Weaker US economy threatens DHL turnaround

The slowing US economy may hit DHL’s aim of turning around its loss-making US business by 2009,according to a senior manager. Meanwhile, Deutsche Post competitors in Germany are aiming to

In the USA, UPS and FedEx have already been hit by the country’s declining economic growth ratesin their latest quarterly results, and have played down expectations of a recovery this autumn.

Now, DHL USA chief executive Hans Hickler has told Reuters that the state of the economy willmake it “fairly tough” for DHL to achieve its planned target of halting the long-running losses inthe USA by 2009. The express operator had seen a slowdown in domestic air volumes since June, hesaid, but there were no plans to “destabilise” the market with dramatic price reductions to try towin business.

But a Deutsche Post World Net spokesman told German media that the group is sticking to itstarget of moving into the black in the USA by 2009. The comments simply reiterated earlierstatements that it would be a challenge to achieve the target, she stressed.

Meanwhile, domestic postal rivals are reportedly planning to form a rival employers associationin competition to the Postal Services Employers Association (AGV) set up by Deutsche Post andsmaller companies. The AGV, which claims to represent the bulk of the German postal sector, lastweek sealed a minimum pay deal with the union Verdi that could apply to the whole postal sectorfrom January 2008.

Leading competitors PIN Group, TNT Post, and large publishing houses with their own postaldelivery activities now plan their own employers association that would join the Federation ofGerman employer associations and seek a separate minimum wage deal with Verdi, the Wirtschaftswochemagazine reported. They are also preparing legal action against the agreement.

The issue is also causing divisions within the German coalition government, according to DerSpiegel magazine. The economics ministry has criticised that the minimum pay deal will effectivelyextend Deutsche Post’s monopoly by pricing competitors out of the market.

Under the deal between the AGV and Verdi, postal companies would have to pay a minimum wagelevel that is substantially below that of Deutsche Post but higher than that currently paid by PINGroup, TNT Post and other private companies. This deal covers the 20 AGV members from October, andboth parties want it to be declared legally binding on the entire mail sector from January2008.