URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=209901551 (http://www.informationweek.com/story/showArticle.jhtml?articleID=209901551)

Deutsche Post World Net has backed out of a planned IT outsourcing (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=outsourcing&x=&y=) megadeal with Hewlett-Packard worth billions of dollars, InformationWeek has learned.
Deutsche Post, the German logistics company and parent to DHL, chose not to finalize the contract after a six-month review found the "benefits, particularly in the early years, do not outweigh the risks," according to an internal memo.
It's a considerable blow to HP, which has had limited success winning IT services megadeals. HP plans to propel itself into the IT services big leagues via the pending acquisition of EDS for $13.9 billion.
The dropped outsourcing deal called for HP to hire 2,500 Deutsche Post employees, including those working for DHL. It included taking over the operations and management of data, infrastructure, networks, and software (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=software&x=&y=) running in data centers in Scottsdale, Ariz.; Prague, the Czech Republic; Malaysia; and other regions.
Although the companies didn't make the contract size public in January, when they announced the signing of a letter of intent, they said Deutsche Post would save at least 1 billion euros over seven years by outsourcing IT and expected to reach a "definitive agreement" with HP by the middle of 2008.
Analysts had lauded the significance of the deal. In a January research note titled, "HP-Deutsche Post Agreement May Herald Fresh Outsourcing Wave," Gartner analyst Claudio Da Rold wrote that the planned deal signified that the "threat of a recession means outsourcing providers may see a period of intense activity as companies race to sign similar deals."
But the cost savings apparently weren't there. In a July 18 e-mail (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=e-mail&x=&y=) to employees, Stephen McGuckin, IT services managing director at Deutsche Post, wrote that the deal had fallen through partly because it wasn't going to bring Deutsche Post the expected savings.
During the past six months, "both companies have learnt much about the challenges, risks and benefits of the proposed outsourcing. More significantly ... [Deutsche Post] IT Services continued to improve its cost position, increased the number of services delivered while also maintaining service levels. Simply put, during the six months of the evaluation, our improving cost position made HP's job that much harder and their cost reduction target that much more difficult to achieve."
McGuckin added that the decision is "not a reflection of HP's merits as a service provider; it is a vote of confidence in [Deutsche Post] IT Services and our track record of service delivery." McGuckin and other Deutsche Post officials could not be reached Friday morning.
However, there were other issues at play, according to sources within Deutsche Post that requested anonymity. HP was having some difficulty negotiating with IBM -- a staunch IT services competitor -- for acceptable prices on existing IBM server (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=server&x=&y=) and mainframe (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=mainframe&x=&y=) software and support in the data centers, they claim. Also, some employees raised concerns about HP's compensation packages.
InformationWeek was unable to get a response from HP or Deutsche Post about these claims Friday.
HP did confirm Friday that the deal was off, but said it's still working with the company. "The [Deutsche Post] and HP teams working on the project identified a number of areas where optimization can be achieved without outsourcing at this time," an HP spokesperson said in an e-mail. "As a result, [Deutsche Post] IT services will continue to retain responsibility for all day-to-day services while working with HP's support to deliver the savings through a series of transformation projects." The companies have a "strong relationship" and "jointly agreed to revisit the situation if and when appropriate at a future time," the spokesperson added.
HP, meanwhile, should get into big IT outsourcing deals via the planned EDS acquisition. If the deal goes through, EDS will give HP blue-chip customers like American Airlines, Bank of America, and Royal Dutch Shell. The combined services revenue for EDS and HP last year was $38 billion, compared with $54 billion for IBM. Earlier this week, EDS said that Europe's antitrust watchdog agency had OK'd the deal. On Thursday, EDS said a majority of its shareholders voted in favor of the acquisition.

Beaver_Driver

3rd Aug 2008, 05:06

penguin22

3rd Aug 2008, 08:51

"After more than a decade of cohabitation, UPS assumed full control of its activities in Korea in June, acquiring partner Korea Express's 40 percent share in the joint venture the pair had run since 1996.

The integrator and its Korean partner continue to work together feeding traffic to one another, but the deal gives UPS full autonomy to chart its course in an Asian country with a vibrant economy and a strong interest in promoting logistics and connections to China."

http://www.aircargoworld.com/regions/pacific_0808.htm (http://www.aircargoworld.com/regions/pacific_0808.htm)

Rock_On

3rd Aug 2008, 12:40

UPS: No 'significant' cargo flights from DHL until 2009 (http://www.daytondailynews.com/b/content/oh/story/business/2008/08/02/ddn080308dhlinside.html)

UPS: No 'significant' cargo flights from DHL until 2009

UPS says it needs an agreement first then work can begin on a new operational plan for Wilmington hub.

By John Nolan
Staff Writer

Sunday, August 03, 2008
One of the big questions about DHL's proposal to hire United Parcel Service to fly its express delivery packages nationwide is how soon it will start taking away jobs from Wilmington, from where the ABX Air and ASTAR Air Cargo airlines now fly DHL's U.S. cargo.
Ohio officials estimate that a DHL shift to UPS will cost at least 8,000 jobs at DHL's Wilmington air freight hub, a major regional employer. A UPS spokesman said it could be "well into next year" before any changes are noticeable.
DHL said on May 28 that it hoped to work out a contract with UPS within three months and to start making changes in DHL's delivery network beginning later this year.
But that timetable may be unrealistic, because of the complexities of negotiating a deal and putting it into effect, UPS spokesman Norman Black said. UPS is unlikely to begin flying significant amounts of DHL cargo until well into 2009, Black said in a telephone interview last week from his Atlanta office.
"Bottom line is, we expect to be able to negotiate an agreement by the end of this year," Black said. "We, as a vendor, can't build a new operational plan for them until we've got an agreement, until they share information with us about their network and their package flows."
Lt. Gov. Lee Fisher said DHL hasn't given Ohio any new information about the timetable for the proposed deal with UPS.
Fisher made a personal visit to the U.S. Department of Justice in Washington on July 10 to explain Ohio's position that a DHL deal with its rival UPS would reduce competition in the U.S. express delivery market and potentially violate antitrust laws designed to promote competitive markets. If regulators agree, the federal government could join Ohio in a possible antitrust lawsuit against DHL, or Ohio could go it alone under the state's own antitrust law, Fisher said.
Fisher said Justice Department officials told him they had started collecting information about the proposed DHL-UPS deal, but could not start any antitrust investigation until DHL and UPS have a deal in place.
"We are being relentless in our efforts to explore how we can stop this transaction, on multiple fronts," Fisher said.
Ohio would be willing to work with DHL on ways to help reduce its operating costs, but only if the company backs away from the UPS deal and commits to staying in Wilmington, Fisher said. DHL has said it is committed to a deal with UPS.
With the Bush administration scheduled to relinquish power in January 2009, Ohio officials have covered their bases by also bringing their concerns about DHL and the Wilmington jobs to the attention of both major-party presidential candidates, Fisher said. Republican John McCain plans to go to Wilmington in early August for a campaign trip to DHL. Democrat Barack Obama recently met with Wilmington's mayor and workers at DHL.
Ohio has also asked the U.S. Department of Transportation to consider using its authority, independent of an antitrust case, to stop the proposed UPS-DHL deal on grounds it would have negative effect on the U.S. shipping market. Ohio is awaiting responses from both federal agencies.
DHL and UPS say there is no antitrust issue and no need for any government approval. They say it would be a customer-vendor arrangement, similar to DHL's current contracts under which ABX Air and ASTAR Air Cargo fly DHL packages nightly from Wilmington. Replacing ABX and ASTAR with UPS would shift the cargo sorting and flying work to UPS' hub at Louisville, Ky.
DHL projects a $1 billion loss on its U.S. cargo operations this year, but says it needs to continue operating in the United States as a key part of its global delivery network. DHL has forecast that hiring UPS would reduce DHL's U.S. losses to $900 million in 2009, $500 million in 2010 and $300 million in 2011.
DHL said it would also save money by reducing its U.S. delivery network capacity.
"The purpose of our restructuring plan is to build a stronger foundation for sustained operations in the U.S.," Jonathan Baker, a DHL public relations representative, wrote in an e-mailed answer to a reporter's questions. "To do this, a new operating model is required — one that is better matched to the current economy and existing volumes.
"Both rising fuel prices and the downturn in the U.S. economy have had a significant impact on our operations and on the nature and timing of our restructuring plans," Baker wrote.

Ohio's support for DHL in Wilmington
Here is Ohio's accounting of its direct funding contributions in recent years to support expansion and improvements at DHL's Wilmington air freight hub:
Job retention tax credit, valued at $66 million.
Job creation tax credit, 90 percent for five years and 70 percent for 10 years, valued at $13 million.
Rapid outreach grant, up to $2 million.
Training grant, up to $2 million.
Road improvement grant, $1 million.
Dayton-Montgomery County Port Authority sold $270 million in bonds in support of the hub improvement.
The Ohio Department of Transportation is building a $99 million highway bypass project designed to support regional economic department. The project's initial emphasis was DHL's needs, but the state says the new route is still needed to reduce truck traffic through Wilmington and noise in residential neighborhoods. Construction is to be complete by early 2011.
Source: Ohio Department of Development

Contact this reporter at (937) 225-2242 or [email protected].

dusk2dawn

5th Aug 2008, 08:31

Senators Seek Antitrust Probe Of UPS/DHL Plan (http://news.airwise.com/story/view/1217883450.html)

hvydriver

5th Aug 2008, 12:35

Here is a cut and paste of the full letter for those who might want to see it:

August 1, 2008

The Honorable Thomas Barnett

Assistant Attorney General

Antitrust Division

United States Department of Justice

950 Pennsylvania Avenue, N.W.

Washington, D.C. 20530

The Honorable William E. Kovacic

Chairman

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

Dear Assistant Attorney General Barnett and Chairman Kovacic:

On May 28, 2008, DHL Express US (“DHL”) and United Parcel Service, Inc. (“UPS”) announced their intention to enter into a contract where UPS will become, for ten years, the exclusive provider of air transportation for DHL’s North American package delivery service. As the Chairman and Ranking Republican Member of the Senate Antitrust Subcommittee, we believe that this proposed agreement raises important antitrust and competition issues that should be examined carefully by the Department of Justice (“Department”) or the Federal Trade Commission (“Commission”).

UPS and DHL are, respectively, the second and third largest overnight package delivery services in the United States. Therefore, if consummated, DHL will become reliant for air transportation on one of its two major competitors. This raises the question if DHL will still be able to effectively compete against UPS, since UPS will now have a large role in determining the cost and quality of DHL’s services. In addition, we presume that such a relationship would also require DHL to adopt UPS’s package tracking, labeling and hub distribution systems. Whether, and how, DHL packages will receive priority should UPS planes fill to capacity is another concern raised by this deal. As a result, some critics of the proposed agreement contend that DHL will become a captive of UPS, rather than an independent competitor. Further, having only two airlines providing national airlift capacity for overnight package delivery could raise the risk of serious economic disruption should service on one of these two airlines be reduced due to unforeseen difficulties, such as a strike, maintenance issues, weather disruptions or other similar disruptive events.

