DHL in the US - Latest

EuroWheenie

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Was at a meeting with some very senior boffins earlier this week, and were given briefings on various topics. One of them was, obviously, our business in the US.

To make a long story short, there will be roughly 40000 lay-offs - including contractors. ABX is considered a contractor. The UPS deal is all but stalled, but since it'll cost USD 500 Million if either of the parties back out of the deal prematurely, nothings happening at the moment. February 1st will see the obvious statement that the deal is dead; DHL is quitting the US domestic market, so the lift is not required.

Speaking of lift, the future air network in the US will consist of between 20 and 30 jet aircraft. Types to be flown are the A300s, 767 and DC-8 - with the DC-8 likely to be axed if the number of aircraft required is closer to 20 than 30. Whichever airline(s) will be doing the job will integrate fully with the way DHL does business in the rest of the world. No C-cans; adopting the same rules, procedures and standards as everyone else. Note, I'm not talking about the actual flying SOPs here, "just" everything else.

Nothing firm about where the hub will be located. If you're a gambling man, somewhere in Kentucky might not be a bad bet.

The revenue will be decreased by roughly 92%(!), with an expected daily volume of around 100K shipments, down from around 1.5 million. Cost savings to the tune of around 750 million/year, and the US just might turn a (very small) profit. Still, we lost around 1 Billion EUR in the US last year.

DHL Express made a profit of around 200 million EUR in 2008.

In other news, the first factory fresh B767 freighters will be coming in August (1) and December (2) this year. First aircraft (originally intended for trans-atlantic flights) will be employed on other routes. Next two aircraft may also fly "somewhere" else than the US, as a consequence of the current state of the US economy. The remaining 3 aircraft on order have been deferred to late 2010/early 2011. They'll be operated by wholly owned airline DHL Air UK (DHK), but crewed by both DHK and EAT.
 
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shooter

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Tell them I said to not let the door hit them in arse on the way out of the US. Oh, and tell them I have some extra Federal Express envelopes if they ever desire for anything to actually get where it needs to go. They have management that actually knows how to run a cargo business. :D
 

flyinboxes

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Was at a meeting with some very senior boffins earlier this week, and were given briefings on various topics. One of them was, obviously, our business in the US.

To make a long story short, there will be roughly 40000 lay-offs - including contractors. ABX is considered a contractor. The UPS deal is all but stalled, but since it'll cost USD 500 Million if either of the parties back out of the deal prematurely, nothings happening at the moment. February 1st will see the obvious statement that the deal is dead; DHL is quitting the US domestic market, so the lift is not required.

Speaking of lift, the future air network in the US will consist of between 20 and 30 jet aircraft. Types to be flown are the A300s, 767 and DC-8 - with the DC-8 likely to be axed if the number of aircraft required is closer to 20 than 30. Whichever airline(s) will be doing the job will integrate fully with the way DHL does business in the rest of the world. No C-cans; adopting the same rules, procedures and standards as everyone else. Note, I'm not talking about the actual flying SOPs here, "just" everything else.

Nothing firm about where the hub will be located. If you're a gambling man, somewhere in Kentucky might not be a bad bet.

The revenue will be decreased by roughly 92%(!), with an expected daily volume of around 100K shipments, down from around 1.5 million. Cost savings to the tune of around 750 million/year, and the US just might turn a (very small) profit. Still, we lost around 1 Billion EUR in the US last year.

DHL Express made a profit of around 200 million EUR in 2008.

In other news, the first factory fresh B767 freighters will be coming in August (1) and December (2) this year. First aircraft (originally intended for trans-atlantic flights) will be employed on other routes. Next two aircraft may also fly "somewhere" else than the US, as a consequence of the current state of the US economy. The remaining 3 aircraft on order have been deferred to late 2010/early 2011. They'll be operated by wholly owned airline DHL Air UK (DHK), but crewed by both DHK and EAT.
Very informative post. Thanks for the update. Looks to be interesting over the next few weeks after a few months of quiet.
 

erichartmann

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Was at a meeting with some very senior boffins earlier this week, and were given briefings on various topics. One of them was, obviously, our business in the US.

