Deutsche Post World Net (DPWN) has denied German media reports that it might fully pull out ofthe US express market but says further restructuring measures might be necessary if the US economy
worsens further. A US Congress committee will meanwhile hold another hearing on the plannedcooperation deal with UPS later today.Various media reported yesterday that DPWN CEO Frank Appel no longer excluded a completewithdrawal from the world’s largest express market in order to halt the heavy losses there. Thiswould be a complete U-turn on the former strategy of competing in the US market in order to offercustomers a global network and product portfolio.
Handelsblatt, citing “management board sources”, reported that DPWN is considering deeperrestructuring measures than originally planned in May when the US express restructuring programmewas announced, and that a “total withdrawal” was no longer excluded. US deliveries could be takenover by other suppliers, it said. DHL Express USA, which is expected to make a $1.3 billion lossthis year, has been hit by the worsening US economy, as customers switch from air to grounddelivery products, and its volumes are falling due to customer reaction to its downsizing plans,and the impact on service levels, the newspaper wrote.
Reuters cited DPWN sources as saying that Appel is closely monitoring the weakening US economyand express market demand, and no longer rules out a market exit. At present, however, the companysaw no need for any further restructuring measures.
But DPA news agency reported that Appel told DPWN managers yesterday that there would be no “complete withdrawal” from the US express market. The cooperation talks with UPS were complex andthus time-consuming, and the restructuring measures had been made more difficult by the worseningUS economy. DPWN would thus consider “further necessary restructuring measures” if required, DPAreported.
Die Welt today reported that DHL Express Global CEO John Mullen wants to downsize DHL ExpressUSA to its original positioning as a supplier of international express shipments to and from theUSA, and focus in future on large corporate customers. This would mean the end of the domesticcollection and delivery network, impacting on up to 19,000 employees. This could mean that DPWNwould not only transfer North America airlift to UPS but also ground pick-up and delivery, thenewspaper wrote.
Meanwhile, the House of Representatives’ transportation committee will today hold a hearing onthe planned DHL-UPS airlift cooperation deal to look at issues of “competition, customer serviceand employment.” This follows a similar hearing last week by the judiciary committee.
Under the planned $10 billion, 10-year cooperation agreement, UPS will provide airport-airporttransportation of DHL Express shipments within the USA, Canada and Mexico. Ground collections anddeliveries would remain the responsibility of DHL Express. The agreement is expected to enter forcein 2009.
