Boeing to Supply 767's for DHL US Operations

[shooter]

Thought they were out of biz??

Gonna be laughable if DHL gives these to anyone but ABX, tryin to save money and all...

I hope more than anything else that ABX gets these, but my money is going to ride in DHL across the pond to get them and fly them to and from the US.

They already have the 757, so everything is in place just like ABX. The Polar ownership gets them 747 space to Asia and these will increase uplift across Atlantic. Does anyone know if these will be ETOPS aircraft and what range ETOPS (if at all) DHL Euro operates under? The ONLY worry would be a slow death if open skies allows DHL to operate point to point within the US.

And I will go back to my ILN Ops thread post the W.Dan needs a pee test because he thinks some kind of DHL/UPS/FedEx deal is in the works. Hey Dan...Delta flies 767's too...so your mind must be just RACING that Delta Dash is this giant cargo consipracy to all fall under the same umbrella.

RUN TO THE HILLS DAN! AND DON'T OPEN ANY YELLOW, PURPLE OR BROWN BOXES!

 

[shooter]

Another possibility is DHL is playing hardball with Hete - somebody mentioned this elsewhere. Hete apparently won't give DHL our additional 767s under the current ACMI margin rates. Hete's holding out for much higher charter margin rates.
Not saying its so, just another possibility.

Good for Hete...have you seen how much more Astar contract is than the ABX ACMI???? ABX gets better $$$$ for charter, so either pay up DHL or ABX will make money elsewhere. Just give ABX the same rates as Astar.

 

[Browntothebone]

Whistlin' Dan,

What do you think the chance is that DP could purchase FedEx if Open Skies goes through?

Current FDX market cap is 35.22B. A 30% premium would put it at 45.79B ($149 per share). Is this something DP could swing? The result would be instant complete access to the US market.

 

[penguin22]

Whistlin' Dan,

What do you think the chance is that DP could purchase FedEx if Open Skies goes through?

Current FDX market cap is 35.22B. A 30% premium would put it at 45.79B ($149 per share). Is this something DP could swing? The result would be instant complete access to the US market.

There ya go, Whistlin' Whacko, a fellow conspiracy theorist. Y'all talk amoungst yourselves, and be sure to let us know when you've got it all figured out.

 

[Browntothebone]

I'll keep talking, but remember the world was once flat. Coke or Pepsi? Long term there is room for 2 integrators. The ranking right now is 1. DP (DHL), 2. UPS, 3. FDX and 4. TNT. Now let's make two: (DP+FDX) and (UPS+TNT). The gutsiest will then somehow acquire Schenker http://www.schenker.com/index_en/index.html from DB.


2006 revenue:
DP (TNT) $ 79.32 Billion
UPS $ 47.55 Billion
FDX $ 33.97 Billion
TNT $ 13.23 Billion

DP (TNT) + FDX = $ 113.29 Billion (Total net profits approximately $ 4.5 Billion)
UPS + TNT = $ 60.78 Billion (Total net profits approximately $5.7 Billion)


Makers & Breakers
Brown Triumphant
Tatiana Serafin 03.26.07



Freight carrier UPS always seemed to be less glamorous than its competitor FedEx. With its dull brown trucks and unionized workforce, United Parcel Service (70, UPS) compared unfavorably to the less unionized (pilots only) and brightly colored FedEx.
But UPS has come into its own. Beefed-up bar codes have let Big Brown's drivers improve reliability. UPS workers and customers now are better able to track package movement. Despite their identical price/earnings multiples (18), UPS is the better bet for investors than FedEx , which has gotten indigestion from swallowing several smaller competitors. Another minus for FedEx is the money it is pouring into its ailing copy chain, Kinko's. FedEx also is embroiled in a dispute with contract drivers on whether they should be treated as employees. In 2006 UPS earnings rose 8% to $4.2 billion on $47 billion in revenue.
The 100-year-old UPS now has a broader array of services, including freight forwarding, heavy airfreight and logistics planning, and is taking full advantage of burgeoning international trade to fuel growth, says Bank of America analyst Scott D. Flower.
UPS delivers 15.6 million packages a day in 200 countries (FedEx: 6.1 million). UPS' international package volume was up 17.3% last year while its U.S. package growth was 4.4%. In February the company ordered 27 Boeing 767-300er freighters to handle the surge in volume. The UPS-FedEx rivalry will heat up in 2007 after a detente in prices last year. UPS announced a 4.9% boost while FedEx's rate increased 3.5%. Another potential duel: TNT Post Group in Europe, which Flower says both UPS and FedEx may go after.

 

[LarryinTN]

Another possibility is DHL is playing hardball with Hete

Not necessarily playing hardball, just reacting to what Hete is willing to do. If ABX owns the 767 then Hete wants to put it somewhere earning more than 1.75%. If DHL owns the airplane then Hete doesn't have the option to use it in any way other than in the DHL ACMI at 1.75%. It would let Hete use ABX airplanes for higher yield business and it would allow DHL better control over the 767s that ABX is flying for them.