It has been reported that the parties are close to finalizing this agreement. The prospect of a quick ratification is equally disconcerting since the proposed contract will have a devastating financial impact on DHL’s current air transport providers, ABX Air and ASTAR and these airlines’ base of operations, southern Ohio.

It should be noted that we have not reached a conclusion as to the legality of this proffered transaction under the antitrust laws. However, due to the issues raised above and urgency of this matter, we respectfully request that the antitrust agencies initiate an investigation into this arrangement immediately.

Thank you for your consideration of this matter.

Sincerely,

______________________***********************

HERB KOHL ORRIN G. HATCH

Chairman, Subcommittee on Ranking Member, Subcommittee on

Antitrust, Competition Policy Antitrust, Competition Policy, and

and Consumer Rights Consumer Rights

413X3

5th Aug 2008, 20:43

When will companies realize that outsourcing does not save you money, it just allows the managers to do less managing while making the same or getting bonuses. It just takes a liability off your books and gives it to another company. You still are paying around the same for the same services.

Rock_On

8th Aug 2008, 02:30

So who will MCCain help out this time? DPWN, UPS, Fred Smith, Teamsters or ALPA? My money is on DPWN and UPS since his campaign manager can give him all the details the way DPWN wants him to hear it.

Denied:1up! Software (http://wnewsj.com/main.asp?FromHome=1&TypeID=1&ArticleID=168321&SectionID=49&SubSectionID=156)

McCain's campaign chair former DHL lobbyist

GARY HUFFENBERGER ([email protected])
Staff Writer

Wednesday, August 06, 2008

One day before today’s Wilmington visit by Sen. John McCain concerning the prospect of massive job losses at the DHL Air Park, The Plain Dealer reported McCain’s presidential campaign chairman formerly was a lobbyist for DHL.
In 2003, Rick Davis lobbied the Senate to go along with DHL’s acquisition of Wilmington-based Airborne Express, reported The Plain Dealer.
The news immediately prompted a Wednesday morning press conference call, held by the Ohio Democratic Party and featuring comments from U.S. Sen. Sherrod Brown (D-Ohio).
“We have a major public official in this country that was part of this deal four years ago, five years ago, that’s just stayed quiet,” Brown said of McCain, the Republican candidate for president. Brown said McCain “helped broker the deal” when DHL bought Airborne Express, based on the Cleveland newspaper report.

Brown said he questions why McCain has not mentioned his DHL connection and why Davis has not stepped forward and said he knew executives with DHL and its parent company Deutsche Post World Net.

“We’re trying everything, yet McCain and Davis have stayed silent when they know people at Deutsche Post World Net,” said Brown of the effort to stop a proposed contract between DHL and United Parcel Service (UPS).

McCain spokesman Paul Lindsay characterized the Ohio Democratic Party’s response to The Plain Dealer report as one that politicizes the air park situation.

“John McCain is visiting Wilmington to hear firsthand the challenges facing working families in the community. Rather than try to politicize and take advantage of Wilmington’s struggle, Barack Obama should explain how his support for the failed tax-and-spend policies of the past will create any jobs in this state,” Lindsay wrote in an e-mail sent out after Brown’s conference call.

In reply to a question from the press, Brown said he’s not accusing McCain of a conflict of interest in the DHL matter.

“I’m personally calling on John McCain to send Rick Davis to Germany to use his considerable clout with DHL, to use his long-term connections with DHL, to use his … connections there to help save these 8,200 jobs in southwest Ohio,” said the junior senator from Ohio.

According to The Plain Dealer report by Stephen Koff, who is the paper’s Washington Bureau chief, Senate records show Davis’ lobbying firm was hired to help DHL cope with Congress where there were objections to DHL’s foreign ownership. DHL is owned by the German-based corporation Deutsche Post.

In 2003, when DHL purchased Airborne Express for $1.05 billion, Davis and a partner earned the lobbying firm $185,000 on work for DHL, wrote Koff. During 2004 and 2005, Davis and the partner earned an additional $405,000 on lobbying work for Deutsche Post, the newspaper report said, attributing the numbers to Senate records.

In the conference call with the press, Brown said he and Ohio Gov. Ted Strickland spoke with Democratic presidential candidate Sen. Obama “at length” Tuesday on a campaign trail bus ride between Youngstown and Cleveland.

According to Brown, Obama asked “What else can I do?” concerning the air park matter.

Brown added Obama is “very interested” in helping with the antitrust components of the issue.

Brown took a jab at McCain’s comment in Portsmouth last month when McCain gave little hope of stopping the proposed deal between DHL and UPS, and instead emphasized retraining of the workers who would lose their jobs.

“Well, job retraining is not going to provide all these jobs in, you know, its six counties,” Brown said of the regional reach of air park-based workers.

McCain is scheduled to be in Wilmington today for a private meeting with a cross section of local people to hear about the potential loss of 7,400 to 10,000 jobs if DHL closes its air freight operations at the air park.

Rock_On

8th Aug 2008, 02:33

Dems Web ad highlights McCain's involvment with Wilimington DHL - OPENERS - Ohio Politics Blog by The Plain Dealer (http://blog.cleveland.com/openers/2008/08/dems_video.html)

Dems Web ad highlights McCain's involvment with Wilimington DHL

Posted by Christine Jindra/The Plain Dealer (http://blog.cleveland.com/openersabout.html) August 07, 2008 11:39AM

Categories: Democratic Party (http://blog.cleveland.com/openers/democratic_party/), McCain (http://blog.cleveland.com/openers/mccain/), Presidential candidates (http://blog.cleveland.com/openers/presidential_candidates/)

The above Ohio Democrate Web Web ad: "Stand Up" criticizes John McCain's involvement in trying to protect jobs at the DHL-Airborne facility in Wilmington, Ohio.
The Ohio Democratic Party released a Web ad today that contrasts John McCain's aggressive personal intervention in the Senate on behalf of a foreign shipping company with what it says is his unwillingness to intervene just as aggressively with DHL as 8,000 Ohio jobs hang in the balance .
The ad features video of McCain's exchange in early July with a woman at a town hall in Portsmouth, Ohio and reporting from The Plain Dealer and cleveland.com.
The Democratic Party noted that on the eve of McCain's visit today to DHL-Airborne Express in Wilmington, Stephen Koff, The Plain Dealer's Washington Bureau chief, reported (http://blog.cleveland.com/openers/2008/08/dhl.html)that McCain's campaign manager and longtime friend Rick Davis lobbied on behalf of DHL to overcome Congressional opposition to allowing a foreign company to take over Airborne, and that McCain himself intervened to ensure that the deal went through.
The story on Tuesday said that filings in the Senate show Davis' lobbying firm, Davis Manafort, was hired to help both companies deal with Congress, where objections over DHL's foreign ownership arose. Davis and a partner earned their firm $185,000 for the DHL-Airborne Express work that year, records show.
Previous stories: • Brown to McCain: Send your manager to Germany for DHL help (http://blog.cleveland.com/openers/2008/08/sherrod_brown_to_mccain_send_y.html). (Aug. 6)
• McCain had role in original Wilmington DHL deal (http://blog.cleveland.com/openers/2008/08/dhl.html) (Aug. 5)
• Obama, McCain showing interest in fate of Wilmington (http://blog.cleveland.com/openers/2008/07/wilm_follow.html) (July 29)
•"Wilmington air park a symbol of what's at stake in 2008 presidential election" (http://blog.cleveland.com/openers/2008/07/wilmin.html) (with video, July 26)

They earned $405,000 more from Deutsche Post for work on other issues in 2004 and 2005, after the deal passed Congress.
When DHL and its German owner, Deutsche Post World Net, acquired the Wilmington operations, the merger resulted in expansion, not retraction of jobs. "At the time of the merger, no one anticipated an impact on jobs in Wilmington," McCain spokesman Brian Rogers said.

Asked to respond to the Democratic video, McCain spokesman Paul Lindsay said this afternoon, "John McCain is meeting with the community in Wilmington today to hear their concerns, not Barack Obama."
Several other Republicans in the last day have weighed in in support of McCain's efforts to help Wilmington.
Congressman Mike Turner of Dayton issued a statement saying:
"John McCain's visit to Wilmington shows that the possible next President of the United States takes the issue of the proposed DHL/UPS plan and the job losses that would follow very seriously.
" ....Our local, state, and federal leaders have worked together on a bipartisan basis to respond to DHL's plan and we look forward to working with Senator McCain" and ... his "stated support for the Ohio Delegation'sefforts to make certain the transaction is reviewed by several federal and state agencies for any potential violations of applicable law."
U.S. Sen. George Voinovich last night issued a lengthy statement :
I am pleased that my good friend John McCain is coming to Southwest Ohio to discuss the possible DHL hub closure in Wilmington. His concern for the region and the dramatic impact the proposed closure will have demonstrates what we in Ohio have known: that closure of this facility would be devastating to Wilmington and the entire region.
"The attention the DHL proposal has drawn by both Presidential campaigns serves to confirm the urgency of this situation this is one of the worst job catastrophes that any community in this nation is facing. This is not just a local issue, but has an international dimension because many of us believe that in order for us to have a positive impact we aregoing to need some involvement by the German government. I commend the Mayor of Wilmington, the Clinton County Commissioners, Governor Strickland and other state and regional leaders who have been working to save these 8,000 plus jobs since the announcement in May.
"John McCain recognizes that providing assistance to the workers and families in the region must have a dual-track approach. He supports the efforts by the Mayor, County Commissioners, Governor and the entire Ohio delegation to keep these jobs in the region. At the same time, he has also supported state and federal efforts to ensure that worker and
community assistance efforts are mustered in preparation for the potential loss of thousands of jobs in the Wilmington area.
"I will continue to work with the entire Ohio Congressional Delegation to support all efforts to assist the workers in the Wilmington area and save this facility."
In the meantime, The Justice Departmentis looking to see if there are antitrust implications in the matter, which involves plans by DHL Express to close its air hub outside of Wilmington. DHL wants to use a rival, United Parcel Service, in Louisville, Kentucky, to fly its packages city-to-city.
DHL, owned by the German Deutsche Post, maintains there are no anti-competitive issues in the deal. Although it would stop its own air hub operations outside Wilmington, between Columbus and Cincinnati, DHL would not get out of the delivery business. Instead, it would use UPS for one phase of delivery --air -- but still pick up and deliver its packages by truck and van.

This is the script for the Web ad, "Standup."

Woman: I hope that you're aware, I'm sure you are aware that DHL is closing that airpark in Wilmington. We will lose 8,600 jobs. Will you call for Senate hearings to investigate the DHL-UPS joint venture? (Editor's note: The woman is Mary Houghtaling, of Wilmington, who drove to a McCain campaign appearance in Portsmouth last month to ask the senator for help.)

