European logistics conglomerate Deutsche Post World Net has announced a significant restructuring of it’s DHL Express brand in the United States, the conglomerate contracting United Parcel Service (UPS) to handle the majority of its international and North American package volumes.

In announcing the agreement, Deutsche Post World Net has said that the reason behind the restructuring is to reduce costs associated with the DHL Express brand.  The brand expecting losses in 2008 of approximately $1.3 billion dollars.

Speaking at a press conference in Bonn, Chief Executive Officer at Deutsche Post World Net, Frank Appel, commented that the company is, “taking a pragmatic approach” to the issues at hand and would go on to be “smarter player in the challenging U.S. Express market”.  All the while offering “premium service to customers who rely on DHL as the leading network operator across the globe.”

United Parcel Service has welcomed the agreement to provide services for the DHL Express brand.  Indeed the agreement, when finalized, is expected to produce up to $1 billion in additional annual revenue for UPS over ten years.  UPS has said that the company should be able to handle much of the anticipated new volume in its existing air network, although additional capacity will be added beginning in 2009.

David Abney, Chief Operating Officer at UPS has said that company plans to move forward quickly on the final contract, Abney saying that “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.”

While both Deutsche Post World Net and UPS are keen to proceed with a final agreement to benefit both groups, representatives of pilots of ABX Air, the company that has has served as the major air freighter for DHL in North America for the past five years has expressed significant concern over the potential for massive jobs losses at ABX Air. 

Captain David Ross, the President of Airline Professional Association has said that “thousands” of jobs could be in jeopardy, in the wake of the agreement between Deutsche Post World Net and UPS.  Additionally Ross has called for the immediate resignation of the Chief Executive Officer of Air Transport Services Group, the parent company of ABX Air and has urged Government and community leaders to “pursue all available means” to prevent the job losses.

Source: Deutsche Post World Net, United Parcel Service, PR Newswire and Teamsters Local 1224

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