DHL actualy admitted it!!!!

ABXbooger

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In light of everything, this has got to take the cake...thanks, DHL, for ruining a great company!


By Will Waters, International Freighting Weekly,
Wednesday November 26, 2008

DHL has finally admitted to mistakes that contributed to the company’s US$10bn failure in the US domestic express market. Following this month’s decision to withdraw early next year (IFW, 17 November), a spokeswoman told IFW that it had learned major lessons from the experience of integrating US firm Airborne Express, which DHL bought in 2003. "One big lesson was that the management of Airborne Express should have been kept, " she said. It was something the company had already learned and applied, she added.
"If you look at the integration of Exel, we kept John Allan as the head of the logistics business and that integration has been very successful." A former senior Airborne executive told IFW that DHL executives - many of whom had recently joined from TNT - took over the running of Airborne, with "a lot of international freight experience, but their domestic air freight knowledge and experience was limited, at best. "Would it have made the difference [between the success and failure of DHL’s US operations]?
"Who knows for sure? But one could argue that it wouldn’t have been nearly as bad if they had left the Airborne team intact." He said prior to the acquisition, DHL USA was losing around $200m-$250m per year, while Airborne posted $6m profit. "When they combined both, instead of heading towards the black they started almost immediately losing a lot more money, and it never stopped getting worse." DHL expects $1.5bn losses for its US express operations in 2008, which it hopes to bring down to $900m in 2009, stabilising at a $400m annual loss by 2010.
Another key lesson was the importance of remaining close to customers, said the DHL spokeswoman, "in order to give them what they want rather than what you think they want. "Airborne was not really in the premium segment of the market, but DHL wanted to be in that premium segment alongside FedEx and UPS, and we invested heavily to build a network to match that idea. "That is also why we have been able to take out so much capacity without much impact for customers - we had a network built for much larger volumes."
Frank Appel, CEO of parent company Deutsche Post World Net, said the total cost of DHL’s five-year experience in the US domestic market was €7.5bn (US$9.6bn), including the Airborne acquisition cost and $3.9bn in estimated restructuring costs in 2008 and 2009. But he insisted the Airborne purchase was the right decision at the time, just as pulling out of the US domestic express market was the right decision now. Although it had seemed vital to have a strong presence in the US domestic market, this had become less important.
"Don’t forget that the acquisition of Airborne was five years ago, and since then the dynamics of the global market and the relative significance of the [US domestic] market has dramatically changed, " he said. "Today we have a much stronger China and Asian business, and the European business has now been integrated. "Of course we would love to still be in the US domestic business. But if we can’t be profitable, we have to be realistic and spend our money where we are clearly stronger than our competitors, and where we are in a much stronger position than we were five years ago - in the international business."
 

shooter

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Too bad they were so hard-headed they did not listen to the ABX management that was telling them that since day one. Good luck to all the people that will remain with the much much smaller ABX and to the rest of us that will need to find new employers.

May we all find better jobs before every one of those DHL *#&$%'s that helped destroy this business.
 

abxdx

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It's a little late now for them to admit there inadeqacies?:puke:
 

ABXbooger

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I wished they would have at least kissed me first...
 

Big Beer Belly

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It's a little late now for them to admit there inadeqacies?:puke:
ah... the time honored tradition of drinking and typing! :beer:
 

shooter

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Huh? Did someone say drinking? :)
 

TWA

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What's the town of Wilmington to do??? Surely BW3s won't open at 0500 on Friday anymore! This is getting serious!
 

Publishers

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While the management part is likely true, the biggest statement there is the part about them wanting into a different niche, the premium product that FEDEX or UPS has. That is also where all the expenses are and that is what killed the golden goose.
 

Whistlin' Dan

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While the management part is likely true, the biggest statement there is the part about them wanting into a different niche, the premium product that FEDEX or UPS has. That is also where all the expenses are and that is what killed the golden goose.
"Golden goose?!!"

How about a feral turkey, wearing a tacky set of pasted-on, gold lame' feathers?
 

EuroWheenie

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Great, fantatastic. Excellent job there boys, you've spent 10 billion in 4 years, and suceeded in ending up right back where you started. By all accounts, that is truly an amazing achivement.

We should all gather around and send our praises to the wonderful management team that planned, executed and spectacularly failed this project. And let's not forget the most excellent consultants who helped bringing this monumental failure about, our esteemed friends from Max&Kinsley. We wish to assure you all that M&G will continue to play a prominent role in our future projects, where we shall aim to maximise on the lessons learned in the US, and embarge on a unrelenting route to further humiliation.

Oh, and the 10 Billion. Hurts, but we'll survive. Remember we're the company who spends 2.5 billion a YEAR on "professional services".

Your's so and so.
 

shooter

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Great, fantatastic. Excellent job there boys, you've spent 10 billion in 4 years, and suceeded in ending up right back where you started. By all accounts, that is truly an amazing achivement.

We should all gather around and send our praises to the wonderful management team that planned, executed and spectacularly failed this project. And let's not forget the most excellent consultants who helped bringing this monumental failure about, our esteemed friends from Max&Kinsley. We wish to assure you all that M&G will continue to play a prominent role in our future projects, where we shall aim to maximise on the lessons learned in the US, and embarge on a unrelenting route to further humiliation.