To make a long story short, there will be roughly 40000 lay-offs - including contractors. ABX is considered a contractor. The UPS deal is all but stalled, but since it'll cost USD 500 Million if either of the parties back out of the deal prematurely, nothings happening at the moment. February 1st will see the obvious statement that the deal is dead; DHL is quitting the US domestic market, so the lift is not required.

Speaking of lift, the future air network in the US will consist of between 20 and 30 jet aircraft. Types to be flown are the A300s, 767 and DC-8 - with the DC-8 likely to be axed if the number of aircraft required is closer to 20 than 30. Whichever airline(s) will be doing the job will integrate fully with the way DHL does business in the rest of the world. No C-cans; adopting the same rules, procedures and standards as everyone else. Note, I'm not talking about the actual flying SOPs here, "just" everything else.

Nothing firm about where the hub will be located. If you're a gambling man, somewhere in Kentucky might not be a bad bet.

The revenue will be decreased by roughly 92%(!), with an expected daily volume of around 100K shipments, down from around 1.5 million. Cost savings to the tune of around 750 million/year, and the US just might turn a (very small) profit. Still, we lost around 1 Billion EUR in the US last year.

DHL Express made a profit of around 200 million EUR in 2008.

In other news, the first factory fresh B767 freighters will be coming in August (1) and December (2) this year. First aircraft (originally intended for trans-atlantic flights) will be employed on other routes. Next two aircraft may also fly "somewhere" else than the US, as a consequence of the current state of the US economy. The remaining 3 aircraft on order have been deferred to late 2010/early 2011. They'll be operated by wholly owned airline DHL Air UK (DHK), but crewed by both DHK and EAT.
ABX currently has 16 767-200SF aircraft. 6 of these are currently flying the DHL system. 1 is committed to Aeromexpress, 5 are in KMIA flying other than DHL trips and 1 currently committed to ANA (soon to be available). 1 is committed to TNT. 2 are in maintenance. Bottom line here is that ABX has 6 aircraft currently available to DHL with 1 in maintenace soon to return to DHL service and perhaps 1 more soon to be available for a total of 8.

Word is Astar will not be renewing the leases on the A300's.

So, where are the 20 to 30 "A" container aircraft DHL wants going to come from? Is DHL now willing to pay ABX a profit margin sufficent to warrent converting PC ("C" container) 767's to SF configuration or pay for the change directly? Is DHL willing to have ABX operate "C" container aircraft in the interim? If not, what are they going to do for the needed aircraft? If DHL is wants to use only B767, A300 or DC-8 freighters neither ABX or Astar currently has enough aircraft available to meet the projected need individually or combined.
 

EuroWheenie

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eric

I've no information about the nuts and bolts of the future network, only rough numbers. At this point in time your guess is as good as mine, and whilst I'd be somewhat surprised should DHL fund conversion of ABX 767's, I suppose everything is possible.

Expect more news in February.
 

TWA

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What happens tomorrow night? Does ABX continue to fly the little DHL freight that there will be? Is there going to be some mass exodus to Kentucky?
 

countbat

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Thank you Euro for the inside infos.
 

ABXbooger

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DHL has permanently stained their reputation here in the US. they may start with 100k packages, but it will lowly decline. I wouldn't be surprised to see the total get to around 50k.

While there used to be a reason to ship DHL internationally, Fedex and UPS have both made major inroads internationally. There is no longer a reason to ship anything DHL. I and most of the people I know will never ship DHL ever again.
 

erichartmann

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DHL has permanently stained their reputation here in the US. they may start with 100k packages, but it will lowly decline. I wouldn't be surprised to see the total get to around 50k.

While there used to be a reason to ship DHL internationally, Fedex and UPS have both made major inroads internationally. There is no longer a reason to ship anything DHL. I and most of the people I know will never ship DHL ever again.
Perhaps. DHL's previous business model, from which they deviated here in the US, has been to purchase a large minority share in an existing sucessful business, usually the largest or second largest of its kind in the country, and go from there leaving the management team more or less intact. The next step is to increase to a majority share, then an all out purchase or as much of a share as local law permits. Why they chose to take a different path here is not hard to discern, but clearly it failed. If, and it is a big if, they have learned from their mistakes, they have a couple of paths open to them. They might, for instance, chose to resurrect the Airborne brand, which they own, focus on providing outstanding service, then gradually rebrand again as DHL to resurect the name. To do this they would operate as Airborne, then as Airborne - a DHL Company (with the DHL Company in small print) and finally, once again as DHL. Not easy, but I think it could be done with the right people. Or, they could forgo the Airborne slight of hand, and simply work very hard to redeem themselves. Again, not easy, but, I think, doable. There is no customer loyalty here in the US. If they were to provide a comparable service with a better price they would be able to win back market share over time.
 

