If you can’t beat ’em

The news in May that DHL was radically scaling back in the U.S. wasn’t a huge surprise. The courier had lost billions of dollars here, and it was well documented that German parent company Deutsche Post World Net — not to mention the company shareholders — had been losing patience with it.

More curious is DHL’s plan to partner with rival United Parcel Service on airlift operations. UPS will handle airfreight for DHL Express U.S. domestic and international shipments within North America.

As a result, DHL is scrapping its own air network. It’s also shuttering its @home service product, a service designed for business-to-consumer shippers, as of Sept. 1.

So Deutsche Post’s plan to conquer the U.S. delivery market hasn’t exactly panned out. It bought DHL Express in 2002, and DHL acquired Airborne in 2003. But while DHL made great strides here in a relatively short time period, it remained a distant third in its attempt to go head-to-head with UPS and FedEx.

The courier no doubt thinks partnering with UPS is a better alternative than cutting and running from the U.S. marketplace altogether. It’s certainly a great deal for UPS, which stands to generate $1 billion a year under the proposed 10-year agreement.

But I’m not sure it’s really saving DHL’s brand (or face) here, and I know it’s not great for direct merchants. For one, the deal basically eliminates a contender, and that’s never a good thing when it comes to rates and service. And I have yet to understand how DHL is going to make money by paying UPS to transport its airfreight. If I’m a merchant in need of air services, why wouldn’t I just use UPS directly?

For certain, the deal raises more questions than it answers, as our story “The deal with DHL restructuring” on page 9 points out. There’s a lot that DHL still needs to work out, and we’ll be watching what happens with great interest.

On another note, I’d say don’t miss the MCM 100, but it’s pretty hard to miss in this issue. Our annual ranking of the top-100 multichannel marketers is always a tremendous undertaking. In other words, it’s a royal pain to put together. But it’s worth it, because when it’s finally done, it’s a great resource for us — and we hope for you, too.

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