In my opinion, DHL is done here in the USA.
According to this article, an analyst doesn't even believe that DHL will be able to pay UPS a billion a year, because DHL's US business is so bad.
Couple that to the fact that they just laid off the entire US salesforce, and the fact that shippers cannot even set up DHL accounts here in the USA. In my opinion, DHL is done here. They will have to have UPS deliver the packages too.
Parcel shipping: Domestic problems persist for DHL Express USA - 10/3/2008 - Logistics Management
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.