DHL to Scale Back in U.S.

It’s been rumored for months that Deutsche Post would pull DHL out of North America or take some drastic action to stem its substantial losses in the U.S. Now it has: The company announced today that DHL Americas will end a partnership with its two airline subcontractors and close about a third of its U.S. stations.

The courier says it’s cutting its infrastructure network capacity by consolidating and closing smaller sorting facilities into larger stations; reducing pickup and delivery routes by 17%; and scaling back its ground linehaul network by 18%.

What’s more, DHL is working out a deal with United Parcel Service in which UPS will provide air freight for DHL Express U.S. domestic and international shipments within North America. The 10-year agreement with UPS is expected to begin later this year.

The moves will mean substantial layoffs for DHL in the U.S. — up to 1,800 jobs cut by some estimates, plus the elimination of positions at its former partner companies and contractors. The company said in a release that it also plans to reduce overhead and other administrative expenses.

DHL, which bought Airborne Express in 2003 for about $1.05 billion, has been losing money in the U.S. ever since: It expects to lose more than $1 billion in the U.S. this year. The carrier has been under pressure from investors in recent months to do something about the losses in the U.S. market.

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