Deutsche Post is reportedly in talks with FedEx over a partnership with DHL Express designed toreduce its heavy losses in the USA. The report, which follows news of the planned EUR 600m
writedown of US assets, has not been confirmed.The Financial Times Deutschland reported today that DPWN executives want FedEx to take over DHLExpress’ domestic US operations. In exchange, DHL Express would provide services in Europe forFedEx. Talks are taking place with FedEx chairman Fred Smith, the newspaper said, citing sourcesclose to the company. DPWN CFO John Allan told the newspaper: “We have several options.”
News agencies cited DPWN spokespersons as saying that no decisions have yet been made about thefuture of the US express business. Talks with FedEx were not confirmed.
The Frankfurter Allgemeine Zeitung’s online website cited Allan on Friday as saying that it was “ very, very unlikely” that the domestic US business would be given up due to the strategicimportance of the market. The priority was to reduce the US losses “as quickly as possible and verysubstantially”. But this did not necessarily mean having to make a profit in the USA since asubstantial amount of international business was generated there, he noted.
DPWN announced late on Wednesday that it will write down the value of DHL Express Americas byEUR 600 million in its 2007 results due to the loss-making US business. The group said that it iscontinuing to identify the “optimal solution” to improve the performance of the US expressbusiness.
But Allan stressed in the statement: “The U.S. Express business is a key management priority andwe are looking at a variety of options to improve performance. In doing so, we are committed tomaintaining a significant presence in the U.S. market, which remains of strategic importance to theGroup.”
Influential analysts recently called on DPWN to downscale its US express operationssignificantly to reduce long-running heavy losses. Last November, due to the increasing impact ofthe slowing US economy, DPWN scrapped the target of achieving a breakeven in the USA by 2009.