McCain: I have been briefed, and read about this situation.
CHRYON: "McCain and his campaign manager, Rick Davis, played roles in the fate of DHL Express and its Ohio air park as far back as 2003." Cleveland Plain Dealer, 8/6/2008
McCain: I've got to look you in the eye and give you some straight talk; I don't know if I can stop it or not. Or if it will be stopped it. So I have to tell you that. Some straight talk.
CHRYON: "Those jobs are on the chopping block because Sen. McCain and his campaign were involved in a deal that resulted in control of those positions being shifted to a foreign corporation." - Joe Rugola, president of the Ohio AFL-CIO
McCain: In fact, some more straight talk: I doubt it.
CHRYON: The firm of Rick Davis, John McCain's campaign manager earned $185,000 lobbying for foreign ownership, and $405,000 after the deal passed Congress. Cleveland Plain Dealer, 8/6/2008
CHRYON: Tell John McCain it's time to stop the same old Washington politics and stand up for Ohio jobs.

Rock_On

8th Aug 2008, 02:40

I can't wait to watch this Senate hearing on CSPAN. Maybe the US government can subsidize DHL in the US. Anything to get votes in a swing state. Can aybody tell me if the DHL ground workers in the US are unionized? As far as I know all UPS ground workers are Teamsters.

McCain wants Senate hearing and more on DHL - OPENERS - Ohio Politics Blog by The Plain Dealer (http://blog.cleveland.com/openers/2008/08/mccain_wants_senate_hearing_an.html)

McCain wants Senate hearing and more on DHL

Posted by Stephen Koff (http://blog.cleveland.com/openersabout.html) August 07, 2008 18:02PM

http://blog.cleveland.com/openers/2008/08/large_dhlemployees.jpgAP Photo/Mary Altaffer DHL employees hand Republican presidential candidate, Sen. John McCainsigned petitions during a visit to the Kelly Center Thursday in Wilmington.
GOP presidential candidate John McCain told civic and government leaders in Wilmington, Ohio, that he will seek a Senate hearing as soon as Congress comes back from a five-week break on the antitrust implications of DHL's planned contract with competitor United Parcel Service. McCain also pledged during the meeting in Wilmington this afternoon that he would do everything legally and constitutionally possible to keep DHL from eliminating more than 8,000 jobs in the small community. But he also told about 30 people in the meeting that in the end, he did not know if he could stop what he called a "train wreck."
Several participants of the closed meeting in a room at Wilmington College, where the windows were covered, apparently to keep people from looking in, said the much-anticipated gathering stayed positive and apolitical. The subject of McCain's campaign manager, Rick Davis, and his lobbying for DHL from 2003 to 2005 did not come up, they said.
McCain also said he would call for the chief executive of DHL's German-based owner, Deutsche Post World Net, to come to Wilmington and explain first-hand why the company wants to end its air hub operation there.

penguin22

8th Aug 2008, 07:03

I can't wait to watch this Senate hearing on CSPAN. Maybe the US government can subsidize DHL in the US. Anything to get votes in a swing state. Can anybody tell me if the DHL ground workers in the US are unionized? As far as I know all UPS ground workers are Teamsters.

I agree! Congressional hearings?? Are you kidding me?? GREAT FUN!!! You'll never get the US gov't to subsidize DHL, but who knows what we'll learn form those hearings! I'll bet Bonn never saw this coming!

To answer your question, some of the DHL ground workers in major cities in the US are former Airborne Express workers, and most of them are Teamsters. ABX pilots are also Teamsters. So I don't think you'll see the Teamsters take a stand on the UPS side.... there's enough Teamsters on the former Airborne Express side (mainly ABX pilots) to prevent that.

McCain's campaign chair former DHL lobbyist......
Rick Davis was just another lucky break. (The first... this being an election year with Ohio a swing state) The Rick Davis news forced McCain to take a stronger stand in Ohio than he otherwise would have.

Now Obama, the Democrat, will have to take an even stronger stance on "save the jobs", because that's what Democrats do. Otherwise he'll chance losing Ohio, which is key to winning the White House.

If we truly get the Congressional Inquiry that McCain now proposes, who knows what we'll all learn about this mess! DPWN express division logs a profit of over a billion, while claiming it lost a billion in the US. Yeah, right! There's been systematic elimination of all express carriers in the US ever since DPWN bought DHL. Maybe we'll find out how that really happens.

layinlow

8th Aug 2008, 12:09

Congressional hearings are nothing more than a feel good exercise. Nothing will come out of it but the snake oil salesmen can say "We tried, we really did". If anyone will stop this it will be the Federal Trade Commission or some other bureaucratic commission.

Rock_On

8th Aug 2008, 13:31

From the amount UPS spends in lobbying, I guess it's wise not to underestimate the power of Brown.

UPS spent more than $1.3M lobbying in 2Q: Financial News - Yahoo! Finance (http://biz.yahoo.com/ap/080808/ups_lobbying.html?.v=1&printer=1)

UPS spent more than $1.3M lobbying in 2Q
Friday August 8, 9:20 am ET UPS spent more than $1.3 million lobbying federal government in second quarter

WASHINGTON (AP) -- UPS Inc., the world's largest shipping carrier, spent more than $1.3 million in the second quarter to lobby on issues including its proposal to carry some air packages for DHL, according to a recent disclosure form.
The Atlanta-based company, also know as United Parcel Service, lobbied on the reauthorization of the Federal Aviation Administration, appropriations for the departments of Transportation and Housing and Urban Development, as well as legislation dealing patent reform, data security and health care policy.
UPS also lobbied on aviation safety issues and technology, and UPS' "proposed airlift agreement with DHL," according to the form posted online July 16 by the House clerk's office.
UPS announced on May 28 that it was seeking to work out a contract with DHL that would mostly involve the transport of DHL packages between airports in North America -- not the pickup or delivery of DHL packages to customers. UPS has said the deal, which it hopes to complete by the end of the year, is similar to its existing agreement with the U.S. Postal Service.
UPS said the deal, when completed, will add up to $1 billion in annual revenue for UPS. DHL is the struggling U.S.-based express shipping unit of German postal service Deutsche Post AG.
The deal could be a significant blow to DHL's current vendors for the air shipments UPS is seeking to take over. Thousands of jobs could be lost in Ohio, where some officials are trying to scuttle the deal.
Two U.S. senators have asked the Justice Department and the Federal Trade Commission to review the proposal. They argue the deal raises competition concerns. UPS has asserted that the federal government does not have authority over the vendor relationship.
Besides Congress, the company lobbied the departments of Transportation, Homeland Security, Labor and other agencies in the April-June period.

hvydriver

8th Aug 2008, 14:04

>Today's WSJ, pg. A5. Things are getting interesting.<

Criticisms of Plans
To Shut DHL Hub
Echo Sen. Obama's

By ALEX ROTH and ELIZABETH HOLMES
August 8, 2008; Page A5

WILMINGTON, Ohio -- Republican presidential candidate John McCain on Thursday jumped onto a populist, anticorporate bandwagon, appearing before workers expected to lose their jobs in the planned shutdown of a large DHL air cargo hub here, and promising to use government powers in an effort to prevent the loss-plagued company from slashing jobs.

Echoing criticisms expressed by his Democratic rival, Illinois Sen. Barack Obama, Sen. McCain called for a congressional hearing and an antitrust investigation into plans by global express delivery giant DHL to outsource much of its U.S. operations to shipping heavyweight United Parcel Service Inc.

Then Sen. McCain one-upped Sen. Obama, suggesting that Frank Appel, the chief executive of Deutsche Post AG, the German parent of DHL, be pressed to visit Wilmington and personally confront the more than 8,000 workers expected to lose their jobs should the contract between UPS and DHL take effect. "It's more than appropriate," Sen. McCain said, for Mr. Appel "to come in and to talk to the individuals whose lives are being affected."

While U.S. politicians more commonly decry the loss of American factories or jobs to overseas companies, the brouhaha around DHL has led both Republican and Democratic presidential candidates to criticize a business contract that will actually result in a U.S. business taking over much of a foreign company's North American operations.

In recent days, Sen. McCain has been criticized by Democrats and local unions in this pivotal electoral state for his support five years ago of DHL's $1.05 billion acquisition of Airborne Inc., then the struggling No. 3 express delivery company in the U.S. behind FedEx Corp. and UPS. As part of the deal back then, DHL acquired Airborne's main air cargo operation, based in Wilmington, and thousands of the company's workers there. Sen. McCain's presidential campaign manager, Rick Davis, also worked at the time as a private lobbyist for DHL. Sen. McCain's and Mr. Davis's support for the 2003 deal was earlier reported by the Cleveland Plain Dealer this week.

In the past five years, DHL expansion in the U.S. soured, and the company lost billions of dollars. In May, the company announced a retrenchment, including plans to outsource most of its air cargo operations in the U.S. to rival UPS, eliminating about 8,000 Wilmington jobs.

Meeting with two dozen community members in a building on the campus of Wilmington College on Thursday, Sen. McCain promised to "do everything in my power" to avert the loss of jobs.

Sen. McCain listened quietly as Mary Houghtaling, president of a local hospice facility, tearfully described the impact the job losses could have on Wilmington, a town of about 12,000 people.

"The schools within the area are going to lose an untold amount of tax revenue, services to retired folks will be in jeopardy, the ability to provide basic human service such as fire, EMS and police would be in question," she said. "Our county hospitals will not be able to survive...never before have so many people been abandoned at once, it is inconceivable."

Controversy over the proposed deal between UPS and DHL flared as soon as it was announced in May. Last week, Senators Orrin Hatch, a Utah Republican, and Herb Kohl, a Wisconsin Democrat, wrote a joint letter urging the Bush administration to conduct an antitrust investigation. Sen. Obama issued a letter calling on regulators "to examine the transaction to ensure that it is not in violation of antitrust laws."

Sen. McCain said the inquiries "should proceed with the highest appropriate standards of review." The White House subsequently appointed an official to look into the matter.

"Such arrangements have been common in the transportation industry for some time and are not subject to prior regulatory approval," DHL said in a written statement Thursday. DHL said it couldn't comment on Sen. McCain's call for its CEO to visit workers in Ohio.

UPS spokesman Norman Black says the deal between the companies is a simple "vendor" contract under which UPS will transport packages for DHL, like any other customer.

"There is no partnership, no merger, no joint venture," Mr. Black said. "It's a little surprising that anybody could realistically look at this and argue that it raises antitrust issues."

hvydriver

8th Aug 2008, 14:07

>If we truly get the Congressional Inquiry that McCain now proposes, who knows what we'll all learn about this mess! DPWN express division logs a profit of over a billion, while claiming it lost a billion in the US. Yeah, right! There's been systematic elimination of all express carriers in the US ever since DPWN bought DHL. Maybe we'll find out how that really happens.<

Not trying to split hairs P, but DPWN made profits of 6 Billion. Also, did you know that DHL Express US has to pay DHL to help with expenses in LEJ and HKG? There is all kinds of money moving around to various places.

penguin22

8th Aug 2008, 17:37

Congressional hearings are nothing more than a feel good exercise. Nothing will come out of it .....
Maybe, maybe not. Usually there's nothing to expose. But if there's dirty laundry hidden away...

