Deutsche Post to shed thousands of US jobs (DHL)

[Slimprofits]

BERLIN (AFP) — German logistics giant Deutsche Post will on Monday announce thousands of job losses in the United States in the wake of heavy losses, a German newspaper reported.

In its edition to appear Monday the Frankfurter Allgemeine Zeitung (FAZ) says that group chief executive officer Frank Appel "cannot do other than announce massive job cuts" when he presents third quarter results that day."

According to the FAZ, "40,000 jobs are under threat in the United States," of which "20,000 are directly linked to Deutsche Post and as many again to the US partners."

The paper said that within the group there was talk of a "bloodbath".

source: AFP

Here is the article in German on FAZ.net

[Morelia]

Re: Deutsche Post to shed thousands of US jobs (DHL)

From the UPS web site:

"Welcome Center for DHL Customers. A place to switch over to UPS quickly and easily - just for you."

http://www.ups.com/content/us/en/index.jsx

[Slimprofits]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Morelia, don't know why that made me laugh out loud, but it did.

The map says, "we're fucked".

[kingcopper]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Morelia, don't know why that made me laugh out loud, but it did.

The map says, "we're fucked".

Actually this has been in the works since spring. UPS is contracting out all of DHL's American shipping work. UPS has spent billions in Louisville Kentucky on an automated package sorting system that DHL will now use via this terrible news.

The bad news hear is that UPS and FEDEX will now control all shipping in this country and rates will go up big time!

[BiscayneSunrise]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Yes, we all dislike seeing a loss of a competitor and the loss of jobs but the brutal economic reality is that FedEx and UPS are the premier package deliverers. In a recession, the weak can't compete any longer with the strong.

As kingcopper points out, this has been in the works a long time. It is kind of a long and convoluted story and I have to admit I am a bit sketchy on the details but it is story of corporate deal making gone wrong.

Let's see if I can get it right: DP wanted in on the American market and buys DHL. DHL, however, had most of their market share abroad. In order to build US market share, DHL buys Airborne Express. However, since DHL is foreign owned, they run afoul of US ownership requirements for an airline.

Then there is some sort of spinoff with Airborne (100% US owned) contracting with DHL to provide US services.

Airborne was really just a third tier provider and just could not provide the kind of efficiencies of UPS. Airborne/DHL was vulnerable since they were an inefficient provider of service and had only one customer (DP) They found themselves without a dance partner when DP went shopping for a more efficient provider.

So, many jobs are lost at DHL/Airborne but many of those jobs will be done by other very high paid American workers at UPS. Small consolation , though, to those at DHL/Airborne given the seniority based system at UPS.

[dbarberic]

Re: Deutsche Post to shed thousands of US jobs (DHL)

The bad news hear is that UPS and FEDEX will now control all shipping in this country and rates will go up big time!

This is exactly what Fred and EJ were predicting as what would incure in an inflationary recession/depression enviorment.

Consolidation then increased prices.

[BiscayneSunrise]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Yes, but remember, UPS and FedEx are the two low cost providers and will compete with each other fiercely since their offerings are virtually fungible.

I'm not denying they won't engage in some informal price collusion but for the longest time FedEx and UPS pretty much had the whole market to themselves anyway.

Airborne Express was always just a single digit market share player that probably didn't appreciably affect pricing with the Big 2. I'm not sure the loss of DHL and Airborne will be noticed by the consumer.

[Slimprofits]

Re: Deutsche Post to shed thousands of US jobs (DHL)

The new Fedex and UPS rates were announced to the public in October, from Rich Smith at The Motley Fool:

Specifically, management promised to first "increase shipping rates by an average of 6.9% for U.S. and U.S. export services" and then give back two points in the form of lower fuel surcharges -- charging 4.9% more, net.

UPS framed its increase similarly: UPS Ground shipments will incur "an average increase of 5.9 percent" in 2009. Air express and international shipments will get a "6.9 percent increase in the base rate, less a 2 percent reduction ... in fuel surcharge" -- again, 4.9% total.

[BiscayneSunrise]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Thanks for the extra insight.

DHL is headquartered in my backyard so I have been following the story closely. DHL tried to break in the US domestic market and failed miserably. Airborne Express had been just a bit player in the US market and DHL was never able to transform them into a serious competitor to FedEx or UPS. Even before the announcement of their retrenchment they had been losing significant market share.

Even with the loss of Airborne?DHL as a competitor, average payload on a UPS airplane is down 15% YOY. similar story at FX. As I mentioned, there is certain to be some informal collusion.

The FX/UPS duopoly now have two choices. Continue offering a high level of service at a higher price or reduce frequency of service so as to get overall costs down. It looks like now they are following the former path. As the recession deepens and lengthens they will likely choose the latter.

[Slimprofits]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Biscayne, I'm hearing from people and reading about companies of all sizes putting the kibosh on free-for-all shipping by employees. People need permission to ship via USPS, FedEx and UPS now. Also it is safe to say that online shopping as well as storefront shopping will take hit this holiday season? I think you are right, and it is similar to the airlines; they'll have to reduce frequency.

[Chomsky]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Biscayne, I'm hearing from people and reading about companies of all sizes putting the kibosh on free-for-all shipping by employees. People need permission to ship via USPS, FedEx and UPS now. Also it is safe to say that online shopping as well as storefront shopping will take hit this holiday season? I think you are right, and it is similar to the airlines; they'll have to reduce frequency.

Wow, what self-discipline. Some companies are going even further to rein in the costs and send a strong message to their shareholders:

http://www.huffingtonpost.com/2008/0..._n_121706.html

[kingcopper]

Re: Deutsche Post to shed thousands of US jobs (DHL)

Thanks for the extra insight.

DHL is headquartered in my backyard so I have been following the story closely. DHL tried to break in the US domestic market and failed miserably. Airborne Express had been just a bit player in the US market and DHL was never able to transform them into a serious competitor to FedEx or UPS. Even before the announcement of their retrenchment they had been losing significant market share.

Even with the loss of Airborne?DHL as a competitor, average payload on a UPS airplane is down 15% YOY. similar story at FX. As I mentioned, there is certain to be some informal collusion.

The FX/UPS duopoly now have two choices. Continue offering a high level of service at a higher price or reduce frequency of service so as to get overall costs down. It looks like now they are following the former path. As the recession deepens and lengthens they will likely choose the latter.

UPS execs. aren't stupid and they are cheap! They've recently began using higher efficiency 747's with less flights. They are similar to Southwest in that they calculate fuel efficiency and payroll all of the time through a logistics dept. Heck, they constantly clean the planes for aerodynamic purposes!