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DHL: A Primer And 2008 Update

Sep 6, 2008
DHL is one of the most recognisable brands in global courier services. The name DHL comes from the first letter of each founder's surnames: Adrian Dalsey, Larry Hillblom and Robert Lynn. The company was founded in 1969 and experienced rapid growth from their roots in operating between San Francisco and Honolulu to expanding their services to Australia, Hong Kong, Japan, the Philippines and Singapore. The resultant effect of this was the creation of a pioneering industry revolving around a "door-to-door express service", which is terminology commonly used today by all major courier services.

DHL's services can be broken down into the following types: "Express Services", "Logistics" and "Mail Services". Express services can offer immediate same day pickup and delivery, "day definite" delivery within a specified number of days as well as "time definite" services, which allow packages to be picked up and delivered at pre-agreed times, making it an ideal way for businesses to manage their shipments.

DHL's logistics services are geared towards enterprise-level businesses and include: air freight, ocean freight, road and rail freight. Supply chain solutions are also available, which allow companies to outsource their inventory management, order processing and warehousing. DHL also offers mail services, which offer Solutions for international business mail, direct marketing, as well as delivering publications and merchandise.

In 1998, Deutsche Post World Net (DPWN), the world's largest logistics company started to acquire significant shares in DHL, and became majority shareholders in 2001. In March 2008, Deutsche Post reported a net income of 255m Euro, which was a 61% drop over the previous year's profits of 649m Euro. This slump in profits is due to problems with its US-based DHL Express services, which is not expected to make a profit until at least 2009.

In May 2008, Deutsche Post announced that they will likely outsource all United States-based airlift operations to key rival UPS. Whilst DHL aims to delivery, pick up and track the cargo on and off the aircraft, UPS will carry the cargo on their own flights. This restructuring is intended to reduce annual losses from $1.3 billion in 2008 down to $300 million in 2011. Analyst Christian Obst has stated: "Management is admitting that they cannot stand face to face against FedEx and U.P.S. on their home turf."

At present, DHL's air operations are centred in Wilmington, Ohio, where ABX Air work as contractors. DHL's move to outsource air freight to UPS could cost this 12,000 population small-town over 8,200 jobs. Ohio state is presently evaluating the Wilmington air freight hub for potential re-uses and pursued legal action to prevent a DHL-UPS deal. This was blocked by the U.S. Department of Transportation, rejecting claims that an agreement between DHL and UPS would be "unfair competition" in the United States air freight industry.

Presidential candidate John McCain has been vocal about the proposed deal between DHL and UPS, stating that: "should this happen, DHL will cede significant elements of cost and quality to one of its chief competitors. Consumers all over America would suffer." Senator Barack Obama has also been involved. In his letter to Karl Zinsmeister, Director of the White House's Domestic Policy Council, he wrote: "If the deal proceeds, Governor Strickland and Senator Brown have both told me that the DHL facility in Wilmington would likely cease operating. That would eliminate at least 8,000 jobs in Ohio and impact an estimated 41 counties. That level of concentrated job loss strongly weighs in favor of the government assisting them through the difficult time that will follow."

In 2008, DHL faces not only problems with losses, but also risks a media and political backlash should the Wilmington site drastically cut jobs in the region. Despite this, DHL remains as one of the world's most significant door-to-door courier services.
About the Author
David Whelan has written on behalf of Parcel2Go, an international courier service provider that includes DHL as its largest preferred supplier.
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