Rock_On

8th Aug 2008, 20:11

To answer your question, some of the DHL ground workers in major cities in the US are former Airborne Express workers, and most of them are Teamsters. ABX pilots are also Teamsters. So I don't think you'll see the Teamsters take a stand on the UPS side.... there's enough Teamsters on the former Airborne Express side (mainly ABX pilots) to prevent that.

I just took a look at the Teamster website and it appears the ratio is 16 UPS Teamsters for every DHL Teamster. I am inclined to believe that Hoffa is not going to create too much noise in this case, but I may be wrong. After all UPS is his bread and butter. I would think the #1 item on his agenda is to unionize the FedEx workers.

Teamsters in the DHL System = 12,500+
There’s strength in numbers and by building your union with the Teamsters, you’ll join more than more than 12,500 workers at DHL Express, ABX Air and throughout the DHL system—and some 250,000 workers in the package-sort-delivery industry—who are proud Teamsters.
Teamsters in the DHL System (http://www.teamster.org/resources/dhlsystem/teamstersinthedhlsystem.asp)

Teamsters in the UPS System = 200,000+
The Teamsters Package Division serves more than 200,000 members throughout the United States. United Parcel Service is the single largest employer in the Teamsters Union, and the Division is responsible for ensuring that management abides by the National Master Agreement.
Teamsters Parcel and Small Package Division (http://www.teamster.org/divisions/parcel/parcel.asp)

hvydriver

8th Aug 2008, 22:23

>The first in what will probably be quite a few hearings.<

Committee on Transportation and Infrastructure
transportation.house.gov

Hon. James L. Oberstar (Minn.), Chairman
For Immediate Release, Friday, August 8, 2008

Committee to Hold Hearing on UPS-DHL

Air cargo carriers' 'strategic alliance' to be reviewed

WASHINGTON—A “strategic alliance” announced earlier this year between air cargo giants UPS and DHL will be the subject of a hearing before the House Committee on Transportation and Infrastructure when Congress returns in September.

The hearing was announced today by Committee Chairman James L. Oberstar (Minn.), and was requested by the Ohio Congressional delegation.

“Just as I have opposed additional consolidation in air passenger service, I have serious concerns about the UPS-DHL alliance. My concerns include the transaction’s effects on service, costs, consumer choice, and jobs,” Oberstar said. “This alliance is likely to eliminate two cargo air carriers, ABX and ASTAR, which now serve DHL and compete with UPS. This would lessen, or even eliminate, competition between UPS and DHL in providing overnight package delivery services.”

The letter requesting the hearing, signed by all 18 Members of Congress from Ohio, said that the alliance could cost as many as 8,000 jobs in their state.

Rock_On

9th Aug 2008, 00:15

I just found the following website Bad Decision (http://www.savethejobs.org/) and noticed the reference to the DHL airplane that recieved a missle hit in Baghdad. Can anybody tell me if this was an Astar or ABX Air airplane? I am assuming Astar since I don't think ABX Air operates Airbuses.

In 2003 on a mission for the Department of Defense, shortly after takeoff from the Baghdad Iraq Airport. A DHL aircraft was struck by an anti-aircraft missile.

The crew survived.

Ask yourself this question, under the new management of today do you think Deutsche Post/DHL or UPS would put their greed before the lives of American fighting men and women?

hvydriver

9th Aug 2008, 00:23

It was neither. It was an EAT crew out of BRU. They also fly the A300B4 out of there. Those boys did a heck of a job!

Rock_On

9th Aug 2008, 00:26

Another question I have is; What are the chances UPS could take over the entire sort in Wilmington and fly UPS airplanes in and out of Wilmington for a combined DHL/UPS sort? UPS could then shut down one of their other regional sorts, either PHL or RFD and at the same time save thousands of jobs. Politicians would be happy, DHL would be happy, UPS would be happy and most of the Wilmington ground employees would be happy too except Astar and ABX Air pilots who would lose out big time. Personally I think a better option for UPS/DHL might be to establish a sort in CVG since it is closer to Louisville and more people to hire from in that area. CVG would also be a great reliever airport for Louisville.

Rock_On

9th Aug 2008, 00:58

It was neither. It was an EAT crew out of BRU. They also fly the A300B4 out of there. Those boys did a heck of a job!

Thanks, I didn't see that mentioned on the website! Isn't UPS is in CRAF too? I think UPS does a lot of flying for the military and are not most UPS pilots ex-military?

Further more, I am having a hard time understanding the intent of the following question quoted below. As far as I know UPS has always been a very patriotic Company more than willing to always help out the military. I understand military charters are very profitable and companies like to do them since fuel is paid for both ways by the military.

Ask yourself this question, under the new management of today do you think Deutsche Post/DHL or UPS would put their greed before the lives of American fighting men and women?

hvydriver

9th Aug 2008, 01:13

On the troops question, the suggestion is that by eliminating two carriers that fly for the DOD, (Astar and ABX) DPWN is putting greed before the US national security. Which, since they are a German company, I'd suspect they give not one whit about. You sure do ask a lot of questions. This is work. ;) Mind if I ask who you work for?

Opsisgr8t

9th Aug 2008, 08:15

You may be overlooking the fact that DHL has a very large operation set up in Bahrain to support the US forces by operating in excess of 20 flts per day moving the mail etc for those troops into several locations in Iraq and Afghanistan :hmm:

This is the same operation which involved the A300 mentioned above - an operation which despite a shootdown and countless other incidents DHL has continued to operate and support constantly since July 2003 to this day.

None of which has anything to do with Astar or ABX by the way.... :=

hvydriver

9th Aug 2008, 14:27

>You may be overlooking the fact that DHL has a very large operation set up in Bahrain to support the US forces by operating in excess of 20 flts per day moving the mail etc for those troops into several locations in Iraq and Afghanistan

This is the same operation which involved the A300 mentioned above - an operation which despite a shootdown and countless other incidents DHL has continued to operate and support constantly since July 2003 to this day.

None of which has anything to do with Astar or ABX by the way.... <

Interesting, Opsisgr8t. Could you perhaps explain to me how a non-US carrier is able to operate US Mail segments under DOD contract?

Rock_On

10th Aug 2008, 01:39

Looks like DPWN is planning on doing it the "TNT way" in North America, Canada and Mexico. I am not aware of TNT using dedicated airplanes in the US, so if the #4 integrator in the world isn't forced to fly their own volume (dedicated TNT airplanes), why should DHL be forced to do so???

http://group.tnt.com/annualreports/annualreport07/downloads/tnt-annual-report-2007-chapter03.pdf

Express Rest of the World
The Express Rest of the World business provides door-to-door
express delivery of documents, parcels and freight worldwide in
all areas outside Europe and from these areas to Europe. TNT’s
worldwide coverage extends to more than 200 countries. TNT
is also building its position in Asia and has further improved
service levels between Asia and Europe.
Express Rest of the World operates in a way similar to that of
TNT’s Express Europe business line, but relies primarily on
airlift by commercial passenger airlines for linehaul
transportation links. However, in many of the countries TNT’s
global Express services are augmented by domestic and regional
express delivery services.

In North America, TNT provides international Express
services in 15 of the top metropolitan areas. Building on its
own delivery network in the North-east business corridor,
TNT continues to improve next-day delivery services to major
business centres, including New York, Washington D.C.,
Chicago and Toronto.

hvydriver

10th Aug 2008, 01:59

Like I asked before Rock On, who do you work for?

Day_Dreamer

10th Aug 2008, 10:27

Rockon
The Baghdad aircraft was owned and operated by European Air Transport (Belgium) with an all Brussels based flight crew.
They carried out an almost impossible approach and landing and received the credit they deserved.

DHL Air, EAT Belgium and now EAT Germany operate a mixed fleet of B.757's and A 300 aircraft shortly adding 3 B.767-300ER to the DHL Air operation.

As for the Willmington hub closure and the transfer of the flights to UPS, while I feel extreemly sorry for those who will loose their jobs ( I have been there 3 times) I must say that this has been caused by the eternal quest for the big profit which has caused management to forget people in favour of the accountants year end figures..

The losses from the US operation has been used in Europe to minimise pay rises below inflation for the workers.
Yet significant profits have been made, which do not reflect in the average mans pay packet going to the management bonuses instead.

DPWN / DHL is a worldwide operation and losses from a particular sector need drastic rectification, and that is what happened.
Agreements with the airlines and unions (US) I know nothing about but maybe a positive cost cutting exercise would still not of saved the operations in their current form.
There has never been dialog with senior management at DPWN level so a shut down based purely upon cost was the logical decision.

The answer would have been long ago a worldwide pilot representation to the DPWN board.
Now its too little too late.

Whilst I do not agree that you all roll over and give up the fight, I must be realistic and say that you have very little hope of a reprieve, even with government pressure being brought to bear.
With the presidential change in the USA soon and with it administrative changes the time frame is against any reversal of the decision before its implemented.

My feelings are to the families who will have to suffer and will need support.
Yet where did the god of the big buck originate ? you cant blame another operator from whatever country following the US example.

Recession is upon us and jobs will be very hard to come by so every effort to keep those jobs I support.

Good Luck you will need it.

Rock_On

10th Aug 2008, 15:49

Looks like there may be movement in the purchase of TNT by UPS. If this deal does happen the combined European market share for UPS/TNT will be a whopping 17+8 = 25%! This would be 9% bigger than DHL. I don't think UPS can risk letting TNT go to FedEx.

http://group.tnt.com/annualreports/annualreport07/annual_report/chap-2.html (http://group.tnt.com/annualreports/annualreport07/annual_report/chap-2.html)
TNT has the highest market share in Europe (17%), followed by DHL (16%), UPS (8%) and La Poste (7%).

