Fri, May 30, 2008
Plans To Cut At Least 1,500 Jobs
German package delivery conglomerate Deutsche Post said
Wednesday it will hire rival delivery service UPS to handle air
cargo shipments in the United States, following years of losses at
its North American operation.
The New York Times reports Deutsche Post will overhaul DHL at a
cost of $2 billion. It will cost an additional $1 billion annually
for UPS to take over North American cargo shipments, and the move
will mean the loss of at least 1,500 DHL jobs.
Though profitable on a global scale, DHL's operations in America
have never made money, due to fierce competition from FedEx and
UPS. DHL has ranked a distant third in overnight delivery business
in the United States, and is poised to lose $1.3 billion this
It's not yet known how many jobs will be lost at DHL
subcontractors, which handle the bulk of the company's regional
delivery services once the cargo is off the plane. It's a
near-certainty there will be big cuts there, as well.
Despite the impact, however, one analyst said Deutsche Post's
decision to shutter DHL "seems like the right approach."
"Management is admitting that they cannot stand face to face
against FedEx and UPS on their home turf," added Christian
Obst with Unicredit. "This is over now."
Deutsche Post bought out DHL in 2002, and followed that
acquisition with the purchase of Airborne Express in 2003. The
company's American hub is in Wilmington, DE.
The Bonn-based company stressed it is committed to serving US
customers -- even if that means DHL forever loses money in the
United States. UPS said the deal does not include the pickup or
delivery of DHL packages to customers.
The deal must still clear anti-trust hurdles.
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