DHL tests new U.S. ground service
DHL Worldwide Express is ramping up its march on the U.S. domestic market with plans to roll out ground service early next year and moving its U.S. sales operations to Florida.
DHL has begun pilot tests of a new ground service in the United States, with a full launch scheduled for the first quarter of 2003, according to Randy Clark, DHL's senior vice president of sales and marketing for the Americas. The ground service will position DHL, a unit of German-based Deutsche Post World Net, to compete head-to-head with archrivals FedEx Corp. and United Parcel Service.
At the same time, U.S. sales, marketing and operations functions are moving from DHL's San Francisco headquarters to Fort Lauderdale, Fla.
The move began earlier this year and should be completed early in 2003. said Clark, who has already relocated to Fort Lauderdale, as has Fred Beljaars, DHL's senior vice president of operations.
The relocation follows a decision earlier this year by DHL International Inc., the Brussels-based parent company, to consolidate its U.S., ground and freight-forwarding business with its Latin America unit. DHL's Americas operation is based in Fort Lauderdale. South Florida is a gateway for business in the Latin America market.
The company's finance, human resources and legal departments will remain in San Francisco, as will John Fellows, chief operating officer of DHL in the Americas, said Tracy Egan, a DHL spokeswoman. Fellows, who is also chairman and chief executive of DHL in the U.S., will be traveling frequently to the relocated office, she added.
Clark said the company is pleased with the test of the new ground service, which began in early September. "Service is right on," he said. "We're delivering when we say we're going to deliver. If the schedule calls for fourth-day delivery, we're delivering on the fourth day. Customers are happy. And we have had more customers asking us to provide ground service to them."
Ground will be aimed at a full range of customers, both domestic and international, he added.
The carrier plans to utilize an extensive third-party network for line-haul service, Clark said. He declined to name the other service providers.
DHL Airways, a separate company which provides domestic air service to DHL and other customers, will maintain its headquarters in Chicago, said spokeswoman Joanne Smith. Its principal hub is in Cincinnati.
FedEx and UPS recently renewed their legal challenges to DHL Airways, claiming that it does not meet the ownership criteria set by U.S. law, which mandates that U.S. citizens must own at least 51 percent of the equity in an airline operating on U.S. domestic routes. DHL maintains that William Robinson, a U.S. citizen, owns 55 percent of the equity and 75 percent of the voting shares in the airline.
FedEx and UPS have asked the U.S. Department of Transportation to conduct a public hearing on the ownership issue, something that DOT has never done. The two big U.S. carriers say the matter has become even more critical since Deutsche Post took control of DHL in 2001.
In recent filings with DOT, FedEx charges that DHL Airways has no viable independent existence and that it functions as a tool for the DHL network to expand in the U.S. domestic market.
FedEx also likens DHL Airways to flag-of-convenience ocean carriers that contributed to the demise of the U.S. merchant shipping fleet.
DHL Airways, which operates 38 aircraft, has doubled its business from other customers in 2002 and plans to double it again next year, Smith said. She did not provide an estimate as to how much business it gets from non-DHL customers. At the same time, the search is continuing for a successor to Joe O'Gorman, the carrier's president and chief executive, who died of a heart attack on Aug. 10. Vicki Bretthauer, the carrier's senior vice president of operations, is the acting chief executive.