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/10/cnups110.xml (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/10/cnups110.xml)

UPS plots bid for TNT

By Louise Armitstead and Ben Harrington
Last Updated: 10:56pm BST 09/08/2008

America'a biggest delivery giant United Parcel Service (UPS) is plotting a €10bn (£7.8bn) bid for Dutch rival TNT, a move that could herald the long-awaited consolidation in the global express-delivery business.
UPS has made an informal approach to TNT, its European rival and one of Royal Mail's biggest competitors in Britain. Despite initial reluctance from TNT, early-stage talks about a potential tie-up have been held in recent days, The Sunday Telegraph has learned.
Soaring fuel costs have hit global courier businesses hard. The share prices of the main firms - UPS and FedEx in American and TNT and DHL in Europe - have suffered in recent months, making consolidation both cheaper and compelling.
UPS, which has a market value of $66.24bn and dominates the American delivery market with rival FedEx, has appointed investment bank Morgan Stanley as adviser.
The American company has also brought in strategy consultants AT Kearney to carry out a detailed report on a potential deal with TNT.
Insiders said that AT Kearney has now finished its report and delivered to Morgan Stanley, whose bankers are now spearheading discussions with TNT.
TNT, which is being advised by Goldman Sachs, serves more than 200 countries and employs 161,500 people. The firm, which is listed in Amsterdam and has a market value of €9.6bn, last year reported €11bn in revenues and an operating income of €1,192m.
Both UPS and FedEx have eyed TNT's parcel business for several years but are said to have been put off bidding for the firm because of its slower-growing postal division.
Sources said that UPS' plans to buy TNT could include selling its postal division, possibly to a private equity buyer. It may instead decide to team up with a buyout firm. It is thought CVC, the European buyout giant, could be interested because it already owns stakes in Belgium postal operator De Post-La Post and Post Danmark, a Danish postal company.
A deal with TNT would deliver to UPS substantial cost savings as well as a vast European reach - something it has been trying to slowly build up in recent years. The company recently forged closer ties to TNT's main rival, DHL, through its agreement to ferry the Deutsche Post unit's packages between North American cities.
Sources close to the situation said discussions were being held about the future management of a UPS tie-up with TNT. The American firm is run by Scott Davis, who joined UPS in 1986. Ben Verwaaayen, former chief executive of telecoms group BT, also sits on the board of UPS alongside Rudy Markham, the former chief financial officer of Unilever.
The Dutch target is led by Peter Bakker, who has been chief executive since 2001.
The industry's biggest deal was done three years ago when Deutsche Post - which owns the DHL express service - acquired Exel, the UK-based logistics group, for £3.7bn.
On Friday, TNT's shares closed at €25.36, valuing the business at €9.6bn.

Rock_On

10th Aug 2008, 17:52

Further more I wouldn't be surprised if Warren Buffet i.e. Berkshire Hathaway participates in the financing of a potential TNT purchase by UPS. Berkshire Hathaway already holds a small position in UPS (1,429,200 shares) and very recently helped finance the acquisition of two other companies, namely;

Wrigley by Mars
Wrigley - Investor Relations - News Release (http://investor.wrigley.com/phoenix.zhtml?c=92701&p=irol-newsArticle&ID=1135540&highlight)=
Funding for the transaction includes approximately $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman, Sachs, and $4.4 billion of subordinated debt from Berkshire Hathaway, Inc. At closing, Berkshire Hathaway has committed to purchase a minority equity interest for $2.1 billion in the Wrigley Company subsidiary at a discount to the share price being paid to the stockholders of Wrigley.

and

Rhom and Haas by Dow Dow Acquires Rohm and Haas, Creating Worldâ€™s Leading Specialty Chemicals and Advanced Materials Company (http://news.dow.com/dow_news/corporate/2008/20080710b.htm)
Financing for the acquisition includes an equity investment by Berkshire Hathaway and the Kuwait Investment Authority in the form of convertible preferred securities for $3 billion and $1 billion respectively.

Rock_On

10th Aug 2008, 23:35

What appears rather ironic is that if both the DHL and TNT deals happen, DHL will be providing UPS with a large chunk of the money (USD 10 Billion) towards the purchase of TNT. Also when/if upcoming antitrust hearings happen the focus might just suddenly shift from the DHL deal to the TNT deal because the DHL deal will look like chump change in comparison, at least if the agenda actually remains true antitrust concerns versus job losses in Wilmington.

Rock_On

11th Aug 2008, 02:24

Links to Chinese UPS 2008 Olympic ads. Seem pretty well done even though I don't understand a word of what they are saying.

Dow Jones Single Title Player (No Content) (http://link.brightcove.com/services/player/bcpid452319854?bctid=1716487703)

Dow Jones Single Title Player (No Content) (http://link.brightcove.com/services/player/bcpid452319854?bctid=1716456143)

Rock_On

11th Aug 2008, 13:07

Not so fast..

UPS looks to China for M&A, downplays TNT talk | Deals | Reuters (http://uk.reuters.com/article/innovationNews/idUKHKG5659020080811)

UPS looks to China for M&A, downplays TNT talk

Mon Aug 11, 2008 11:48am BST
BEIJING (Reuters) - Top global logistics firm United Parcel Service hopes to buy a firm in China and boost staff there in coming years, and said on Monday that paying billions for rival TNT would devalue its own shares.
UPS, a bellwether of the U.S. economy along with rival FedEx Corp, last month posted earnings in line with expectations but hit by rising fuel costs and a weak economy.
Trying to drive growth beyond a U.S. market that accounts for more than half its revenue, UPS will be opening two $180 million transport hubs in China and wants to nearly quadruple its staffing there in the next few years, hoping to serve growing demand for delivery services within a relatively untapped market.
"U.S. consumers are not buying, but I think the great opportunity for us internationally is business that never touches U.S. shores.," Dan Brutto, the president of the company's international business, told Reuters in an interview on Monday.
A TNT deal is "something that devalues our shares", he added. "But we always look at different things and try to fit into the puzzle."
Shares in TNT, Europe's No. 2 mail and logistics firm, leapt more than 6 percent on Monday after a Sunday Telegraph report that UPS was planning a 10 billion euro ($15.2 billion) bid.
UPS has doubled its headcount in China over the past 18 months to around 5,300, but expects that number to increase by at least 1,000 annually over the next 3-4 years, said Brutto.
It's now looking for acquisitions within the world's fourth largest economy, despite fears that Chinese growth will taper off over 2008 and 2009.
"You could say UPS China should really have 25,000 employees. The business is out there," Brutto said.
($=6.85 yuan)
(Reporting by Michael Wei and Kirby Chien, editing by Edwin Chan)

org

11th Aug 2008, 15:43

Question: how does a non us carrier operate for USPS?

They sub through Kalitta, but I'm not sure why it matters.

layinlow

11th Aug 2008, 16:10

It makes sense that UPS would want to be in China. Fed Ex bought a Chinese company and I am sure UPS will counter.

hvydriver

11th Aug 2008, 16:50

Actually Org, they also sub quite a lot through Astar Air Cargo. Without a US air carrier as route authority, those flights you're saying have nothing to do with Astar would not move. That's the point I'm getting at.

Opsisgr8t

12th Aug 2008, 05:38

Hvydriver

Kalitta are contracted by USPS to fly the material to the Middle East (BAH). DHL are subcontracted to perform the remaining part of the service and have been doing so for 5 years. :ok: no secret there either.....

Astar/ABX have nothing to do with this contract...

Astar did operate a schedule for a while but that was to supplement the core business uplift from BRU after the A300 daily flight was dropped due to lack of volume. After that Astar did some DOD flying through BAH, however again, that was not linked to the USPS contract..... :8

hvydriver

12th Aug 2008, 11:38

Opsisgr8t,

As you say. There are several DOD flights that are brokered by Astar for DHL. This is fact. There may be some that are done by Kalitta as well.

Rock_On

12th Aug 2008, 15:21

That is about as clear as it gets unless someone can prove otherwise. Alternatives appear rather slim.

Deutsche Post CEO defends proposed U.S. job cuts - Forbes.com (http://www.forbes.com/afxnewslimited/feeds/afx/2008/08/12/afx5312250.html)

Thomson Financial News
Deutsche Post CEO defends proposed U.S. job cuts
08.12.08, 4:29 AM ET

http://images.forbes.com/media/assets/spacer_white.gifhttp://images.forbes.com/media/assets/spacer_white.gif
FRANKFURT (Thomson Financial) - Deutsche Post World Net AG. chief executive Frank Appel defended planned job cuts at the company's U.S. DHL business, insisting in response to criticism voiced by U.S. politicians that the reductions are needed to turn the division around.
'There's no real alternative. Otherwise we would threaten our entire express operations in the United States, and at the end of the day many more jobs (than currently) would be at stake,' he told Frankfurter Allgemeine Zeitung.
Appel added that DHL is losing $5 million per day in the U.S.
Deutsche Post is in talks with United Parcel Service Inc. (nyse: UPS (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=UPS) - news (http://www.forbes.com/markets/company_news.jhtml?ticker=UPS)- people (http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=UPS)), to which it would like to outsource its U.S. air express services, while it is also restructuring its ground express services to reduce annual losses of some $1.3 billion to $300 million by 2011.
The plans involve the closure of a logistics hub at Wilmington, Ohio, while threatening up to 8,000 jobs at airline ABX.
Both U.S. presidential candidates, Democrat Barack Obama and Republican John McCain, have voiced antitrust concerns over the planned cooperation between DHL and UPS.
Appel said both companies would remain strong competitors, even though UPS provides services to DHL. He added that talks with local authorities and unions on severance packages are ongoing, but provided no details.
DHL's U.S. business has posted unspecified losses since entering the market in 2004 in the face of tough competition from incumbents UPS and FedEx Corp. (nyse: FDX (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=FDX) - news (http://www.forbes.com/markets/company_news.jhtml?ticker=FDX)- people (http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=FDX)) Its market share is estimated at below 10 percent.

[email protected]

Rock_On

12th Aug 2008, 18:12

“When the economy does rebound, mail volume may not return to previous levels,” said Postmaster General John Potter. “This requires that we significantly accelerate process improvements and the realignment of resources in order to achieve long-term financial success. Failure to do so will threaten our ability to meet our mission of providing universal service at affordable prices.”

The above quote means; We have hired consultants to evaluate the cost structure of the U.S. Postal Service. Possible cost savings include cancelling Saturday delivery of mail which will result in corresponding layoffs.

I wonder what Obama and McCain will do about that? From what I am hearing, anybody with less than 6 years seniority with the U.S. Postal Service may be in jeopardy of losing their job. At least no DPWN to blame in this case.

USPS News Release: Postal Service Reports Third Quarter Loss as Economic Slowdown Continues to Affect Mailing Industry (http://www.usps.com/communications/newsroom/2008/pr08_080.htm)

Postal Service Reports Third Quarter Loss as Economic Slowdown Continues to Affect Mailing Industry

On-Time Mail Delivery at Record High

WASHINGTON, DC — The U.S. Postal Service ended its third fiscal year quarter (April 1 – June 30) with a greater-than-expected net loss of $1.1 billion. The national economic slowdown reduced mail volume at an accelerated pace and continued inflation in fuel prices produced rapidly escalating transportation costs. Despite these financial challenges, Postal Service employees delivered record-breaking service performance in the third quarter.
For the third quarter ending June 30:

Operating revenue was $17.9 billion, a decrease of $437 million, or 2.4 percent, compared to the same period last year.
Operating expenses totaled $19.0 billion, an increase of only $178 million, or 1.0 percent, from the third quarter last year, despite substantial increases in fuel prices.
Expenses include $1.4 billion of the $5.6 billion payment to the Postal Service Retiree Health Benefits Fund that the Postal Service is required to make by Sept. 30, 2008, under the Postal Accountability and Enhancement Act of 2006.
Mail volume was 48.5 billion pieces, a 5.5 percent drop from the same period last year. First-Class Mail and Standard Mail volume were each down 5.5 percent in the third quarter, reflecting the challenging economic environment. The fiscal 2008 year-to-date net loss totals $1.13 billion. The Postal Service had essentially broken even in the first half of the fiscal year. With no economic recovery in sight, the Postal Service expects an end-of-year, economy-driven net loss.
“When the economy does rebound, mail volume may not return to previous levels,” said Postmaster General John Potter. “This requires that we significantly accelerate process improvements and the realignment of resources in order to achieve long-term financial success. Failure to do so will threaten our ability to meet our mission of providing universal service at affordable prices.”
Record-Breaking Service Performance
In the third fiscal quarter, on-time delivery performance reached record highs for all three categories of First-Class Mail the Postal Service tracks. Overnight service was 97 percent on-time, up from 96 percent the same period last year. Two-day service was 95 percent on-time, up from 93 percent the same period last year. Three-day service was 94 percent on-time, up from 91 percent the same period last year.
“These outstanding results show the tremendous dedication of our employees to provide excellent customer service, especially as we continue to work with our unions to further reduce costs and increase efficiency,” said Potter.

