DHL, UPS formally cut off talks
DHL moves international air freight hub out of Ohio
By Dave Hannon -- Purchasing, 4/21/2009 4:43:00 PM
DHL’s decision to pull out of the domestic U.S. market last year put a lot of shippers—and one of DHL’s main competitors—in a tricky spot.
Prior to DHL’s decision in November to exit the U.S. market and focus solely on international air freight, the German-owned logistics firm had been in talks with its competitor UPS since July for an outsourcing deal under which UPS would carry all of DHL’s air freight shipments as a way for DHL to reduce its cost structures. With DHL’s formal exit from the U.S. express market, however, the scope and volume of the deal changed. Nonetheless, as recently as January, the two firms said they were still in talks but most market watchers did not expect a deal to come.
And this week UPS and DHL officials confirmed that the two companies have mutually agreed to terminate their negotiations but neither side was quick to elaborate on the reasons. “We have not been able to come to a conclusive agreement that is acceptable to both parties," DHL confirmed to the Associated Press in a statement.
"I suspect UPS had developed a fairly comprehensive plan in the event that it did not become the carrier of choice for DHL," Jerry Hempstead of Hempstead Consulting tells Purchasing.com. "Frankly I think UPS ended up with the best scenario as they most likely have a much higher revenue yield and profit margin that that which DHL had expected to pay UPS to transport its customers' shipments."
DHL Express also confirmed on Friday that it will move its U.S. hub operations for its international business from an air park in Wilmington, Ohio (left) to the Cincinnati/Northern Kentucky International Airport by mid- to late summer, also a move that was expected. The move "will be more cost-effective for handling the company's international express shipping volumes, and is expected to improve DHL's long-term financial position," DHL said in a statement.
DHL will reactivate its fully automated sorting facility at the Cincinnati-area airport, a facility that DHL used from 1983 until its move to Ohio in 2005.
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