DHL cuts additional 9,500 jobs by: David Levy
German based postal service company, Deutsche Post, is cutting 9,500 jobs from its US subsidiary, DHL. The logistics company is trying to restructure the company which will involve shutting down their domestic air and ground operations. DHL has been losing profits to its major rivals UPS and FedEx. Right now, operating costs are roughly $5.4 billion in DHL’s express unit. The move will lower these costs to fewer than one billion dollars. DHL is going to concentrate more on its core international business rather than domestic air and ground. Despite the sever changes, DHL has still seen increased earnings.
Deutsche Post has 31% of its ownership by the German government and is expecting a net loss for 2008 because of all the sever changes to the company. However, from its core business the company earnings gained 1.3% to 1.6 billion euros and had rising sales of 2.3% to 40.5 billion euros. The announcements have led shares to jump 8.82% in midday trading.
This major change to DHL of cutting out its domestic air and grounder operations will provide a lot more business for UPS and FedEx. Both companies should see an increase in market share and profits in the upcoming years.
Sources:
http://www.dw-world.de/dw/article/0,,3778378,00.html
http://news.yahoo.com/s/ap/20081110/ap_on_bi_ge/eu_germany_deutsche_post
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Having used DHL, it’s a bit surprising that they are laying off workers. They are a much better service than Fedex and UPS because they are willing to come pick up your package. Maybe that is the reason they are laying off workers, but nonetheless they have a good business model and when the economy turns around they will do well.
nnusinow - November 11, 2008 at 6:08 pm
It is quite surprisign that DHL is cutting off these many workers. I don’t have a preference for either DHL, UPS or FedEx but the reason that is DHL suffereing so much compared to the other two companies makes sense. Due to operating costs, they are losing their profits. It is a smart move for them to stop focusing on domestic air and ground because it is costly. But a negative for them is that UPS and FedEx will benefit from DHL stopping their operations and will reel their old customers.
alexchung01 - November 11, 2008 at 6:22 pm
Its very interesting that DHL had experienced so much growth in the past several years that they even were able to hire all these extra workers. I think as more of these job cuts become apparent, the market for temp-workers is going to explode. Temp-companies are already becoming quite popular for other jobs.
bkriger - November 11, 2008 at 8:01 pm