Rock_On

12th Aug 2008, 19:42

UPS Garbles Delivery Of TNT Lines - Forbes.com (http://www.forbes.com/2008/08/11/tnt-ups-update-markets-equity-cx_ll_0811markets19.html?partner=yahootix)

UPS Garbles Delivery Of TNT Lines
Lionel Laurent (http://javascript<b></b>:fdcBioWindow('lionellaurent')), 08.11.08, 3:35 PM ET

LONDON -
Shares of the Dutch mail company TNT had a very volatile Monday, after United Parcel Service's head of international operations was mistakenly reported to have poured cold water over hopes of a takeover bid.

Shares of TNT (other-otc: TNTTY (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=TNTTY) - news (http://www.forbes.com/markets/company_news.jhtml?ticker=TNTTY)- people (http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=TNTTY)) closed down 1.0%, to 25.11 euros ($37.41), in Amsterdam, after initially rising on reports that it was in discussions with American rival UPS (nyse: UPS (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=UPS) - news (http://www.forbes.com/markets/company_news.jhtml?ticker=UPS)- people (http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=UPS)). But according to TradeTheNews (http://www.tradethenews.com/?forbes), the chief executive of UPS International said that buying a company would "devalue" its own shares.

A UPS spokesperson contested the quote, which first appeared in a Reuters report published at around midday. She would not say why or how the executive, Dan Brutto, had been misquoted; in any case, the dramatic 11.1% plunge in TNT shares during midday trading was all but recovered by market close.
Later, Reuters withdrew the article, saying it "accepts that the UPS executive was not commenting specifically on reports that TNT and UPS were in talks."

This is not the first time the Dutch firm has been linked to an American rival. TNT's stock had a particularly wild July, jumping 43.6% in two weeks, on rumors of interest from Federal Express (nyse: FDX (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=FDX) - news (http://www.forbes.com/markets/company_news.jhtml?ticker=FDX)- people (http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=FDX)). TNT shares are now down 28.7% from their peak last year.

"From a fundamental view, TNT is worth more than 30.00 euros ($45.06) per share," said Phillip Scholte, analyst with Rabo Securities, adding that a takeover premium could push an offer into the territory of 41.00 to 42.00 euros ($61.59-$63.07) per share. That would value the company at around 15.0 billion euros ($22.5 billion) .

That price gap may be the very obstacle that prevents a deal with either TNT or FedEx, despite the strategic logic behind such a tie-up. Both UPS and FedEx issued quarterly profit warnings this summer, showing the two companies were struggling with record fuel costs and a significant downturn in the American economy.

Although TNT has strong European exposure and has resisted commodity prices better by focusing on road transport rather than air freight, it may not want to sell itself at a time when potential buyers are not looking to overspend on an acquisition. (See "FedEx's Face Saver." (http://www.forbes.com/markets/2008/07/14/tnt-fedex-delivery-markets-equity-cx_vr_0714markets10.html))

Rock_On

12th Aug 2008, 19:48

As you say. There are several DOD flights that are brokered by Astar for DHL. This is fact. There may be some that are done by Kalitta as well.

I wonder if DHL will transfer these DOD flights currently brokered by Astar to UPS if the DHL/UPS deal is signed?

hvydriver

12th Aug 2008, 20:17

They don't belong to DHL. They "belong" to any US carrier that is involved in CRAF operations. DHL is a "subcontractor" for it.

Rock_On

14th Aug 2008, 22:58

Yesterday, Ohio Lieutenant Gov. Lee Fisher said in an interview that the state wants to enter into "a risk-sharing, collaborative financial partnership" with the company, in place of the UPS deal.

Now that's insane! The state of Ohio now wants to enter into the express integrator business. That's what people in the rest of the world call socialism.

DHL Parent's Chief Defends UPS Deal - WSJ.com (http://online.wsj.com/article_print/SB121866443949538367.html)

DHL Parent's Chief Defends UPS Deal

By COREY DADE and ALEX ROTH
August 14, 2008; Page B4

Hoping to quell the furor building for congressional hearings into DHL's outsourcing deal with United Parcel Service Inc., the chief executive officer of DHL parent Deutsche Post AG of Germany defended the move as critical to saving the U.S. business and its 43,000 jobs.
Frank Appel, CEO of the Bonn-based delivery giant, in his first interview since the agreement became a political target of presidential candidates John McCain and Barack Obama, said the only alternative is "more serious cuts to the whole operation" to stanch losses of $5 million a day. "I can't afford to take losses of $1.3 billion forever," he said.
Mr. Appel expressed sympathy for the more than 8,000 workers expected to lose their jobs in the closure of DHL's Wilmington, Ohio air hub and said he plans to dispatch local advisers to help them find other jobs.
Concerns raised by Republican Sen. McCain and Democratic Sen. Obama are understandable given the hub's importance to the local economy, Mr. Appel said. However, he said there are no grounds for the candidates' demands for an antitrust investigation. "I can't imagine what would be the legal position" to block it, he said. UPS has sought to clarify the deal as a vendor contract rather than a merger, which would trigger a federal anticompetition review. If consummated, the contract would make DHL the largest customer of UPS and generate $1 billion in annual revenue for the Atlanta shipping titan.
A spokeswoman for the House Transportation and Infrastructure Committee said Wednesday that a hearing likely will be scheduled for September.
The Ohio congressional delegation first requested a hearing, and the committee chairman, Democratic Rep. James Oberstar of Minnesota, has expressed unease about the job losses and potential effects on customer service and industry competition.
Sen. McCain, along with Rep. Mike Turner, also a Republican, who represents the Wilmington area, on Tuesday sent a letter to Mr. Appel urging him to visit the city and "hear first hand the many important issues of concern to the affected community."
Mr. Appel in the interview said that wasn't necessary. "I should go there if I can tell people something, but we have said what we can say at the moment," Mr. Appel said.
Yesterday, Ohio Lieutenant Gov. Lee Fisher said in an interview that the state wants to enter into "a risk-sharing, collaborative financial partnership" with the company, in place of the UPS deal. Mr. Fisher declined to disclose details of the proposal.
Deutsche Post AG spokesman Silje Skogstad said, "We are not aware of such a proposal."
Last week Sen. McCain met with DHL workers in Wilmington and pledged to try to stop DHL from slashing jobs. Sen. Obama voiced similar concerns in asking the White House to step in.
DHL announced the UPS deal in May as part of a downsizing of its expansion in the U.S., which has failed over the past five years to gain market share against UPS and FedEx Corp. DHL bought express-delivery company Airborne Inc. in 2003 for $1.05 billion. At the time, members of Congress questioned a foreign company buying the cargo airline, in light of the Sept. 11 terror attacks and a U.S. law preventing foreign investors from holding a majority stake in a U.S. carrier.
DHL's Wolfgang Pordzik, executive vice president of corporate public policy, in an interview disputed recent news reports about the work of former Washington lobbyist Rick Davis on the acquisition. Mr. Pordzik said Mr. Davis, who is currently Sen. McCain's campaign manager, represented Airborne before the acquisition and wasn't hired by DHL until after the purchase was completed. Mr. Pordzik said Mr. Davis's role for DHL was to "basically create good will" for DHL on Capitol Hill "without a specific legislative target...or regulatory target."
http://s.wsj.net/public/resources/images/HC-GK364_Davis_20080702170906.gif
Lobbyist disclosures filed with the Senate and a McCain campaign spokesman say Mr. Davis's firm, Davis Manafort Inc., worked on behalf of Airborne to push through its sale to DHL. The campaign and the documents also say DHL hired Manafort after the acquisition. Mr. Davis declined to comment.
An Obama campaign ad airing in the Wilmington area says Mr. Davis and Sen. McCain helped "foreign-owned DHL buy a U.S. company and gain control over the jobs that are now on the chopping block in Ohio." The McCain spokesman, Brian Rogers, said the Obama ad is "absolutely wrong" as far as Sen. McCain's role in the 2003 acquisition. Mr. Rogers says the senator never took a position on the deal, but opposed an amendment to a military spending bill aimed at prohibiting foreign airlines from carrying U.S. military troops and equipment. DHL at the time had such a contract.
Obama campaign spokesman Nick Shapiro said the ad's claims are "factually accurate."
Write to Corey Dade at [email protected] ([email protected])1 and Alex Roth at [email protected] ([email protected])2
URL for this article:
http://online.wsj.com/article/SB121866443949538367.html (http://online.wsj.com/article/SB121866443949538367.html)

Hyperlinks in this Article:
(1) mailto:[email protected] ([email protected])
(2) mailto:[email protected] ([email protected])

Rock_On

14th Aug 2008, 23:02

I guess the state of Ohio missed this story?

UPDATE 1-EU rejects 500 mln euros state aid for DHL Leipzig | Industries | Industrials, Materials & Utilities | Reuters (http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL23102972420080723)

UPDATE 1-EU rejects 500 mln euros state aid for DHL Leipzig

Wed Jul 23, 2008 8:36am EDT
BRUSSELS, July 23 (Reuters) - The European Commission has rejected German state aid guarantees for express cargo carrier DHL [DHL.UL] worth up to 500 million euros ($796.1 million) at Leipzig airport, it said on Wednesday.
The Commission did, however, authorise 350 million euros of public investment for a new runway at Leipzig Halle airport.
DHL, owned by Deutsche Post (DPWGn.DE: Quote (http://www.reuters.com/stocks/quote?symbol=DPWGn.DE), Profile (http://www.reuters.com/stocks/companyProfile?symbol=DPWGn.DE), Research (http://www.reuters.com/stocks/researchReports?symbol=DPWGn.DE), Stock Buzz (http://reuters.socialpicks.com/stock/r/DPWGn)), said it welcomed the decision on the contribution to the new runway and had very little concern about the decision on the guarantees.
"CEO Frank Appel emphasized that Deutsche Post can live quite well with the commission's decision today," DHL said.
"We have obtained in the meantime the long-term security that DHL urgently needs at the Leipzig location," the statement quoted Appel as saying.
DHL said that it expected "no consequence whatsoever on the operational day-to-day business nor on DHL's decision to operate the central European hub in Leipzig for the long term."
A Commission spokesman said that the most DHL would have to reimburse for having received nine months of the guarantee would be less than 1 million euros.
Germany's federal state of Saxony had issued a so-called "comfort letter" promising Leipzig Airport and DHL up to 500 million euros if Leipzig airport was unable to meet conditions of a deal with DHL.
"The Commission concluded that the unlimited guarantee allowed DHL to hedge business risks on terms which a private investor would not have accepted and would distort competition," the Commission said in a statement.
The Commission said DHL has already benefited from the maximum amount of investment aid permissible for regions with an abnormally low standard of living and high unemployment.

