DHL US builds network and predicts losses of USD600m

Going after the U.S. express market is proving more expensive than DHL had anticipated.

The company’s parent Deutsche Post World Net says it no longer projects a profit in North America before 2006 and instead could lose around USD600 million this year and USD370 million next year as it bulks up to challenge FedEx and UPS.

DHL is spending USD1.2 billion on building infrastructure in the United States, including a network of regional ground hubs it is rolling out this fall. DHL says it remains focused on the long term market potential, not the losses in the short term.

But the Fitch Ratings credit rating agency also said the losses show “how challenging it is for a small newcomer to establish a sustainable business model in a market dominated by a powerful duopoly such as UPS and FedEx.”