DHL USA restarts
DHL’s losses in the United States appear to be deepening and the express carrier is looking closely at the entire operation even as it struggles with its major North American air service provider, ABX Air.
DHL and ABX Air agreed to binding arbitration last month to settle a financial dispute between the two operators, a dispute that bared the enmity between the businesses and the direction of their operations.
But DHL is concerned with larger issues, including a sharp decline in its air express business in North America over the last year that helped drag down overall profits at parent Deutsche Post World Net in the third quarter. DPWN Chairman Klaus Zumwinkle told analysts in Germany last month the company must look at how to “restart the whole thing” next year, but he rejected any idea that DHL would scale back in the face of problems in the United States.
The company last month reported a 4.6 percent drop in express revenue in the Americas in the first nine months of 2007, including a 6.6 percent decline in the third quarter. The U.S. air express market generally has been in decline in recent years, and volume for key competitors FedEx and UPS in that area has been flat.
In the meantime, DHL is trying to work out its problems with ABX. Their rift deepened in recent months when ABX added new aircraft for its charter and leasing business outside the DHL contract, and ABX then rejected a takeover overture from DHL’s other sub-service air operator, ASTAR Air Cargo.
ABX this fall bought another freighter airline, Cargo Holdings International, boosting its non-DHL business and along the way making ABX a tougher takeover target.
