Tag: UPS

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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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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UPS reports revised results (U.S)

Posted by | Feb 29, 2008 | |

On Jan. 30, 2008, UPS reported an 8pct increase in adjusted diluted earnings per share to USD 4.17 for the full year of 2007. Following the release of this information, in completing the company’s financial statements for 2007, UPS identified a state income tax benefit of USD 65 million that was incorrectly recorded in the fourth quarter.
The tax benefit was related to UPS’s withdrawal from the Central States multi-employer pension plan. This error was discovered by the company during its regular internal review process prior to the filing of its Form 10-K for 2007. Correcting this error has reduced adjusted diluted earnings per share to USD 4.11 for the full year, a 6.5pct increase over the prior year.
The correction has no impact on revenue, operating profit (loss), income (loss) before taxes or segment results for the fourth quarter or the full year of 2007, nor does it impact cash flow or liquidity.
For the 4th quarter, UPS originally reported adjusted diluted earnings per share of USD 1.13. The revised adjusted diluted earnings per share are USD 1.07.
On an unadjusted basis, UPS previously reported a loss per diluted share of USD 2.46 for the quarter and a diluted profit per share of USD 0.42 for the full year. Those figures now are a loss of USD 2.52 per share and a profit of USD 0.36, respectively.
UPS’s previous estimates for 2008 earnings per share remain unchanged at USD 0.94-to-USD 0.98 for the first quarter and USD 4.30-to-USD 4.50 for the full year, as does the company’s estimated effective tax rate for 2008 of approximately 36pct .

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UPS opens branches across China

Posted by | Feb 28, 2008 | |

United Parcel Service Inc will enhance its ground capability in China by opening 10 more branches this year, the US express delivery giant said yesterday.

The branches will open in 10 cities, including Zhuhai, Nantong, Wuhan, Shaoxing and Weihai, this year, said Sebastian Chan, vice president of UPS China’s supply chain operations.

Now the company runs 23 branches across the country.

UPS is the first foreign express firm to operate as a wholly owned concern after it paid USD 100 million to gain total control of its Chinese operations from Chinese partner Sinotrans.

It also runs a financial unit, UPS Capital, in Shanghai to offer loans for domestic clients involved in its supply chain by cooperating with Shanghai Pudong Development Bank, Shenzhen Development Bank and China Merchants Bank.

The company will compete with its rivals on improving its hardware as well as technologies.

The company has invested USD 600 million in China from 2002 to 2007 to boost its capacity and infrastructure, leading to a 40-percent growth in cargo volume last year.

An air-cargo hub of UPS will be open in the fourth quarter of this year at Shanghai Pudong International Airport.

The facility is designed to have a sorting capacity of 17,000 pieces an hour by 2012, and the initial investment is USD 20 million.

UPS launched a 210,000-square-meter logistic center in Beijing last June and will offer services for 19 Olympics venues.

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Teamsters, DHL in Tentative Labor Deal

Posted by | Feb 28, 2008 | |

The Teamsters union has reached a tentative labor agreement with DHL Express, a unit of Deutsche Post, the two sides said on Wednesday.

“This agreement is truly historic,” Brad Slawson, chair of the Teamsters national negotiating committee, said in a statement. “It is the first new national master agreement negotiated in the transportation sector in decades.”

The deal will be reviewed by the Teamsters and DHL members, who will then vote on it. The Teamsters said the deal would cover thousands of DHL employees nationwide.

“”We’re pleased that the parties have reached a tentative agreement and look forward to its ratification,” said DHL spokesman Richard Gibbs.

DHL has around 20,000 employees in the United States.

The company has struggled to make headway in the U.S. market, which is dominated by United Parcel Service Inc and FedEx Corp.

Most of the UPS work force is unionized, while only FedEx’s pilots currently have union representation.

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