Of course, that makes sense so DHL certainly isn't going to do it.

 

[xspud]

UPS is the better bet for investors than FedEx, which has gotten indigestion from swallowing several smaller competitors.

"Swallowing competitors" is sort of the DPWN "growth" mantra, so maybe it's a match made in heaven! We're talking one giant bellyache now!

Looking at the numbers shown, a merger doesn't seem impossible. Seems like it would be unattractive to FedEx if they have any desire to maintain autonomy or their brand. If "open skies" progress at least DPWN could buy into the FedEx airline and not feel compelled to spin them off as yet another ACMI. DHL would have a corner on the market of mothballed sort hubs, too (CVG,ILN,RIV and the 24 regional sort centers)!

 

[Whistlin' Dan]

Whistlin' Dan,

What do you think the chance is that DP could purchase FedEx if Open Skies goes through?

Current FDX market cap is 35.22B. A 30% premium would put it at 45.79B ($149 per share). Is this something DP could swing? The result would be instant complete access to the US market.

I don't know. I suppose it would be possible, especially if some Asian money were to find it's way into the deal. However, I remain unconvinced that any of these players need to work under a common corporate umbrella in order to be effective. Who cares whether a package starts it's journey on a Brown or Purple airplane and finishes it on a Yellow one or vice-versa? Certainly not the customer. All he or she wants to know is that their shipment gets to where it needs to go, and on time. At present, Brown and Purple do a superb job of overnight distribution in this country, while Yellow is still the preferred carrier in many foreign markets. The people on either end of most international shipments don't speak the same language and have probably never met, so I don't know why it would be important for the trucks on both ends to be the same color.

Apparently, Penguin and Shooter believe that DHL will never utilize the services of another carrier to deliver packages in this country. They're conveniently overlooking the fact that DHL already does so in the form of "independent contractors," and that they themselves are but one of many such contractors. Oh well, I hate to break the news to 'em now. Ignorance is bliss, and they seem like pretty blissful guys...

 

[Browntothebone]

I agree 100% with you. It's all about generating profits, and if these companies can make alliances that benefit them they will. Capitalism usually wins out in the end.

 

[HeavyjetDC8]

Let us bow our heads and remember........

Actually, it's the sea of red ink that speaks loudest in the end. It might take awhile, but sooner or later red ink wins against the head-in-the-sand, rump-in-the-air posture. DP took a viable money making express freight operation and reduced it to a loss incurring shambles. Nice job Herman the German. Let us not forget, this is the same goose stepping bunch that opened a second front with Russia in 1941. Masters of sausage eating they may be, masters of strategy they are not. We had better hope that the capacity of their check book exceeds that of their business acumen. Total mess really.

 

[shooter]

Apparently, Penguin and Shooter believe that DHL will never utilize the services of another carrier to deliver packages in this country. They're conveniently overlooking the fact that DHL already does so in the form of "independent contractors," and that they themselves are but one of many such contractors. Oh well, I hate to break the news to 'em now. Ignorance is bliss, and they seem like pretty blissful guys...

not true. I understand DHL is #1 in the world buy buying space on other carriers. A fleet that is peanuts when you compare them to UPS and FedEx. You are saying that DHL will do the same with UPS and FedEx and you could not be more wrong.

Why do you think FedEx and UPS keep buying into the foreign market? Why do you think TNT is in all the UPS and FedEx talks? If you think it is to align themselves for an infusion of DHL cash, again you are wrong.

UPS and FedEx know DHL is in charge of the world delivery while they have the US. They want part of the DHL world market while DHL wants the US. To think they will all come together as one large logistics/delivery giant is ludicrous and illegal (at least in the US).

If you think I am blissfully ignorant by my refusing to buy into your world domination plan....then blissful I will be (in your eyes only).

Good luck with your desire to sew a purple and brown patch on your shoulder....It will NEVER happen.

 

[Whistlin' Dan]

Good luck with your desire to sew a purple and brown patch on your shoulder....It will NEVER happen.

Just to clarify my position-

The only way any ABX/Astar/Polar pilot will ever wear a "Purple or Brown patch on their shoulder" is if they quit their respective jobs and get hired at one of those 2 companies (which apparently, quite a few of them are trying to do). A partnership between any of these players would ultimately be for the benefit of the stockholders, not the employees.

I think that in terms of jobs, it might hurt the guys at UPS and FedEx more than A/A/P. The responsibility for much of the International flying and most foreign distribution would ultimately fall to DHL, I.E., subcontractors. No more Subic/Cologne bases. "Easter egg" 747's and MD-11's at Anchorage and JFK.

Nobody here can say with any certainty what these guys are planning to do. This is one of those situations where "actions truly speak louder than words." Or in this case, non-actions.

