Tag: DHL

U.S. Postal Service – Declining Mail Volume

Posted by | Mar 6, 2008 | |

A fight back on Junk Mail by some 18 states in the US, as well as declining mail volumes has created a GBP 1 billion deficit for the U.S. postal service.

A decline in mail volume, particularly from domestic mail users, has seen postal operators increasingly reliant on Junk Mail but with real concerns over the quantity of paper being used that stretches the recycling capability of many towns and cities, many see the Junk Mail era as a short-lived one.

The U.S. could see more post offices located in other outlets to reduce costs, a trend already being established in the UK.

Increased competition in the U.S. is also putting pressure on the U.S. postal service. Rivals such as German-based DHL, FedEx, UPS and others are all contributing to a gradual decline in profitability and the U.S. postal service is urgently looking at ways to curb spending including reduced overtime and using more part-time workers.

Steve Lawson, editor of Hellmail.co.uk said:

“Whilst the internet age has transformed the way we all communicate and do business, it has undermined the role of postal services to such an extent that few of us actually post many letters now. The problem is a global one, not made easier by deregulated postal markets and greater competition for what were once public-sector services.”

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FedEx, UPS look to gain if DHL scales back

Posted by | Mar 6, 2008 | |

Analysts expect money-losing DHL will scale back in the United States and could make the announcement as early as today, handing FedEx Corp. and UPS a boon.

If DHL closes terminals and hubs, analysts say FedEx could get 35 percent of the lost business in the air and another 25 percent on the ground.

If the restructuring costs DHL 2 percent of revenue, FedEx stands to gain USD 45 million in business, according to a research note published Wednesday by Edward Wolfe. UPS, which has a more powerful ground network, stands to realize USD 71 million.

DHL is the fourth-largest player in the U.S. overnight package business, with revenues in the Americas for 2008 estimated at USD 2.3 billion.

With 9 percent market share, DHL trails the U.S. Postal Service, (32 percent) FedEx (31 percent) and UPS (25 percent).

DHL joined the competitive U.S. overnight business in 2003 when it purchased Airborne Freight for about USD 1 billion, rankling FedEx and UPS, which accused the monopoly Deutsche Post of investing in a U.S. carrier to fight them on their own turf.

Both pressed the issue in lawsuits, which Airborne eventually won.

Airborne was the low-cost alternative to the big players, claiming about 10 percent of the domestic air express market and 2 percent on the ground.

DHL came in promising a threat to the established carriers, but in reality has kicked little sand in their faces, mostly because it has made a series of integration and operational errors that shook customer confidence.

Analysts estimate DHL has lost USD 2.8 billion in North America, including a recent USD 748 million write-down in the United States alone, where it has also announced 600 layoffs.

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Deutsche Post World Net 2007 underlying EBIT at 3.8 billion euros

Posted by | Mar 6, 2008 | |

Deutsche Post World Net reported earnings before interest and tax (EBIT) of 3.8 billion euros before non-recurring effects for the 2007 business year, an increase of 8 percent compared with the year-earlier level. Underlying EBIT was in line with the Group’s business expectations and guidance. Reported EBIT was 17 percent lower at 3.2 billion euros following a non-cash asset writedown in the EXPRESS Americas division. Revenue increased 4.9 percent to 63.5 billion euros in 2007.

Appel reiterated the Group’s financial target for 2008 of around 4.2 billion euros in underlying EBIT and confirmed the Board of Management will propose to raise the 2007 dividend by 20 percent to 90 euro cents. “Our focus remains on organic growth and improving cash generation and cash payout to shareholders,” Appel said.

Net income after minorities declined 28 percent to 1.4 billion euros in 2007, mainly due to the writedown on fixed assets in the EXPRESS Americas division in the fourth quarter. As a result, earnings per share were at 1.15 euros compared with 1.60 euros. In the fourth quarter, net income declined to 255 million euros from 649 million a year earlier.

Fourth-quarter earnings per share totaled 21 cents, down from 54 cents. Revenue increased by 3.9 percent in the quarter to 16.97 billion euros from 16.3 billion euros. Operating cash flow after changes in working capital was at 2.8 billion euros at the end of 2007 compared with 2.2 billion euros a year earlier, and free cash flow totaled 1.9 billion euros, up from 1.3 billion euros, helped by working capital improvements.

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DHL opts for Crawford dock management system

Posted by | Mar 5, 2008 | |

DHL Exel has chosen a dock management system from Crawford for delivery and warehouse control at its logistics centre in Roserberg, Sweden.

Crawford Dock Management is a piece of software and a decision-support system for the monitoring, follow-up and control of warehouse and truck traffic in connection with goods collection and delivery at complex logistics centres. The result is improved efficiency, security and reduced waiting times for the trucks.

The system consists of four modules which provide navigation, follow-up, service and security. The deal includes a complete system with all modules.

“We have operated with Crawford as a strategic partner for many years. With this expanded installation, we can achieve both considerable efficiency savings and improvements in the quality of our customer offering,” says Henry Svensson, DHL Sweden.

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DHL Restructuring – Wheels in Motion But Likely to Take Some Time

Posted by | Mar 5, 2008 | |

RESTRUCTURING IN THE U.S. Following the recent USD 784M write down related to its Americas Express business, 600 recently announced layoffs in the U.S., and change in DPWN’s CEO, several European and U.S. newspapers have reported that DHL could announce either the sale or restructuring of its U.S. business at its parent DPWN’s analysts meeting in Bonn on March 6th.

BACKGROUND ON DHL’S PROBLEMS IN THE U.S. DHL bought Airborne in late 2003 and over the next few years merged its existing U.S. import/export business in with Airborne’s predominantly domestic express business. However, DP has never been able to realize its expected cost synergies and has reported an estimated USD 2.8B in losses in North America over the past 4 years.

WHAT ARE DHL’S OPTIONS? For anti-trust reasons we don’t believe that either UPS or FDX could buy DHL’s N.A. assets or complete book of business. More likely DHL will seek to further stem losses by reducing its commitment in the U.S. through cost reductions/restructuring and partnerships (outsourcing some line-haul and P&D), while making it clear they intend to remain in the U.S. Look for it to reduce terminals and push more freight towards the ground.

WHAT IS THE TIMING? DHL is in a tough position because if customers believe there is even a chance it will exit the U.S., DHL’s competitive position will be compromised. Thus action needs to be swift, but DPWN tends to be contemplative and current Teamster issues likely prevent a major restructuring before April or May. At this point we expect modest restructuring efforts to be announced on March 6th with a clear indication of remaining in the U.S. and more restructuring to come.

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