DPWN Announces US Plan
Hot off the press, the DPWN release regarding the US network -
Bonn, May 28 2008: Deutsche Post World Net, the world’s leading transport and logistics company, today announced a plan to restructure its DHL U.S. Express business by working with UPS for airlift capacity and reducing costs in its ground infrastructure. Under the plan, DHL and UPS have agreed to develop a contract whereby UPS will provide air uplift for DHL Express U.S. domestic and international shipments within North America. In addition, DHL will align its U.S. Express infrastructure to existing shipment volumes by redesigning its ground linehaul network to better match capacity with customer requirements. The impact on service levels will be minimal with less than 4 percent of shipments affected. DHL remains focused on delivering international and domestic Express products, offering an attractive alternative for U.S. customers and keeping a strong commitment to the U.S. market. The restructuring plan will lead to sustainable improvements in financial performance and provide a sound starting point for a more efficient and customer-oriented business in the future. In 2008, the company expects an underlying EBIT loss of $1.3 billion in U.S. 2/4 Express. Through the expected cost savings of around $800 million in 2010 and around $1 billion in 2011, underlying EBIT will improve accordingly. First positive effects of the plan will start showing already in 2009. The company expects to spend up to $2 billion to finance the restructuring plan. Due to the uncertain economic situation in the U.S., Deutsche Post World Net is reducing its guidance for underlying EBIT in the EXPRESS Corporate Division in 2008 to around 400 million euros from around 500 million euros. Subsequently, the Group’s full-year guidance before non-recurring effects and restructuring costs will be reduced slightly by 100 million euros to around 4.1 billion euros. “We have promised to relentlessly focus on improving financial performance and delivering on our Roadmap to Value program. I am confident we have found a sustainable way forward for U.S. Express in the best interest of customers, employees and investors,” said Deutsche Post World Net Chief Executive Officer Frank Appel at a press conference in Bonn. “Taking a pragmatic approach, we will go on to be a smarter player in the challenging U.S. Express market. We will continue to offer premium service to customers who rely on DHL as the leading network operator across the globe. And we will continue to leverage our express, logistics and mail offerings, which in combination make DHL unrivalled as the world’s leading logistics company.” DHL is taking action both in its infrastructure network and in aviation with a restructuring plan that focuses on three main elements: 1. Reducing infrastructure network capacity by approximately 30 percent through the following detailed measures: o Consolidating and closing smaller sorting facilities into modernized, larger stations, resulting in reductions of approximately 34 percent o Rationalizing pickup and delivery routes by 17 percent, including new courier routing plans to enable better route planning and avoiding peaks in the operation, as well as making changes to staffing plans o Ground linehaul network rationalized by 18 percent through improved capacity utilization and footprint reductions in some remote areas. 2. A proposed contract between DHL and UPS whereby UPS will provide air uplift for DHL Express U.S. domestic and international shipments within North America 3. Reduction in overhead and other administrative costs 3/4 As one central part of its restructuring activities, DHL and UPS will pursue a contract to provide air uplift, creating a single airline partner for DHL Express in the U.S. DHL will continue to operate its courier and ground network as well as pickup and delivery services to its customers across the country. The proposed agreement, in character and scope representing an efficient model in the express industry, will extend for 10 years. The commencement of UPS service into the DHL network is expected to begin later this year. The proposed contract provides both DHL and UPS substantial economic benefits in the U.S. Express market, which remains one of the most challenging marketplaces worldwide in light of the current economic downturn. DHL will continue to compete in the U.S. market under its own brand, offering attractive value to customers. The restructuring action in no way diminishes DHL’s commitment to retaining a significant presence in the U.S. market, which is key to DHL’s global network. “Our future focus will be where customers have told us they need to do business the most. Our entire network restructure will enable us to bring a new level of reliability and increased service performance to our international and U.S. domestic customers while cutting unnecessary costs such as maintaining infrastructure that customers don’t ask for,” said John Mullen, Deutsche Post World Net Management Board Member and Chief Executive Officer of DHL Express. DHL’s strategic priorities in the U.S. will be to continue to provide record service reliability, and accelerating growth in more profitable segments of the market through leveraging innovative sales channel strategies like the recently announced Walgreens partnership. In addition, DHL will be more selective in accepting business from a small number of scarcely populated areas and take advantage of capacity and cost reductions to grow a leaner and more focused ground business. To drive the implementation of the restructuring plan, DHL recently announced the appointment of long-time DHL senior executive, Ken Allen, as CEO of DHL Express U.S. Allen has extensive experience executing restructuring plans within DHL. In his previous role as CEO of DHL Express Eastern Europe, Middle East and Africa (EEMEA), Allen has doubled revenue growth and margin within two years. In addition, his experience as CEO of DHL Express Canada resulted in turning many years of negative performance into what is now positive financial development for the company. |
Hey DHL, thanks so much for trashing my life! Really. I appreciate it.
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ABX ~ Another Bloody Xample of working with DHL ~ Don`t Have a Life.
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How the f*** in 3 years did DHL destroy the Airborne Express customer base so bad they had to crawl to UPS to deliver their stuff?? ABX was in business for 50 yrs and air ops for 25,
Thanks DHL |
DHL indicated a 34% reduction in the U.S. and is working on the agreement with UPS. That has to frost the Airborne group.
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Trust me, we Astar folk aren't happy either.
