DHL/Airborne Deal Could Aid Mailers

The proposed acquisition of Airborne Express by Deutsche Post, Europe’s largest postal monopoly and the owner of DHL Worldwide Express, would turn the combined ground network of Airborne and DHL into a formidable competitor of United Parcel Service, FedEx Home Delivery, and the U.S. Postal Service. And that could encourage the parcel shippers to keep rates in check.

The deal, announced in March, might not be approved by the U.S. Department of Commerce for at least several months. Nonetheless, the prospects of another significant carrier in the $45 billion U.S. parcel shipping market could force UPS and FedEx to refrain from raising prices every year, as has been the case for more than a decade.

Once combined, the DHL/Airborne ground delivery business will account for just 1.5% of the parcel shipping market. But in an April report in business newspaper Barron’s, some analysts predicted that DHL/Airborne’s market share would jump to 6% during the next few years, “presenting UPS and FedEx with a new and distinctly tough competitor,” fueled by Deutsche Post’s monopoly profits in Germany.

“Catalogers ought to eagerly and thoroughly get involved with Airborne,” says Gene Del Polito, president of the Arlington, VA-based Association of Postal Commerce. To show interest in having another player in the ground delivery market, Del Polito suggests that mailers initiate meetings with DHL once the Airborne deal goes through.

Mike Muoio, president/CEO of Oshkosh, WI-based gifts cataloger Miles Kimball, highly doubts his company would ever use an Airborne/DHL ground service. “DHL and Airborne are both highly customer-centric and are known for value-added services and becoming a key piece of your supply chain,” Muoio explains. “For those catalogers who need general, low-cost logistics services such as ours, I don’t foresee a need for them.”

Nevertheless, Muoio thinks the acquisition could still benefit companies that, like Miles Kimball, use freight consolidators such as R.R. Donnelley Logistics and Quad/Graphics’ Parcel Direct, which deliver packages to local destination postal facilities for final delivery via the USPS. “Anything that can compete with the Postal Service is a good thing,” he says, because the long-term effect would be better service or lower rates from the consolidators and the USPS.

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