Will DHL Stay the Course in the U.S.?

With at least two major investment banks pushing for Deutsche Post to pull DHL out of North America, multichannel merchants may be wondering about the fate of DHL Express US.

A Jan. 7 research report from Morgan Stanley said in that the company needs a “quick, radical solution” to the estimated $900 million in losses DHL faces in the U.S. Bear Stearns in December had said that Deutsche Post’s losses in the U.S. are eating into its overall value to shareholders.

Morgan Stanley, which according to the report thinks “a substantial cut in network size, combined with subcontracting and a focus on international services (revenues from $4.5 billion to $1.7 billion), is the most logical outcome,” even implies that Deutsche Post is close to doing something aggressive about DHL. “With the arrival of a new CFO we sense management has stepped up a gear in terms of addressing investors’ longstanding sore point–The U.S. business,” the report said.

For its part, DHL, which bought Airborne Express in 2003, insists that it remains committed to the U.S. market as part of its global service network. And MULTICHANNEL MERCHANT’s distribution industry sources say that, according to their own well-placed sources, they have no reason to believe DHL is considering exiting the U.S. anytime soon.

What’s more, the carrier on Jan 9 announced that it is partnering with Walgreens in a deal that will place DHL shipping kiosks in nearly all of drugstore chain’s 6,500 stores nationwide by the end of the year. The move will boost DHL’s presence in the U.S. and enable it to compete with competitor Fedex’s retail network with Kinko’s and the United Parcel Service’s UPS Stores.

But the idea that DHL—or any courier—could leave the market should remind marketers to constantly monitor their contracts with parcel carriers. We saw what happened when third-party logistics provider APX Logistics filed for Chapter 11 bankruptcy protection two years ago, leaving several multichannel merchants scrambling to reroute packages.

To protect your company, experts suggest investing in multicarrier parcel manifesting systems to help determine which carrier to use when, considering a backup courier or regional carriers, and seeking competitive bids from other carriers in the marketplace. As with most aspects of your business, hope for the best–but always be prepared for the worst.

Related Articles:

Making Sense of the Coming Parcel Rate Hikes

FedEx Express Rates to Rise 4.9%

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