Rock_On

15th Aug 2008, 01:11

.....and maybe the state of Ohio forgot about this story?

DHL fails to deliver the goods, agencies say
Ohio's courier draws complaints but says contract provisions met
Monday, November 21, 2005
Ted Wendling
Plain Dealer Bureau

Columbus - Nearly a year after Gov. Bob Taft helped DHL land exclusive rights to provide express-delivery services for the state government, officials at several agencies are complaining that the contract has been a disaster.

Agency officials accuse DHL of a wide array of delivery problems, including losing State Highway Patrol paychecks; routing Health Department vaccine shipments to the wrong cities; overweighing Department of Transportation packages; overcharging the Department of Natural Resources thousands of dollars; and mistakenly turning over agency accounts to bill collectors.

"There is not a week that goes by that DHL does not mess something up," an Agriculture Department official grumbled in a Sept. 9 e-mail after the shipper destroyed water-quality samples mailed by an agency microbiologist.

"I received more calls than I can count from the DHL collections department," a Division of Wildlife employee fumed in a Sept. 28 e-mail. "Rest assured, we have not used DHL since February. From my perspective, DHL is a mess."

Those complaints are among dozens that state agencies have made since Jan. 1, when Ohio awarded DHL a $4.4 million contract to replace UPS as the state's exclusive courier. They contrast sharply with the German-owned shipper's current national ad campaign, which emphasizes customer service. In one TV spot, set to the music of "What the World Needs Now is Love," a series of vignettes features a delivery man crushing a package in an elevator door and a ham-handed bagger mashing the week's groceries with a half-gallon jug of milk.

"Whatever happened to customer service?" the ad says. "At DHL, it's alive and well."

DHL officials declined to answer questions, releasing a statement through Robert Mintz, the firm's public relations manager. The statement said Ohio was required by law to award the contract to DHL because the company was the lowest bidder.

It also said DHL has met a contract requirement that 98 percent of deliveries be on time - a statistic that state officials rely on the contractor to monitor and report.

The billing issues, the statement said, "were quickly remedied and resolved. In addition, some service issues are unavoidable when a change in vendor takes place."

DHL won contract

after moving to Ohio

DHL was awarded the contract shortly after Ohio won a bidding war with Kentucky for a new DHL air cargo hub. The company agreed to move its hub from Cincinnati/Northern Kentucky International Airport in Hebron, Ky., to Wilmington, Ohio, in exchange for $122 million in tax breaks and incentives.

DHL was not considered for the state's delivery business until DHL officials complained to Taft's office that they had not been treated well when they had asked about reopening the contract. Records show that this was after the Department of Administrative Services had already asked UPS to renew the courier contract.

"By going directly to the governor's office, they bypassed standard business channels in an attempt to politically influence a procurement decision," DAS procurement supervisor Jeff Westhoven wrote to his boss, Richard Hickman, on Aug. 6, 2004. But Westhoven wrote that it could have been "simply a company being aggressive about competing for the state's business."

Taft spokesman Mark Rickel said the governor gave DHL a crack at the contract out of gratitude for DHL's decision to relocate its hub to Wilmington and create 900 more full- and part-time jobs.

"We had aggressively fought for DHL to select an Ohio site for its consolidated air and ground hub," Rickel said. "It was our position that if it made good business sense, the contract should be rebid."

DHL's $4.4 million bid was $170,000 less than UPS' bid. FedEx's bid was $4.7 million.

As for DHL's service problems, Rickel said: "We've recently become aware that some agencies are not happy with DHL's service. We expect DAS to rigorously enforce the contract with DHL."

Mintz's statement said DHL appealed to Taft's office "to ensure that the state of Ohio provided an opportunity for DHL to bid fairly on this contract."

A spokesman for UPS declined to comment.

Both Westhoven and Hickman, who is now executive director of the Ohio School Facilities Commission, said they don't recall any disputes with DHL officials over the courier contract. Westhoven also retreated on his claim that DHL used political influence to acquire the contract, saying simply, "They were obviously pushing for the opportunity to compete for the state's business."

Westhoven acknowledged that the state has threatened several times to cancel DHL's contract, but he said most of the problems have been resolved.

"Certainly, we would always like vendors to be perfect, and perfect is the goal, but perfection is not the requirement in the contract," he said.

Similarly, Mintz's statement said DHL "has still met and in many cases exceeds" the contract requirements.

DHL's record pales

next to UPS'

Despite those statements, DAS records show that problems have persisted. The Department of Health and the Department of Public Safety got waivers from DAS to use other couriers for special deliveries. DAS has denied waiver requests from three other agencies, and LeeAnne Mizer, a spokeswoman for a fourth agency, the Department of Agriculture, said her agency is dissatisfied, too.

"We've taken our concerns to the Department of Administrative Services," she said. "There's not a whole lot more we can do at this time. It's still a problem."

DHL's record looks particularly bad when compared with that of UPS. In the six years that UPS had the contract - from October 1998 to December 2004 - agencies filed 16 "complaint to vendor" reports after being unable to resolve their disputes with UPS, requiring mediation by DAS. The reports typically involve multiple service complaints.

In comparison, agencies filed 15 complaint-to-vendor reports in the first 10 months of the contract with DHL.

A sampling:

After DHL repeatedly lost paychecks and other mail at the Ohio River Valley Juvenile Correctional Facility in southern Ohio, angry officials at the Department of Youth Services wrote, "It is unacceptable for us to continue to operate this way when we are talking about employees' paychecks and, therefore, we are officially requesting a waiver from utilizing DHL." The waiver was denied.

DHL lost three boxes of brochures that the state development department sent to Hanover, Germany. Then, development officials learned that a DHL driver was having an affair with a development employee and that the two were using drugs together on state time. DHL assigned another driver to the development account.

Informed that DHL had put a hold on the Mount Vernon Developmental Center's account due to an unpaid bill of $12.63, the center's business manager raged in an e-mail that DHL was, once again, wrong: "This morning at 8:23 a.m., I had the pleasure of receiving a call from . . . the credit collection agency hired by DHL. This is just classic. . . . I find this utterly ridiculous, especially in light of the fact that we have never received a statement of account NOR has anyone contacted me to discuss any outstanding invoices!"

DHL has fought back by blaming agencies for providing inaccurate addresses and ZIP codes. Its statement said "more than half of the complaints . . . were due to customer error," including unpaid invoices, wrong addresses and "improper documentation."

Occasionally, Gail Vorhees, DHL's national account manager, has resorted to sarcasm when responding to the barrage of complaints.

"Yet another state of Ohio blunder!" she wrote. "I think their employees might very well be hiding under rocks!"

DHL's statement said the disputes are temporary. DHL, the statement said, "looks forward to a long, superior service commitment to provide express delivery services to the state."

To reach this Plain Dealer reporter:

[email protected] ([email protected]), 1-800-228-8272

layinlow

15th Aug 2008, 13:13

The Murray county Sheriff Department dropped DHL for poor performance and went with Fed Ex. It seems DHL's problems are of their own making. Maybe they should disband

Rock_On

16th Aug 2008, 16:56

http://www.nytimes.com/2008/08/16/business/worldbusiness/16interview.html?_r=1&ref=business&oref=sloginAugust 16, 2008Saturday InterviewFor Deliveries, Speed Not Quite of the EssenceBy ELIZABETH OLSONHIGH fuel prices and a sluggish economy have taken a toll on overnight delivery services, forcing some significant shifts in how the biggest operators do business. DHL Express, the country’s third-biggest overnight deliverer, recently hired a rival, United Parcel Service, to handle its air cargo operations in the United States. While its global business is profitable, the American segment of DHL, acquired in 2002 by Deutsche Post of Germany, is expected to lose $1.3 billion this year. In an interview from DHL’s American headquarters in Plantation, Fla., its chief executive, John P. Mullen, discussed the deal with U.P.S.Q. What factors drove you to make a deal with U.P.S.?A. The cost of maintaining our network in the United States has been very painful to us, and it’s been exacerbated by the increasing fuel costs. Under the arrangement with U.P.S., if our volume should continue to fall, our costs fall with it. And we have 110 aircraft in the United States, a lot of which are quite old and will need replacement in the coming years. So we avoid that capital expenditure. Q. What kind of impact have fuel costs had?A. Very considerable. First, the straight cost burden, and our fuel surcharge does not cover all of it. But more importantly, it starts changing a customer’s behavior. When you say there’s a surcharge of 5 percent or 10 percent, they read the newspapers and they know fuel is going up. But when you start talking 30 percent and up, which is what we’ve got at the moment, the customer starts saying: “Well, do I really need the package there tomorrow morning at 10:30?” Q. Has that translated into less demand for air service?A. We’re seeing that customers are downgrading their service expectations, from air to ground. And once customers change, it’s pretty hard to get them to come back again. And even if fuel prices were to come down significantly, we’re not sure customers would revert to urgent air express. Our whole industry is going to have to adjust because, while it may not be tomorrow, we’re going to see huge amounts of our revenue migrate to ground and other forms of transport.Q. By outsourcing your air cargo services to a rival, where does that leave the company? What is the business model now — more ground and less air?A. Our business model hasn’t changed. We’re still picking up the package, we’re still delivering it. But instead of giving it to one operator who is flying just for us, we’re giving it to U.P.S., which, although it is a competitor, is just a service provider. The customers wouldn’t actually know whether we used U.P.S. or someone else for the air segment.Q. What was the price of this deal?A. U.P.S. will charge us about a billion dollars a year to move our material. Our savings, taking into account other restructuring, including closing 30 percent of our ground stations in the United States, will save us about a billion dollars a year.Q. How many jobs will you be cutting?A. We’re cutting 1,500 to 1,800 of our own employees, including some at our air hub in Wilmington, Ohio. And these changes will have an impact on our suppliers, which will mean several thousand more jobs will be affected. Our cuts will come in smaller towns, and we’ll close stations where there are several in the same area.Q. What percentage of your business will be affected by these changes?A. We’re estimating that these changes, while they sound fairly large, will only have an impact on about 4 percent of our shipments. In other words, 4 percent of our shipments will go from early morning delivery to maybe afternoon delivery. We’ll still be delivering them, but they will be slightly slower than before, but only a small percent.Q. How does this affect the general landscape in the United States for deliveries?A. It shouldn’t make any appreciable difference, and while the deal should make us both more productive, we remain full-tilt competitors. In the rest of the world, in Europe, Asia and emerging economies — where we are in a much stronger position — we are trying to make life as difficult as possible for them.Q. How much of a decline in daily package volume have you seen because of the economy slumping?A. Some customers are not sending altogether. But most are trying to find a cheaper way, such as sending it by ground. We’ve got the double impact right now of fuel costs and the economic recession because we carry an awful lot of mortgage documents, contracts and so on, and that side of our business is very significantly under pressure. Air express overnight volumes in the industry are down anywhere from 5 percent to 15 percent from this time last year. Q. When will the new arrangement go into effect?A. We hope to have a completed agreement with U.P.S. in a couple of months, and we would start to migrate volume across. We would like to see it all in place by mid- to late 2009. But at the end of the year, our busiest season since stores and other parts of industry are ramping up, we will slacken off and try not to make too many changes until the new year.

