FedEx, UPS & USPS target DHL US international business
FedEx, UPS and USPS are now targeting DHL’s USD 1bn international business to and from the US after sharing the USD 3.5bn spoils of its exit from the domestic market at the end of January.
DHL Express officially closed down its US domestic business last week (January 30) under the restructuring programme to reduce years of heavy losses. DHL Express USA has downsized from nearly 15,000 employees at 18 ground hubs and 412 stations in early 2008 to about 3,000 – 4,000 workers at 103 stations.
In addition, up to 7,000 employees of domestic airlift provider ABX Air and an unknown number at Astar Air Cargo are expected to lose their jobs. The fate of DHL’s Wilmington air hub remains uncertain, although its use has been extended for several months since DHL and UPS have still not yet been able to agree on a replacement airlift agreement. The city of Wilmington has formally asked DHL to return the airport to the city once the hub closes.
DHL Express USA, which now focuses on international express shipments, is expected to have about 100,000 daily shipments in future compared to the previous 1.2 million, which mostly comprised domestic parcels, according to comments made by executives last November. The company’s revenue is expected to decline to less than USD 1 bn in 2009 from about $4.5 billion last year, meaning that about USD3.5 bn worth of business has been up for grabs by competitors in recent months. To support business, DHL is currently offering a 10% discount for goods sent via online shipping.
FedEx, UPS and USPS are all seeking to win more of DHL’s business after picking up the bulk of its domestic volumes in recent months as customers switched following the announcement of the domestic market withdrawal. To a limited extent, these additional volumes have compensated at the three carriers for the ongoing overall drop in the US express and parcel market.
UPS CEO Scott Davis commented during the Q4 analysts’ call that DHL customers in the USA “are coming to us about international volumes” while there is also more interest outside the US in UPS’ services to and from the US. Davis also noted that most of the DHL domestic volumes gained by UPS had been ground packages. UPS is promoting both domestic and international express services in its “ Switch Now” website section which targets new, existing and “returning” customers.
Meanwhile, FedEx is running a “Choose FedEx” section on its US website offering savings of up to 16% for customers in its “Save Now Program”. Discounts include 16% for various express services, 7% for freight shipping and 8% for US parcel delivery via FedEx Ground and FedEx Home Delivery. Company officials already said in December during the Q2 analysts’ call that the departure of DHL from the US domestic market presented “a rare opportunity” for the company to win new business.
The US Postal Service (USPS), which is making major efforts to win more parcel business now that it has more commercial pricing flexibility, also has a “Switching from DHL Express?” online section outlining its products and services for domestic and international deliveries.