1) Any company that wants to be a player in express mail MUST have a comprehensive ground distribution network in this country. DHL isn't building one.

2) Any company that wants to be a player MUST have a state-of-the-art air distribution network in the country. DHL isn't building one of those, either.

3) Fixing the problems here (should they decide to do so), would take billions, spread over years. With the slowing of growth in the domestic market and the increased competition in International, DHL doesn't have "billions" OR years.

 

[big_al]

I agree 100% with you. It's all about generating profits, and if these companies can make alliances that benefit them they will. Capitalism usually wins out in the end.

market consolidation is not capitalism

 

[shooter]

Whistlin' Dan;1277550]
Just to clarify my position-

The only way any ABX/Astar/Polar pilot will ever wear a "Purple or Brown patch on their shoulder" is if they quit their respective jobs and get hired at one of those 2 companies (which apparently, quite a few of them are trying to do). A partnership between any of these players would ultimately be for the benefit of the stockholders, not the employees.

Again, it will never happen.

I think that in terms of jobs, it might hurt the guys at UPS and FedEx more than A/A/P. The responsibility for much of the International flying and most foreign distribution would ultimately fall to DHL, I.E., subcontractors. No more Subic/Cologne bases. "Easter egg" 747's and MD-11's at Anchorage and JFK.

In the event it started snowing on the fires down below…I think you would be correct but I have not thought about it too much.

Nobody here can say with any certainty what these guys are planning to do. This is one of those situations where "actions truly speak louder than words." Or in this case, non-actions.

1) Any company that wants to be a player in express mail MUST have a comprehensive ground distribution network in this country. DHL isn't building one.

In 2004 DHL launched a $1.2 billion investment program to add 7 new regional sort centers and have since added an additional 5 more. Right? Sounds like they are building to me. It may not be up to what you think they need to do, but they are building.

2) Any company that wants to be a player MUST have a state-of-the-art air distribution network in the country. DHL isn't building one of those, either.

I thought the addition of the RIV was part of that network and they needed it. Bad! They do not have the freight to expand an additional large mid-country sort so what do you want them to do? Build an Indy hub just so they can say they have one?

3) Fixing the problems here (should they decide to do so), would take billions, spread over years. With the slowing of growth in the domestic market and the increased competition in International, DHL doesn't have "billions" OR years.

I agree with some of what you say here. They do not have years or that much more cash to spend. But that is entirely their fault. They attacked the Airborne buyout and integration without professional experience or input. Focused a multi-million dollar add campaign without having the infrastructure complete to handle the customers so most left. Not to even mention that they alienated the customer base they just purchased from Airborne and lost much of them as well. You may take offense to this next remark, but keep in mind that I understand it is not the workforce (i.e. yourself) but management. By not providing an on time reliable network to service the customer, it is hard to keep the customer. If you are in the express business, well, to steal a couple lines from the UPS and FedEx adds….On time, every time….the world on time….when it absolutely has to get there… Nothing in the express business says things like…well we had a mechanical problem….but it was foggy….the guy who loads our plane had to keep running to the bathroom.

DHL does not understand what "express" means yet. Right now they are just "DHL it will get there, eventually." I hope this changes and changes quickly because air delivery is express delivery or critical international delivery. If they keep going with the status quo, it will be an all ground US operation servicing only international customers with aircraft. And that’s not good for any of us.

 

[Jetlaggy]

http://www.aircargonews.net/article.asp?art_id=1746

Secret DHL/Lufthansa partnership

13-Mar-2007 : AIR Cargo News has discovered that DHL and Lufthansa Cargo are in negotiations to create a new partnership that could be even bigger than DHL’s recent tie-up with Polar Air Cargo in the US.

A secret tender process is believed to have included Emirates SkyCargo, Cargolux and Lufthansa Cargo. The selection of the preferred partner has now been concluded, with Emirates and Cargolux eliminated.

The exact details of the tender and the full scope and scale of the partnership, are yet to be revealed in public. However, an industry source described it as ‘a massive deal’. The source also stated that both Emirates and Cargolux fought hard to win the contract.

The source states that Lufthansa Cargo believed it was vital for the future that the company was able to protect its home market.

DHL and Lufthansa will now enter a period of intense negotiations tthrash out the exact details. It is believed that the negotiations will take up to four months to reach a conclusion, at which time the deal is likely be made public.

DHL has elected not to follow UPS and FedEx by investing in its own fleet of widebody freighters, but have instead created partnerships with large cargo carriers to guarantee capacity.

Lufthansa Cargo’s director of corporate communications, Nils Haupt, was unable to confirm or deny that LH Cargo had won the tender process, but stated that: “LH Cargo was always in talks to extend the partnership and extend co-operation with DPWN.”

Both Cargolux and Emirates told Air Cargo News that they did not wish to comment on the outcome of the tender process.