Rock_On

17th Aug 2008, 00:49

http://www.ajc.com/business/content/business/stories/2008/08/17/ups_dhl_congress.htmlAs UPS, DHL pursue a deal, Congress gets involvedBy RACHEL TOBIN RAMOSThe Atlanta Journal-ConstitutionA proposed deal for UPS to carry air cargo for DHL has taken the national stage. Both presidential candidates have seized on the issue because the deal could put thousands of Ohio workers and pilots out of jobs.In an August radio ad, run in Ohio, Democratic candidate Barack Obama accused Republican candidate John McCain’s campaign manager of lobbying to help Deutsch Post World Net, the German parent company of DHL, buy the Wilmington, Ohio, air hub that it now plans to close.McCain responded by meeting with two dozen Wilmington community leaders and calling for a federal probe of the pending UPS/DHL deal. Meanwhile, the White House appointed a liaison to monitor the proposed deal, and two congressmen vowed to hold hearings in September.“It is a presidential election, so you will see some efforts to make noise in the media that the political campaigns are paying attention to,” said crisis management consultant Eric Dezenhall, CEO of Dezenhall Resources in Washington and author of “Damage Control.”Currently, lawyers at Sandy Springs-based UPS are talking to lawyers for DHL in Plantation, Fla., its U.S. headquarters. DHL’s world headquarters are in Belgium.The two carriers want to strike a deal to let UPS fly DHL’s air cargo inside North America. The deal is not a merger, which would require approval from federal regulators. DHL and UPS are saying it’s a contract, similar to how UPS and FedEx fly air cargo for the United States Postal Service.But pilots who fly for DHL, and stand to lose their jobs, as well as the entire Ohio congressional delegation, are clamoring for extra scrutiny. The pilots have sued DHL, and congressional leaders are turning up the heat in Washington. The groups say that having two competitors work so closely together will violate antitrust laws.The contract would make DHL the largest customer for UPS, adding about $1 billion a year to UPS’ revenue.Dezenhall said scrutinizing the issue is a pretty safe bet for the politicians.In political science, he said, it’s called a “valance issue,” or an issue that 100 percent of the population can agree on.“By coming out and saying, ‘I’m concerned about this,’ they’ve weighed in and tipped their hat to Ohio voters, showing they’re paying attention. But they’re stopping short of getting into taking sides because they don’t know where the ball is bouncing. Nobody gets hurt that way.”U.S. Sen. Johnny Isakson (R-Ga.) said he understands his congressional colleagues’ urge to look into the issue. “Any time we have a situation where the country is having economically difficult times and a presidential race going on,” he said, “and a business transaction taking place that affects jobs, obviously it gets more attention than it might otherwise get.”Said Isakson: “Congress has the ability to look into anything it wants to look into.”So far, he said, no one from UPS has lobbied him to support the deal, although he knows several UPS lobbyists. He said he frequently talks to them about energy issues. (In the last quarter, UPS’ fuel bill rose 67.4 percent to $1.17 billion, from $697 million the same period a year ago.) Isakson and U.S. Sen. Saxby Chambliss (R-Ga.) recently introduced an energy bill.Isakson doesn’t believe the DHL/UPS contract will require federal regulatory oversight.UPS spokesman Norman Black said the company will cooperate with any congressional inquiries. One hearing has been set for Sept. 16.“If we are asked to testify at these hearings,” he said, “we’ll be more than happy to do so. We do not fear in any way this scrutiny, because any objective look at the proposed deal — remember, it’s not done — will demonstrate that it does not raise any antitrust issues.”He expressed frustration at people who believe they can force DHL to keep its Wilmington hub open. “I’ve seen some people suggest you can somehow order DHL to keep suffering these losses and keep jobs in place.”DHL officials could not be reached for comment.In May, DHL said that by outsourcing to UPS, its U.S. operations will save about $1 billion per year.The news came about four years after DHL made a heavy push to carve into rivals FedEx and UPS’ U.S. territory. DHL is a stronger force internationally.In 2004, DHL announced it would spend $1.2 billion to build more infrastructure here, and the company secured a commitment for $422 million in incentives from the state of Ohio to improve the Wilmington air hub, which DHL owns.The air hub is the crux of the problem in Ohio. It handles only DHL flights, and the hub, which employs thousands of workers, would close under the proposed deal.The interest from Washington hasn’t slowed the deal’s progress, said UPS’ Black. UPS executives have said they are working to finalize the DHL contract this fall, or by the end of the year at the latest.Ed Wolfe, a freight analyst in New York with Wolfe Research, had a different conclusion. He wrote in a note to clients on Aug. 11, “Last week, two senators asked regulators to look into potential implications of a proposed 10-year line-haul agreement between UPS and DHL. Our sense is that federal scrutiny could delay the process further, although we still expect eventual completion.”

old-timer

17th Aug 2008, 19:37

UPS + TAY also, what are the odds on that one also ?

Pagan_angel

18th Aug 2008, 10:26

TAY?? :confused: Do you mean TNT (in Europe)?? Those rumours are old....

Rock_On

18th Aug 2008, 20:27

Transportation News: As Politicians Turn Up the Heat on Planned DHL Hub Closing, Deutsche Post CEO Says There Were Simply No Other Options (http://www.scdigest.com/assets/On_Target/08-08-18-1.php?cid=1860)

Supply Chain Digest
August 18, 2008
Copyright 2008
As Politicians Turn Up the Heat on Planned DHL Hub Closing,
Deutsche Post CEO Says There Were Simply No Other Options
Losing $5 Million a Day Can’t Go On Forever; State of Ohio Offers Vague Partnership
Possibility to Save Wilmington Hub
SCDigest Editorial Staff

T
he drama continues in DHL’s announced change
in its North American strategy, which includes outsourcing
its airlift operations to UPS and closure of
its large sortation hub in Wilmington, OH. That operation
employs more than 6000 workers directly
and several thousand more that work in other companies
that use or support the hub. The outsourcing
to UPS would move the air operations of DHL from
Ohio to UPS’ massive Louisville, KY hub.
Supported by politicians on both sides of the aisle
and presidential candidate John McCain, the US Congress
plans hearings in September on the proposed
deal and how it might impact parcel shipping markets
here. The stated concern revolves around the
potential to reduce competition in the express shipping
industry and other anti-trust concerns. However,
DHL says it plans to sell and market its services
in competition with UPS under the deal, dismissing
charges it will reduce market competition.
Regardless, it seems clear the closure of the Wilmington
hub and related job losses are the real drivers
of political concern.
“This deal, if allowed to be completed, would have
consequences beyond its devastating impact on our
local, state and national economy,” said Mike
Turner, an Ohio congressman in Dayton whose dist
r i c t i n c l u d e s W i l m i n g t o n .
The planned hearings in fact come before DHL and
UPS have even worked out a deal on the outsourcing
relationship. At one point, DHL had said it hoped to
have an agreement with UPS by the end of July, but
now entering the third week of August the deal has
still not been completed. Some observers have questioned
the strategy of announcing the outsourcing
plans before the UPS deal was done, which may
give UPS an advantage in the negotiations.
“Can’t Afford to Take $1.3 Billion
Losses Forever”
Meanwhile,

Frank Appel, CEO of DHL parent
Deutsche Post, finally commented about the DHL
controversy, after having been largely silent until
now. He defended the move to outsource to UPS
(and other announced changes) as necessary to
enable DHL to remain in the US market and save
tens of thousands of other jobs there.
He also wonders what the US Congressional actions
can really achieve – given the alternative for
DHL is to shut down its North American operations
completely. Appel said the company was losing $5
million per day in North America.
“I can’t afford to take losses of $1.3 billion
[annually] forever,” he stated.
The only real, albeit remote, possibility
would be for some very large
group of private equity investors to
buy back the operations and try to
reconstitute the old Airborne Express
in some fashion, but the financial and
market realities of that idea are very
forbidding.
Supply Chain Digest
August 18, 2008
Copyright 2008
As Politicians Turn Up the Heat on Planned DHL Hub Closing, Deutsche Post CEO Says
There Were Simply No Other Options (Con’t)
According to a Wall Street Journal story, Appel
said he has resisted calls for him to visit the Wilmington
area, as he had nothing new he could
tell the workers and community there.
“Nevertheless, I think it’s important to tell the
people that I understand that it’s a hardship for
them,” Appel said.
To further add to the drama, Ohio Lieutenant
Governor Lee Fisher said last week that the
state was interested in potentially jumping in to
save the Wilmington hub and jobs.
Fisher said the state of Ohio might be willing to
craft “a risk-sharing, collaborative financial partnership”
with DHL to eliminate the need for it to
outsource to UPS. Details of this idea, however,
were very limited.
Finally, Ohio Senator Sherrod Brown wrote a
letter this week to the Bush administration asking
it to consider what has happened with DHL
as it negotiates with the Europe Union on the so
-called Open Skies agreement that would ease
restrictions on a variety of international air
transportation operations. Stage II of the Open
Skies agreement is currently under discussion.
In the letter, Brown noted what DHL said when
it received approval to acquire US-based Airborne
Express in 2003: “DHL said the transaction
would: 1) increase profitability and market
share for both companies; and 2) enhance free
market competition by creating a new entrant into
an express delivery market dominated by two major
carriers: UPS and FedEx,” Brown wrote.
“Unfortunately, that has not been the experience of
DHL in the U.S. market.”
Said SCDigest editor Dan Gilmore: “Unfortunately,
no matter what management mistakes got the company
into this position, nothing anyone does can
change the fact that DHL is losing huge amounts of
money in the US market. No law or ruling can force
them to continue to do that indefinitely.”
He added, “The only real, albeit remote, possibility
would be for some very large group of private equity
investors to buy back the operations and try to
reconstitute the old Airborne Express in some fashion,
but the financial and market realities of that
idea are very forbidding.”