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.