Deutsche Post World Net is to restructure its US Express business by working with UPS for airlift capacity and reducing costs in its ground infrastructure.
Under the plan, UPS will provide air uplift for DHL Express domestic and international shipments within North America. In addition, DHL will align its US Express infrastructure to existing shipment volumes by redesigning its ground linehaul network to match capacity with customer requirements more closely. The arrangement is expected to start later this year.
“We have promised to relentlessly focus on improving financial performance and
delivering on our Roadmap to Value program. I am confident we have found a sustainable way forward for U.S. Express in the best interest of customers, employees and investors,” said Deutsche Post World Net chief executive officer Frank Appel.
“Taking a pragmatic approach, we will go on to be a smarter player in the
challenging US express market. We will continue to offer premium service to customers who rely on DHL as the leading network operator across the globe. And we will continue to leverage our express, logistics and mail offerings, which in combination make DHL unrivalled as the world’s leading logistics company.”
DHL’s US express business has been struggling for some time and this year it expects to lose $1.3 billion. The new arrangement is expected to deliver savings of around $800 million in 2010 and around $1 billion in 2011, improving EBIT. The company expects to spend up to $2 billion to finance the restructuring plan.