Deutsche Post's CEO confirms continued intention to crack the US
Deutsche Post’s freshly reiterated expansion plans in the US are encountering fierce resistance from the dominant players in the North American parcel delivery market, UPS and FedEx. But US market forces could present a larger and more difficult hurdle than anything that UPS and FedEx can throw at Deutsche Post in court.
Deutsche Post World Net, the German postal and logistics provider, has pledged to prevent its US competitors from derailing its expansion plans in the US package delivery market. Speaking at a press conference announcing the company’s first-half earnings, Deutsche Post’s chief executive Klaus Zumwinkel said business remained strong despite continued economic weakness in Germany. He also reiterated plans to expand into the US delivery market, in what could be viewed as a message for rivals UPS and FedEx.
Deutsche Post already operates in a number of countries abroad, including Japan and Great Britain, where it currently operates via its 50.0% subsidiary Securicor Omega Express. It has also shown intensive interest in the privatization of postal services in Austria and Denmark and enjoys a leading position in the European express market.
The US market is proving more difficult to crack, but Mr Zumwinkel is confident the US expansion plans of DHL Express will be completed during Q3, despite ongoing litigation against it by UPS and FedEx. Mr Zumwinkel said he expected the Airborne takeover to be approved by Airborne shareholders on August 14 and the sale to be finalized within the third quarter. He added that, once the takeover is complete, DHL and Airborne together would have 15.0% of the express delivery market in the US.
The managers of DHL Express seem to be finally focusing on the market forces in North America rather than on airline ownership issues and the composition of DHL Airways as they look to fill in the gap in express service within the US. However, the complexity of DHL Airways’ structure and the ongoing court action may prove to be nothing compared to the complications DHL faces in expanding in the US. Indeed, although the company was founded in San Francisco, DHL has a miniscule part of the US domestic market while UPS and FedEx hold a combined 80.0% of the US express business.
