FedEx Corp. and United Parcel Service have gone gunning for DHL Worldwide Express Inc. Now they are being joined by other industry players that support their contention that DHL—majority-owned by Germany's Deutsche Post—should have its license to operate in the United States revoked.

FedEx and UPS contend that DHL is subsidized by the German government. The Federal Republic of Germany owns 75 percent of Deutsche Post, which in turn owns 51 percent of Brussels-based DHL International. DHL International has a minority stake in its U.S. affiliate, DHL Airways Inc. of Redwood City, Calif. Both companies do business under the DHL Worldwide Express trade name.

FedEx and UPS, usually fierce competitors, complained last month to the Department of Transportation (DOT) that the complex ownership of DHL Worldwide Express was a smokescreen designed to obscure Deutsche Post's controlling interest. In its filing, FedEx alleged that Deutsche Post and DHL International controlled the U.S. affiliate, which is illegal under a U.S. law prohibiting foreign ownership of more than 25 percent of a U.S.-registered air carrier. The American carriers also argued that the partially privatized German postal service was trying to finance its expansion into the U.S. market with profits from its monopoly mail operation.

In its response to the DOT, DHL Airways said, "As the department is well aware, Airways is and will remain in full compliance with all citizenship requirements." Both UPS and FedEx are using the foreign ownership charge to keep DHL Airways from competing against them in the air-express market, the company alleged.

Not only have the two rival express carriers filed statements against DHL with the DOT, but two powerful labor groups and the American Trucking Associations (ATA) have also weighed in with their opposition to the air carrier's operation.

The two labor groups that filed documents with the DOT were the Transportation Trades Department of the AFL-CIO and the International Brotherhood of Teamsters. In its filing with the DOT, the AFL-CIO stated, "Deutsche Post has benefited from government-derived monopoly powers and privileges in its own country and has used those advantages to support various business salvos aimed at the U.S. marketplace."

The Teamsters' filing also cited potentially unfair competition from "a foreign labor force and its foreign employer." In a document it submitted in support of UPS's request to revoke DHL's license, the union said, "The more packages UPS carries throughout its system, the more jobs are created at UPS—jobs that are likely to be held by Teamsters."

The ATA's filing alleges that DHL Worldwide Express's license to operate in the United States effectively gives the German government unrestrained access to this market, which violates the DOT's own regulation requiring that the U.S. transportation market operate free of government intervention.