DHL bleeding here in the States is no secret. None of this really adds up or maybe it does and I just cant add. It would take FedEx a while to add the additional lift to absorb DHL domestic. If Im not mistaken didnt a news service somewhere report FedEx rejected the idea?
ABX does most of the DHL hauling and they just bought a load of DC8's and 72's with the purchase of CHI. I know those planes are already tasked, but is this a sign that ABX is altering it business plan or gearing up for something else.
Some one need to bug the phones and the board rooms. Its the only way to know for sure.
DPWN/DHL used a model that has worked for them elsewhere. They purchased a "local" business as a shortcut to expanding their business in country. Unfortunately for them they overlooked a few things. First, they didn't really understand the dynamics of the market they were entering. Second, they didn't understand the mindset of the people who were operating their "local" business.
The other sucessful model is to buy into a "local" business. The "local" business then uses the influx of capitol to expand the business. This may be what we are seeing with the re-aquisition of 49% of Astar, along witht the 49% of Polar.
Viewed in this light, what are ABX's future prospects? It could very well mean gradual phase out. Hete more than likely saow this as a possibility from the beginning. His choices were stark. He needs to keep DHL as happy as possible while expanding the 3rd party business a rapidly as possible, or ABX wouldn't survive. Sucessfully expanding the third party business has done several things. First, it provides additional business on which ABX may be able to survive. Second, it proves to DHL that ABX is a viable alternative to Astar, thus allowing for the possibility of keeping DHL as customer, or perhaps a business partner. Third, it allows Hete to fulfill his fiduciary responsibility to the stockholders of ABX which in turn allows him to keep his job.
What we don't know at this point is what the "master plan" is for either DHL or ABX. We don't know, for instance, if DHL is reacting in a reflex manner, i.e. option one didn't work let's try option two, or if they have thought things through and understand what they need to do. Depending on what the plans are, some of us may have to make some difficult choices ourselves. We may, for instance, have to chose between going with the aircraft to Astar if the plan involves an asset sale, or staying with ABX and Hete. Some will have no choice. Most of us have little choice but to stay and see where it all leads.
