UPS Absorbs DHL`s Domestic Ground and Air Services
Nov, 24, 2008
Posted byAs early as May of this year Forbes.com reported a deal brokered between UPS and DHL where UPS would basically carry DHL’s freight within the US and provide air services between the US and Mexico.
Under the agreement, UPS will partner with DHL Express to carry freight for some of DHL’s express, deferred and international packages within the United States, and will provide air lift for DHL packages between the U.S., Canada and Mexico.
The deal is expected to last for 10 years, add $1.0 billion to UPS’s annual revenue, and provide $1.0 billion in annualized cost savings to DHL Express. Implementation will begin later in 2008 and will ramp up in 2009.
More recently 24/7 Wall St. indicated that by the end of January 2009 DHL will not be running any trucks inside of the US. but added:
DHL has announced that it was cutting 9,500 jobs as it discontinues air and ground operations within the United States. DHL Express says that it will continue to operate between the United States and other nations…
Another good insight on ajc.com points out that FedEx and UPS will now battle for what’s left of the express market in the US.
The market opportunity [presented by the closure of DHL's American domestic arm] — about 1.1 million shipments a day — is ripe for the taking.
UPS’s near-term goal is to turn DHL’s customers toward Big Brown —and away from No. 2 FedEx, based in Memphis, or the No. 3 U.S. Postal Service.
- ajc.com
Good point that UPS would quickly jump to convert DHL customers before anyone else steps in an snags them up. Although they are a small portion of the entire market, money is money and previous DHL customers will be looking for a new express carrier.
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