shooter

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Interesting take Eric. I wonder if DHL would do as you say. Their past experience has been they are complete idiots when it comes to business in the USA. I personally do not think they are capable of learning either A) lessons from their past disaster or B) not trying to do business here as they do abroad.

I really do wonder what will become of them now that their monopoly is 1 year over. Will they even be able to compete globally now they do not have that nest-egg any longer? They do provide a good product overseas, but that is not the USA and now they have a stronger international UPS and FedEx to contend with there.

Time will tell. But I think they are tango uniform in the USA with no ability or even desire to learn how to do business here. Had they been willing to learn, they would have listened to Airborne in the first place. Yes, they admitted that already. But what (if anything) will they do about it?


EDIT: Evidence of that can be seen right here with the first post if the thread. Weenie seems to be in some upper management role and seems to toss a few back with some big brass in DHL. But what does he imply? That contractors "will" conform to the way DHL does business "everywhere else". What kind of dope thinks the contractor tells the business owner what flies and what does not? What morons think ABX made the decisions that DHL was responsible for? Well, seems DHL are the dopes and morons since they seem to be placing blame on an outside contractor for their failures and decisions. If ABX were not providing the contracted services, then DHL would definitely file breach of contract as they have in the past with so many. Then they b!^*# and moan about ABX fought us over this and over that. Well dopes, that is because you were destroying yourselves from the inside out. ABX tried to tell them (they seem to think that is fighting them) and then ABX did it the DHL way. The way they wanted and did not listen to what was being told to them. And....the rest is history. Look what happened doing it the "DHL way" here in the USA. Good job.....!#&$%$
 
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Whistlin' Dan

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So, basically, DHL tears up it's contracts and "invites" everybody to re-bid? There are a lot of airplanes out there doing nothing, and a lot of guys who don't want to be on the street, especially in this economy.

So much for "Quantum Leap"
 

shooter

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So, basically, DHL tears up it's contracts and "invites" everybody to re-bid? There are a lot of airplanes out there doing nothing, and a lot of guys who don't want to be on the street, especially in this economy.

So much for "Quantum Leap"
Plus you have to look at the ability for such a small aircraft operation to remain in business. Is it worth the effort and expense for a single digit fleet? They are usually the first to lock the doors on you without notice.
 

erichartmann

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Interesting take Eric. I wonder if DHL would do as you say. Their past experience has been they are complete idiots when it comes to business in the USA. I personally do not think they are capable of learning either A) lessons from their past disaster or B) not trying to do business here as they do abroad.

I really do wonder what will become of them now that their monopoly is 1 year over. Will they even be able to compete globally now they do not have that nest-egg any longer? They do provide a good product overseas, but that is not the USA and now they have a stronger international UPS and FedEx to contend with there.

Time will tell. But I think they are tango uniform in the USA with no ability or even desire to learn how to do business here. Had they been willing to learn, they would have listened to Airborne in the first place. Yes, they admitted that already. But what (if anything) will they do about it?


EDIT: Evidence of that can be seen right here with the first post if the thread. Weenie seems to be in some upper management role and seems to toss a few back with some big brass in DHL. But what does he imply? That contractors "will" conform to the way DHL does business "everywhere else". What kind of dope thinks the contractor tells the business owner what flies and what does not? What morons think ABX made the decisions that DHL was responsible for? Well, seems DHL are the dopes and morons since they seem to be placing blame on an outside contractor for their failures and decisions. If ABX were not providing the contracted services, then DHL would definitely file breach of contract as they have in the past with so many. Then they b!^*# and moan about ABX fought us over this and over that. Well dopes, that is because you were destroying yourselves from the inside out. ABX tried to tell them (they seem to think that is fighting them) and then ABX did it the DHL way. The way they wanted and did not listen to what was being told to them. And....the rest is history. Look what happened doing it the "DHL way" here in the USA. Good job.....!#&$%$
As I said, it is a very big "IF". I think they could. I don't know if they will.
 

shooter

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I understand the big if. Just in the short time since the purchase of Airborne by DHL there have been things I thought I would NEVER see a business do. So, nothing surprises me with these people anymore. I guess there is a chance that one of the surprises could be a good business move for a change. :D Like the old saying goes; Even a broken clock is right twice a day.
 