Oh, and the 10 Billion. Hurts, but we'll survive. Remember we're the company who spends 2.5 billion a YEAR on "professional services".

Your's so and so.
"professional services"......any of them from the likes of your avatar? :eek: At least that service would actually do something.
 

mxer

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Anybody else notice something here. Wheenie is a bit upset at the braintrust over there. Welcome home friend. For the past two years you have supported the ideas over there and blamed the entire mess on the way JH and the rest of ABX wouldn't do as they were told. You finally realize that the ways ABX worked profitably was possibly the correct way. (For the U.S. market) I am glad to see that you have opened your eyes to what we had been trying to say all along. Wish your bosses could have done that about four years ago. JH is a pitiful business man as well, but at least the company he inherited to manage was making money. It would have made more money for the last 25+ years if we had leaders with vision instead of managers with egos.
 

Publishers

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You guys are making simple statements for complex issues. There are other factors than ABX was making money doing it their way. What market they want to be a factor is important as one is much higher yield than another. Flying Tigers ended up in trouble and sold to Fedex because it could not figure out how to carry express packages and telephone poles together. ABX was in the telephone business, DHL likely wanted to be in the high yield package business. They saw Airborne as a means to that and it was probably not a good match.
 

shooter

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You guys are making simple statements for complex issues. There are other factors than ABX was making money doing it their way. What market they want to be a factor is important as one is much higher yield than another. Flying Tigers ended up in trouble and sold to Fedex because it could not figure out how to carry express packages and telephone poles together. ABX was in the telephone business, DHL likely wanted to be in the high yield package business. They saw Airborne as a means to that and it was probably not a good match.
Airborne was in the express package business, not the telephone pole business you claim. They only concentrated on the B2B/B2C business and did not expand to serving the consumer and why you did not see Airborne commercials. That is also why the C container worked with their business model. They did not want to carry the telephone poles. You must be confusing Airborne with some other carrier.
 

wickedride

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You guys are making simple statements for complex issues. There are other factors than ABX was making money doing it their way. What market they want to be a factor is important as one is much higher yield than another. Flying Tigers ended up in trouble and sold to Fedex because it could not figure out how to carry express packages and telephone poles together. ABX was in the telephone business, DHL likely wanted to be in the high yield package business. They saw Airborne as a means to that and it was probably not a good match.
Really, Rocket Scientist--F.I.
 

Publishers

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I have the correct company and used to have lunch with Robert Brasier and Graham at all the Air Cargo meetings.
The point here was that Airborne was in a niche that might not have been the market DHL really wanted to go for. Fedex meanwhile expanded into the Airborne niche as did UPS. Airborne was too limited in their scope for what DHL was trying to achieve in the US hence all those commercials and yellow trucks. Airborne was a means to an end and that end proved elusive. That is what they gave up on.......
 

shooter

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I have the correct company and used to have lunch with Robert Brasier and Graham at all the Air Cargo meetings.
The point here was that Airborne was in a niche that might not have been the market DHL really wanted to go for. Fedex meanwhile expanded into the Airborne niche as did UPS. Airborne was too limited in their scope for what DHL was trying to achieve in the US hence all those commercials and yellow trucks. Airborne was a means to an end and that end proved elusive. That is what they gave up on.......
I do not see it like that at all. I may not have had lunch with a couple of guys as you have, but I do work there. Airborne was a low cost model for businesses providing the same service FedEx does. They had their contracts and did not expand to the low hanging fruit since it would take more investment to get that growth. I thought they should have invested in the company to get the low volume business, but what do I know. Hind sight and conspiracy theorists believe the reason they did not go for that business and let all the customers go that came to Airborne during the UPS drivers strike was because Donaway was a set-up guy to keep the business attainable for DHL to buy them. The DHL buying Airborne/Airborne buying DHL rumor has been around for years and years before something actually happened.

As for speculation as to what could have happened; Airborne was a profitable company with their niche market and DHL wanted a larger footprint in the USA. We now see the German business plan to raise rates and try to be third player in the premium product of the USA has proved to be a failure. Had DHL left well enough alone and folded in the international product (which is a great product) with the low cost B2B niche of Airborne, they would still be going strong. IMO

Now we have a situation as to what they will now do with their international product. Rumors are all over the place again as to what they would do if the UPS deal is not agreed upon. One is that they donate the Wilmington airpark to the state and limp back to Cincinnati. Another huge loss and write off while still bleeding cash. While I understand they do not want the overhead costs with owning an airpark, they have everything they need in Wilmington. Workers, sort, flexibility of operations, everything. If they were to donate the airpark in exchange for landing rights and lease space, they would have a couple years of no cost operations and not miss a beat. They need fuel-first response, they need de-ice-first response, they need sorters-already there. The local community will have some jobs, ABX would lease the hangar space they are looking for from the new port authority, DHL would have something in return by off setting their loss from the airpark by reduced operating costs at a time they probably need it most. But what will they do? Who knows, but past experience tells me it will be what will lose them the most money.
 
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727Niteflyer

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wasnt Airborne a low cost package delivery. They didnt haul oversize freight like emery or bax did they.
 
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