DHL turns to UPS to cure its American headache

DEUTSCHE Post World Net, has announced that it will enter a partnership with UPS to help stem the tidal flow of losses its US Express division has recently suffered from.

Under the plan, DHL and UPS have agreed to develop a contract whereby UPS will provide air uplift for DHL Express US domestic and international shipments within North America. In a statement DPWN said that “DHL will align its US Express infrastructure to existing shipment volumes by redesigning its ground line-haul network to better match capacity with customer requirements”.

After poor 2007 results, the company has appointed Ken Allen, as chief executive officer, DHL Express US. His job will be to introduce a series of measures to help turn around the heavy losses.

In 2008, the company expects an underlying EBIT loss of US$1.3 billion in US Express. However, improvements are predicted by DPWN, thanks to the UPS deal. The company expects cost savings of around $800 million in 2010 and around $1 billion in 2011, with underlying EBIT improving accordingly. The company expects to spend up to $2 billion to finance the restructuring plan.

“Our entire network restructure will enable us to bring a new level of reliability and increased service performance to our international and US domestic customers while cutting unnecessary costs, such as maintaining infrastructure that customers don’t ask for,” said John Mullen (above), chief executive officer, DHL Express.

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