Deutsche Post cleared to expand: UPS, FedEx ponder appeal to block rival
United Parcel Service and FedEx have lost a bid to overturn a ruling that may aid Deutsche Post’s U.S. expansion efforts, which included the acquisition of ground-based operations from Seattle-based Airborne last year.
The Transportation Department said yesterday it won’t review an administrative law judge’s Dec. 19 decision that German postal service Deutsche Post doesn’t control Miami-based Astar Air Cargo.
UPS and FedEx, the largest U.S. package-delivery companies, argued that the German company’s DHL unit controlled Astar in violation of U.S. law. They can appeal in federal court.
The two U.S. companies have sought to block DHL’s expansion in the $50.2 billion U.S. ground and air parcel-delivery market, analysts have said. Closely held Astar, the former DHL Airways, carries air cargo linked to DHL’s U.S. ground-delivery network, purchased in 2003 from Airborne.
“Now it is time for DHL to execute against the 900-pound gorillas and successfully integrate Astar and Airborne,” said Brian Clancy, a principal at freight-transport consulting firm MergeGlobal. “UPS and FedEx are not going to sit back. DHL is going to have to fight for every point of market share.”
UPS controls about half of the U.S. market for air and ground delivery of packages and documents, while FedEx has about a fourth and DHL has 5 percent, Clancy said. The U.S. Postal Service has about 14 percent, and small competitors hold a combined 8 percent, he said.
Judge Burton Kolko “thoroughly analyzed the evidence presented by the parties and applied the correct legal standards,” the Transportation Department said in a statement. His ruling “becomes the department’s final decision.”
UPS and FedEx have contended that Astar’s ownership structure violated a law that says U.S. airlines must be controlled by U.S. citizens.
“We are still reviewing the decision,” said David Bolger, a spokesman for Atlanta-based UPS, the world’s largest package-delivery company.
Memphis, Tenn.-based FedEx is “weighing its options” on a possible court appeal, said Kristin Krause, a spokeswoman for the world’s biggest overnight-delivery company. “We continue to believe that Astar’s ownership structure is inconsistent with the law governing U.S. carriers.”
Astar has an 11-year agreement to carry DHL cargo and gets 90 percent of its revenue from the Deutsche Post unit.
A U.S. investment group, including Astar chief executive John Dasburg and other investors, bought Astar last year.
from Bear Stearns ‘Inside Freight’ 20 May
DOT Affirms ALJ Ruling in DHL/ASTAR Corporate Ownership Suit. Last
>Thursday, the Department of Transportation (DOT), as expected, affirmed the
>ALJ ruling against FDX and UPS that ASTAR was not directly owned or
>controlled by DHL Airways. This ruling is a positive for DHL, allowing the
>carrier to continue its plans for expansion into the domestic U.S. parcel
>market.