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Trust me, we Astar folk aren't happy either.
Hvydriver, What is going to happen to the B767F that is soon to be delivered to you guys. Any chance you will jump into the Latin American ACMI pool? |
We haven't heard anything about a 767 coming our way.
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First 3 76's are coming to Europe, 2nd 3 not decided yet.
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SHouldn't that be 4,5,6 not decided yet
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Well it would seem that if DHL is going to give all the domestic product to UPS, as stated, then the only player left in the US would be Polar/Atlas.
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http://www.aircargoworld.com/break_news/05292008a.htm
DHL Closing Wilmington Hub DHL plans to close its air sort hub in Wilmington, Ohio, as part of its far-reaching restructuring of its financially troubled U.S. express business. The air sort hub will be closed once DHL phases out its outsourced flying with ABX Air and ASTAR Air Cargo, and turns that business over to its competitor UPS. Some air freight will be shifted to UPS's Louisville hub this year, said Jonathan Baker, DHL director of public relations, with full transition to be completed by the end of 2009. The fate of other segments of DHL's Wilmington business remains unclear. The Wilmington airport, which DHL owns, would remain open for now, as will the various facilities on site. DHL said it has not decided whether it will sell the airport, the largest privately owned airport in the United States. Wilmington is also DHL's largest ground sorting facility and is used to clear and sort international air freight. "We're studying what to do with those operations, whether to remain in Wilmington or go to alternative locations," Baker said. Robert W. Moorman |
DHL had no choice and has been reviewing this for years. Astar and ABX were and are instransigent, expensive and uncompetitive. They had guarantees in terms of their profitability and had literrally bled DHL alive for years. Having said that DHL's incompetance for either agreeing the terms initially and not doing something about it sooner is right up their with the Astar and ABX failings.
To use a rugby term, they have "pulled the maul down on themselves" now though and will get hurt from here on it, its big its brown and its going to own your town.! |
Say Roger,
Have you ever heard the saying, "Better to keep your mouth closed and be thought a fool, than to open it and remove all doubt?" Maybe that should be your new mantra. |
hvy
If you are directly affected by ths move then I am sincerely sorry to hear that. But what roger says is true. DHL have been pondering this for a few years now, and if they didnt do it what is the alternative? Continue losing Millions?....nope Pull out the USA altogether?.....not a chance? Outsource and hope to reduce costs......Yep I was surprised though that it was UPS, our money was on the USPS (I think thats what its called.... sorry I am other side of the pond). Its important now to realise DHL (as correctly put in the title of this thread) are now DPWN.....the German Post Office. Not just a freight integrator anymore. Don't get me wrong, its is a terrible shame as I have friends who work in ILN HUB, but it's a reality of life these days ......outsource. Imagine being the guy at DHL who suggested UPS over the boardroom table for the 1st time though. Bet he was given some funny looks :ok: |
In point of fact Beer, I'm with Astar. This company did everything that was asked of it by the Postmen. The funny part is that they are keeping what has truly troubled the US market, which is the ground delivery network. While at the same time, managing to give away all operational control to their primary competitor. Absolutely amazing. DHL will be signifigantly smaller than it is now inside of 3 years. Uncompetitive? Of course we are/were! We were slaves to the DHL machine. It's in our ACMI that we can't do anything but a handful of DOD work outside of DHL flying.
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hvy my man
Dont get me wrong, I am on your side. But the old Fritz post boys are leaking money like crazy in the US, and at some point it had to stop. They will use a 3rd party (UPS) to fly the cargo and DHL deliver (or so I understand). Unsympathetically....a good idea Put your business brain on though and ok its a reasonable idea in the short term. Probably not so good mid / long term......doesnt help the rumours about the boys in brown buying out the boys in yellow though |
The ignorance and naivety of you folks in Europe simply astounds me. You folks just don’t get it. Very quickly there won’t be anything left of DHL in the States. The last chunk of customers you haven’t yet lost will be Fedex and UPS customers before you know it.
The USA is still the biggest part of the world economy. And very soon DHL will be little more than an afterthought to the US customer. DHL worldwide won’t survive this decision. |
Beer, turning over control of your product to a competitor is never a good idea. When the 80,000 payload a/c has 70,000# of Brown packages, and another 30,000# of yellow packages that need to go on it as well, which color boxes do you think will get left behind? I'm thinking yellow.
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Surely not more logic...
hvydriver - Whilst I to am sympathetic to anyones demise, I apologise if the facts dont make good reading another good old saying is "when you are in a hole, know when to stop digging" - Theres no point in having 30,000 packages if you lose money on all of them and thats the harsh reality.
Penguin - you do make an interesting point too, but DHL have analysed that they make EUR1.3bn in the rest of the world in express dox and packages and only 25%, they estimate will be affected by the retrenchment of their US position. TNT survived when they did it and have remained profitable, but you are right with the exception of the downtown areas of the major cities DHL is retreating from the US. Next questions are 1. What happens to the B767F programme EU-US that was planned 2. Kalitta Mail programme US-ME 3. PO Transpac programme - will be limited to Transpac 4. Aerologic Airline will then be limited to EU-AP vv. They have their own network in EU and now UPS in US - Man thats alot of sorting to be done, with different equipment, Hubs and Management and therefore cost....1 step forward 2 steps back... I shall shut up now, so hvydriver can compliment me by thinking of me as a fool....rather than knowing it. |
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