DHL Express USA to reduce workforce by 600 positions
Jeff Berman, Senior Editor -- Logistics Management, 2/12/2008
PLANTATION, Fla.—In a move designed to lower general and administrative costs across its U.S delivery business—due to the current economic climate and market conditions—DHL Express USA said today it will reduce its workforce by approximately 600 positions.
DHL added that these domestic workforce reductions will occur through attrition, reductions, and suspending open positions across functional areas. DHL Express USA Spokeswoman Michele Nadeem told LM that these reductions will take place today and tomorrow.
“These reductions are for management, administrative, and back office positions,” said Nadeem. “This is across the U.S and across all levels [of the company].”
Hans Hickler, Chief Executive Officer, DHL Express USA., said in a statement that this action is one of several measures DHL Express USA is taking to improve its competitive position in the U.S. market, which is strategic to the company’s global growth plan. “These changes will help us better align our cost structure without impacting our unwavering commitment to serve our US customers,” said Hickler.
Last month, DHL dismissed speculation that its may exit the U.S. market after it took an $874 million non-cash writedown on DHL Express operations in the U.S. And the Financial Times Deutschland issued an erroneous report in January, saying that FedEx was in talks with DHL’s parent company, Deutsche Post World Net, to discuss the possibility of the Memphis-based carrier taking control of the whole parcel delivery business of DPWN in the U.S., with DPWN assuming control of FedEx’ European services.
And in December and January investment banks Morgan Stanley and Bear Stearns issued reports, indicating that pulling out of the U.S. market and scaling down domestic operations may be necessary for DHL. DHL has faced an uphill battle for market share since expanding its domestic presence in 2003 with its $1 billion purchase of Seattle-based Airborne Express.
Since then it has competed aggressively for market share against industry bellwethers UPS and FedEx, as well as the United States Postal Service. DHL said it has invested more than $3 billion into the U.S. since 2003, including $1.2 billion in infrastructure and distribution.
In the DHL statement issued today, the company said it is making moves to augment its competitive position in the U.S. by investing in business growth areas and increasing service to both consumer and business customers, as well as the non-cash writedown for DHL Express USA.
DHL recently announced a strategic partnership deal with Walgreens, a national pharmacy chain, which will provide small businesses and consumers with access to DHL’s overnight, ground, and international delivery services at more than 6,500 locations by the end of 2008. And DPWN recently signed a letter of intent with technology giant HP to outsource all IT operations throughout the country, which DPWN said would reduce costs and improve IT services.
Today’s news of workforce reductions confirms what a parcel industry expert told LM last month, when he said some changes would occur at DHL Express USA as a result of the non-cash writedown.
“They are not leaving the market as far as I can see, but if you are having a writedown of that size it won’t be business as usual in the U.S. market,” said Doug Caldwell, executive vice president of ParcelPool, an Orem, Utah-based small parcel delivery consultancy and services provider, in a January interview. “I think what they are going to probably do is scale back. They wouldn’t have announced the Walgreens deal if they were planning to pull out of the market entirely.”
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