UPS Also Making Out Thanks to DHL’s Woes

“United Parcel Service Inc., the world’s largest package-delivery company, said it expects as much as $1 billion a year in new revenue as it takes over U.S. air shipments for Deutsche Post AG’s unprofitable DHL unit.”

So, both FedEx and UPS will pick through the carcass (figuratively) of Deutsche Post’s misguided adventure in the US — which will help both UPS and FedEx buffer the effects of the economic downturn.

Everybody loses less.

Read all about it here.

FedEx Expects to Win Market Share from Deutsche Post’s DHL in the US

Not too impressive a feat, considering DHL has already announced they’re going to downsize their operations significantly.

For more details, check out this article on Hemscott (a Morningstar company).

Exit of Zumwinkel may end DHL push in US

This CargoNews article surmises that with Mr. Zumwinkel gone, the adventure in the US may be addressed sooner than if he were still at the helm.

Worthy points of note in the article are the mention of two Wall Street comments in Q4 2007:

• Bear Sterns concluded DHL stood no chance of making a profit in the near future and advocated a retreat from the US market
• A second Wall Street firm advised they abandon the intra-US market

That second point is good one and not an unlikely scenario, since Deutsche Post has made clear that they are not considering a full withdrawal from the US market.

In that case, a reduced, well-designed presence would stop the bleeding while still giving them a bridgehead to capture inter continental traffic.

Interestingly, many longitudes away and a few latitudes, business is booming in Iran, where  FedEx and UPS cannot compete due to US sanctions.

Appel’s Come Out Swinging

Frank Appel, the new CEO of Deutsche Post has pledged to focus on the US business and to seek a solution for Postbank.

Already, an announcement of cooperation between Deutsche Post and Fedex has hit the wires.

A few points on Mr. Appel:

• 46, has been a member of the management board since 2002, and is currently in charge of the group’s international mail and logistics division.
• Studied chemistry, has a PhD in neurobiology from the Swiss Federal Institute of Technology in Zurich
• Was also at McKinsey (like Zumwinkel)

Bullets mainly from this Deutsche-Welle article.

And more elaboration from the Guardian here.

TNT Threatens to Leave Germany if Wage Challenge Fails

TNT claims that the business case for their German operations will be under pressure if they are forced to pay the newly imposed minimum-wage for the postal industry.

According to this FT article, there is at least one Deutsche Post competitor, the Pin Group,  that has already started laying off staff.

In this FT article, Peter Bakker, TNT’s CEO, comments on the possibility that the arrest of Klaus Zumwinkel will have any bearing on the outcome in Germany:

“If it was just a deal between Zumwinkel and the unions, you could probably have some hope,” he said. “But it’s not. Zumwinkel made the deal and then the cabinet said yes, and parliament said yes and now it’s law . . . So far, everything has gone against us in Germany.”

TNT Misses Q4 Estimates on Restructuring

“AMSTERDAM (Thomson Financial) – TNT NV reported sharply lower fourth quarter results that missed analysts’ estimates as it booked a restructuring charge of 110 mln eur, but said its 2008 outlook is in line with its mid-term target of 10 pct annual organic sales growth.”

A summary of the numbers:

• sales were up to 3.004 billion, up from 2.767 billion, missing analysts’ estimates of 3.048
• EBIT was 253 million compared with 355 million for the same period in 2006; however, concensus estimates expected 376 million
• net profit was 148 million down from 189 million in 2006, missing the forecast of 245.9

The two main components of the underperformance were attributed to a provision of 110 million EUR associated with the postal restructutrings in the postal division as well as a 68 million EUR charge for a UK parcel contract, as part of the repositioning of the unit in that country [Forbes 1].

By unit, the breakdown of the performance looks like this [Forbes 2]:

Express

•  At the company’s express mail arm, operating profits rose to 188 million euros ($276 million) from 168 million euros.
• Sales grew 14 percent at the express operations, thanks to 6.8 percent growth in Europe aided by growth of over 40 percent in Asia, which now accounts for around 25 percent of the division’s total.

Post

•  operating profits fell sharply to 78 million euros ($114 million) from 199 million euros.

A broad overview of the numbers and context in this Bloomberg article.

The Kite Ship Makes it to Venezuela!

This article in ClimateBiz, announces that the ship has reached Venezuela.

“Global DHL Forwarding used the vessel to deliver 71 containers from Germany to Venezuela as part of a larger effort of creating a less-carbon intensive transport and logistics network. The ship’s wind propulsion feature allows it to either travel faster or use up to 20 percent less fuel. “

Claims on the fuel efficiency range from 15 – 35%, heavily dependent on wind of course. Which in PR talk means somewhere between 5 – 10% on calm seas, with an empty hold, in gale force winds. But I’ll do the research, to avoid the risk of any undeserved skepticism.

A sarcastic take on the DHL innovation here.

Deutsche Post’s Zumwinkel to Quit

“Mr. Zumwinkel has told the board’s executive committee that in the interest of the company, he plans to resign,” the Bonn, Germany-based company said in an e-mailed statement today. ”

Read the rest of the Bloomberg article here.

Only question now is who will get to sort out the problems with the US operation?

Deutsche Post’s CEO Investigated for Tax Evasion

Not a very sweet Valentine’s Day for Deutsche Post, who have some relatively large issues on their plate at the moment.

The Times Online (UK) reports that the company’s Bonn offices have been raided and a warrant issued for Mr. Zumwinkel’s arrest.

The Guardian paints a bleaker picture, writing that Zumwinkel’s home was raided and that he was visited by his lawyer before leaving voluntarily with the police. Yikes!

Lloyd’s quotes a lead prosecutor in the case as saying that Zumwinkel “is suspected of evading about EUR1 million in taxes via investments in Liechtenstein”.

The company’s shares rose 3.5% on the news. Which is the market’s unflattering way of saying that Mr. Zumwinkel should take a long vacation and not come back. A cruel thing, the market, especially since Mr. Zumwinkle was at the helm during Deutsche Post’s transformation from domestic, monopoly player to the multinational conglomerate it is now. During his tenure, he oversaw the flotation of the company in 2000 as well as key acquisitions globally.

A full article from the BBC online.

This blurb comes from the Wall Street Journal.

DHL to Cut Approximately 3% of Workforce in US

“DHL Express USA Tuesday announced plans to cut 600 jobs from its U.S. work force, including about 35 from its Plantation headquarters, amid a slow economy and tough market conditions. ”

The job cuts are geographically distributed and focused on management, although other levels of the organisation will also be affected.

The following articles cover this topic:

Sun Sentinel

Reuters

Miami Herald