DHL Express to sell domestic Canadian business

DHL is to pull out of its domestic express operations in Canada, with DHL Express concentrating on international express deliveries to and from Canada. The company has agreed to sell its domestic shipping assets in Canada to TransForce, Inc., which will operate the domestic operations through its newly established subsidiary Loomis Express.

The deal is expected to hand TransForce annual revenues of more than $275m.

DHL, which withdrew from domestic express deliveries across the border in the US at the end of 2008, having somewhat singed its fingers, said it would now focus “exclusively” on the Canadian international shipping segment under its agreement with TransForce.

The two companies have agreed a 10-year alliance in which Canadian businesses will continue to receive domestic and international services, though now split between Loomis and DHL. A new advertising campaign, entitled “The Power of Two” is being launched to highlight the new partnership to Canadian businesses.

The asset sale still requires the nod from regulators, but is expected to close in the next 30 days.

Ken Allen, Chief Executive Officer of DHL Express, said the sale to TransForce was part of his company’s global strategy to focus on its core competency, the international express business.

“By entering into a strategic alliance with the market-leading domestic provider, we can even better meet the dynamic and growing needs of our Canadian customers by offering highest quality, seamless integrated shipping solutions that are second-to-none,” Allen said.

The domestic management team from DHL Express in Canada looks set to transfer to Loomis Express to ensure continuity for customers. DHL said the express deal would not impact on its other businesses in Canada, where more than 5,000 staff work for DHL Express, DHL Global Forwarding, DHL Supply Chain, DHL Global Mail and business process outsourcing firm Williams Lea.

For Montreal-based TransForce, the gain of DHL’s Canadian domestic operations follows on from a USD $248m acquisition of Texas-based express and logistics firm Dynamex, a deal that was completed in February.

Alain Bédard, Chairman, President and Chief Executive Officer at TransForce, said the deal with DHL would bring several benefits to his company, including strengthening its pan-Canadian infrastructure and opening up internataional services for existing TransForce customers.

“The combination of the two customer bases adds material revenue, creating greater scale in the market with superior efficiencies,” he said.

“With our recent Dynamex acquisition, we are significantly increasing our density in the Canadian package and courier sector.”

Bédard said managing the DHL domestic business as a stand-alone operation, Loomis Express, meant the acquisition would not affect the other TransForce package and courier subsidiaries.