DHL forges ties with UPS in US

German logistics giant Deutsche Post World Net (DPWN) has unveiled a restructuring plan for its ailing DHL US Express division, which will involve ties with rival UPS.
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German logistics giant Deutsche Post World Net (DPWN) has unveiled a restructuring plan for its ailing DHL US Express division, which will involve ties with rival UPS.

Under the terms of the agreement, DHL will redesign its ground linehaul network, and UPS will provide air uplift services for DHL's national and international shipments within North America.

A final contract is expected later this year, and UPS anticipates that it will receive $10 billion in revenue from the agreement over the course of the next 10 years.

"I am confident that we have found a sustainable way forward for US Express in the best interest of our customers, employees and investors," announced DPWN CEO Frank Appel. "Taking a pragmatic approach, we will go on to be a smarter player in the US Express market."

DHL has indicated that less than 4% of shipments will be affected, and has predicted that the synergies will provide significant cost savings for the company, which is predicting an underlying earnings before interest and tax shortfall of US$1.3 billion for its US arm.

"We believe this arrangement with DHL would represent a wise use of our assets and network capacity while creating a substantial and profitable revenue stream for our company," said David Abney, UPS's chief operating officer. "We plan to move forward quickly on the final contract."

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