EuroWheenie

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Guys, the reason DHL stays in the US is not to serve the US market - it's to serve our international customers. They've insisted we continue to provide an import and export business in the US, and that's all that'll be provided for the foreseeable future. The company has supposedly analysed the volumes, and seem to think it'll be around 75-100K shipments a day, and have also come to the conclusion it can be done with a fleet of around 20 to 30 aircraft.

All ground-ops hubs have already been closed, along with around 300 of 400 stations. In other words, a little less than 25% of service centres will remain, and there'll be no linehaul by road. The US market is not expected to generate enough revenue to sustain a return to profitability; the majority of the business will be imports to the US.

Shooter

You may not have been privy to the inner workings of our relationship with ABX Air. ABX management may well have had their reasons to resist, and actively work against, the changes DHL wanted them to make. But, in the end it helped bring down the business. It's not the only reason, not even the single biggest reason, but it is one of the reasons. Things are a fair bit more complicated than what you're suggesting, as an example ABX refused to provide the shipment details DHL requires - and DHL requries details to the nth degree .(C-containers with no tracing possibilities was one of the issues). ABX also did what they always done, namely fill up the aeroplanes even with 2nd day freight - and that's a surefire way of eroding your own revenue potential (why pay for 1 day service if the cheaper 2nd option delivers the same result?).

Suffice to say, the relationship between DHL and ABX was somewhat toxic. That's one of the things that'll be changed this time round.
 

shooter

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You're right that I may not be privy to the Monday morning quarterbacking. But I was privy to the daily operations of the system and the asinine decisions that came down from your DHL NCG group. That would be the No Clue Group. Oh, and the asinine decisions they came up with. But they could not come up with them in a timely manner either. They had to go through 5 miles of red tape to even get an answer of what they wanted to do. I KNOW what DHL operations means....they are worthless. I will not insult your operations as I know you have a good product over there. But here in the US my friend, you have idiots working for you. Good luck with them.
 

erichartmann

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Guys, the reason DHL stays in the US is not to serve the US market - it's to serve our international customers. They've insisted we continue to provide an import and export business in the US, and that's all that'll be provided for the foreseeable future. The company has supposedly analysed the volumes, and seem to think it'll be around 75-100K shipments a day, and have also come to the conclusion it can be done with a fleet of around 20 to 30 aircraft.

All ground-ops hubs have already been closed, along with around 300 of 400 stations. In other words, a little less than 25% of service centres will remain, and there'll be no linehaul by road. The US market is not expected to generate enough revenue to sustain a return to profitability; the majority of the business will be imports to the US.
Fair enough. Its their business and they can do as they wish.


...(C-containers with no tracing possibilities was one of the issues).
Frankly I don't see why that would be an issue if clearly communicated. The same method of tracking "A" containers could have been applied to the "C" container.


ABX also did what they always done, namely fill up the aeroplanes even with 2nd day freight - and that's a surefire way of eroding your own revenue potential (why pay for 1 day service if the cheaper 2nd option delivers the same result?).
I can't beleive that could be done without the knowledge and consent of DHL's system control. BTW, the other side of that arguement is that is makes no sense to provide (and pay for) linehaul to a destination if a partially empty aircraft is going there. All one need do is hold the freight for 2nd day delivery.

Suffice to say, the relationship between DHL and ABX was somewhat toxic. That's one of the things that'll be changed this time round.
Again, fair enough from my POV, but I'm just a line pilot trying to get the aircraft and its load of freight where it's supposed go.
 

mxer

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On the idea of second day freight going on the aircraft, I can speak first hand as a customer that they did hold the freight untill the appropriate time. I personally had a shipment held at the hub and that was the exact reason that was given.
 

flyinboxes

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Yes, after they were caught. It costs money to fly 2nd day, and alot more when you don't know you are doing it. It wasn't just second day either.
 
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