Parcel shipping: Domestic problems persist for DHL Express USA
Jeff Berman, Group News Editor -- Logistics Management, 10/3/2008
WALTHAM, Mass. and PLANTATION, Fla.—In the latest sign of ongoing problems in the United States, DHL Express USA this week has terminated roughly 80-to-90 percent—or hundreds—of its domestic sales force staffers, LM has learned.
According to an industry source, DHL Express USA will retain somewhere between 80-to-150 U.S.-based sales staff that will now be referred to as “international” sales representatives.
While DHL would not directly confirm the sales staff layoffs, its press office said in an e-mail that since May 28 it has made certain workforce reductions in line with the restructuring of its network, adding that it “remains committed to the U.S. market and to finalizing [its] pending agreement with UPS.”
As part of its U.S. restructuring plan announced in May, DHL parent company Deutsche Post World Net rolled out a pending ten-year, $10 billion contract with UPS for airlift capacity to reduce its ground infrastructure operations. Other components of the restructuring include: rationalizing infrastructure by 34 percent by closing and consolidating US stations in low density and remote areas, low density areas in multiple station locations, and nearby stations in multiple station locations; reducing pickup and linehaul delivery routes by 17 and 18 percent, respectively; and expanding DHL’s partnership with the United States Postal Service, which will enable DHL to continue delivering to more rural parts of the US, among others. This deal has been the subject of recent House hearings, which have been focusing on whether it is in violation of anti-trust laws or decreases the competitive landscape in the parcel delivery arena.
Along with divesting a large portion of its domestic sales force, shippers are no longer able to create domestic accounts with DHL Express USA. DHL is no longer setting up domestic accounts and has not been since September 21. Although DHL Express USA is currently no longer setting up domestic accounts, shippers can use still use its services domestically and make payments via credit card or to a DHL driver on an individual basis without being billed to an actual account. DHL Express USA’s menu of services is still currently available.
But according to its call center, domestic accounts will not be able to be established until approximately the second quarter of 2009.
This news comes at a time when DHL Express USA continues to be in an uphill battle for market share against UPS and FedEx—especially since acquiring Airborne Express in 2003. Last month, the Financial Times Deutschland reported that DHL’s U.S. operations “have been running worse than expected over the last few months” which is delaying negotiations with UPS. The UPS-DHL contract was originally expected to be finalized by August; industry analysts are suggesting it may take at least another two months.
While market conditions remain challenging for DHL Express USA, the industry source said it is by no means certain that it will exit domestic ground operations.
“They probably won’t shut down their regional hubs,” said the source. “They may not want to compete nationally for ground, but it does not make sense not to compete regionally for ground, because they can price it in such a way to attract deliveries going from New York to Philadelphia and avoid stuff going from New York to Los Angeles.”
But a research report by Robert W. Baird transportation analyst Jon A. Langenfeld said that, according to industry contacts, deteriorating conditions could force DHL to more drastically eliminate its U.S. domestic parcel operations.
“We see this as a reasonable scenario, whereby DHL eliminates domestic service, while maintaining U.S. import/export operation surrounded by its global parcel operations,” wrote Langenfeld.
And Morgan Stanley analyst William Greene wrote in a research note that due to anecdotal reports of extremely large volume declines at DHL it is becoming more difficult to see how DHL can deliver $1 billion in annual air revenue to UPS should the deal go through.
Greene wrote that prospects of this deal being consummated are becoming doubtful, adding that DHL’s customers appear to be leaving at a rapid pace, coupled with the fact that the House anti-trust and competitive issue-related hearings could also spike the deal.
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I did not post the comment made on 10/29/2008 about dhl service and independent contractors.I don''t agree with the statements made and don''t aprreciate words being put into my mouth.Sincerely,Mike Pickral
Mike pickral - 2009-26-5 16:04:00 EDT -
I have worked with Airborne Express 20 years and as a DHL Employee for the last 4 yrs 9 months. Since the merger of these companies there has been nothing but
batteling for positions in managment. This is the problem of failure. Managment was to busy worrying about loosing their position while the employees were carrying the customers. We had all the tools to perform professional but no one to act professional. A successful company needs open communication with all. I constantly felt left in the dark by managment. All managment was worried about was breaking up the Union.
Since no one was watching as a Public owned company would be watch, several upper manamgnets walked away with lots of money that should have been invested in the company success and was not. Very Bad Management
So Sad - 2008-9-11 21:55:00 EST -
I spent 7 years in sales for DHL. The biggest mistake this company ever made was buying Airborne Express. They had a nice thing going on the intl side of the business. They bought an underperforming domestic shipping company to become number three in US marketplace? The old DHL stations closed in favor of Airborne offices. All DHL management took a backseat to Airborne personal. Pretty soon they all quit instead of taking the crappy shifts. Problem is the DHL mgrs had all of the INTL shipping experience. What do you think makes more money for the company? $30 package to UK or a $2.00 ground shipment?
POOR Management deserves what they get. Feel so sorry for the employees.
Rich - 2008-4-11 18:10:00 EST -
Well as a driver of 14 years for Airborne express and DHL express, I would like to let you know that on Monday Oct. 27 we were informed that dhl is no longer interested in the domestic market in the United States. We were informed, in the Boston Station, that International customers take the most priority but no guarentee of a delivery. Domestic customers get thier deliveries when we get there. The company is cutting 25 drivers a week from it's seniority list every week.On November 10th we will be at 200 drivers down from 427..Management said buy Jan. 1st it will be only 100..A pull out in Febuary is on the table.. They refuse to tell us anything!!! It has become more than obvious that they are getting out of the domestic market and only accepting cash international shipments! It it very unfortunate that this company put people in charge that had no idea how to run a company of this size.
Now that there is a link on the Ups homepage,Welcome DHL customers,, It is just a matter of time!!!
dhl driver - 2008-31-10 14:50:00 EDT -
They put so much money into making this work why can't they just wait for the result? The sales force is everything...I don't know why they would let them all go. This was all so mismanaged. The Germans underestimated the American market. Everyday I go to work expecting the doors to be locked. The wife says I need a plan B.
Allen - 2008-30-10 23:22:00 EDT
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