DHL ends U.S. operations, cuts 9,500 jobs
In what may have a catastrophic effect on gadget delivery nationwide, global delivery company DHL has announced that it will be cutting 9,500 jobs and suspending domestic mailing operations.
UPS, FedEx, USPS: We hope you've got enough trucks and airplanes to go around!
DHL is dropping "domestic-only" air and ground services within the United States "to minimize future uncertainties." (You can still ship with DHL Express internationally from the U.S.) Thankfully, it's doing so by Jan. 30, after the holiday consumer rush.
Somewhere, Santa Claus is breathing a sigh of relief.
DHL's 9,500 job cuts are on top of 5,400 job reductions announced earlier this year, leaving just 3-4,000 employees at 103 stations (down from 412) for DHL's U.S. operations, the company said.
CNNMoney.com reports:
DHL said it was making the cuts to improve profitability and "to prepare the company for the economic challenges ahead."
The company said this latest action would add $1.9 billion to its restructuring costs, for a total of $3.8 billion over two years, most of it during 2008. The company said the cuts would reduce the annual operating costs of DHL U.S. Express to less than $1 billion, from its current cost of $5.4 billion.
DHL is owned by the German company Deutsche Post World Net.
DHL's U.S. pullback should help competitors FedEx Corp (FDX, Fortune 500) and UPS Inc. (UPS, Fortune 500), said Donald Broughton, analyst for Avondale Partners.
"Obviously, it's good news for FedEx and UPS, because this puts the 3-4% market share that DHL had [for domestic ground and air shipping within the U.S.] up for grabs," said Broughton. "Makes it a jump ball, if you will."
UPS stock rose nearly 5% in the first hour of Monday trading, and FedEx stock rose about 4%. Both outperformed the Dow Jones industrial average, the Nasdaq and the S&P 500.
Reportedly, DHL has been working out a deal that would extend its airport-to-airport shipping services within the U.S. to competitor UPS.
Of course, this reeks of cutbacks in the face of a terrible economy, just adding to the 1.2 million jobs that were lost in the first 10 months of this year in the U.S. Sadly, DHL's main hub is in Wilmington, Ohio, a town of just 12,000 people.