DHL Express is the latest company to show dissatisfaction with the current state of the United States economy, announcing this week that all air and ground domestic delivery operations within the United States will be ceased, and 9,500 jobs will be cut.
Previously in charge of 4% of the shipping services market share in the US, and a pending deal with UPS on the table, DHL’s withdrawal from the United States market seems imply that the comany has a less than optimistic view of the future of the US economy.
The 9,500 jobs to be cut represent over fifty percent of the current DHL work force, and come after the reduction of 5,400 employees earlier this year. The reduction in force is expected to affect employees of all DHL US based ground hub locations, and the 309 DHL stations planned for closure.
According to a CNN Money report on the DHL company webcast detailing the announcement, parent company Deutsche Post World Net’s Chief Executive Frank Appel commented “We see a significant shortfall in the U.S. part of our express business due to the fact that the economy has weakened deeply”, and that “We have taken a massive action in the U.S.”
Speculation exists regarding the ongoing potential of the DHL and UPS deal which has been in negotiation for most of the year, however analysts still feel that UPS could make use of DHL air transportation services between airports.
Perhaps the most concerning aspect of the news however is the potential domino effect in local communities which have come to rely on DHL centers and hubs for employment. One community in particular, that of Wilmington, Ohio, seems to be hardest hit due to a strong mutual relationship between DHL in Wilmington, and the local ABX Air, Inc. and Air Cargo Carrier transport companies.
Both UPS and Fedex stand to gain by DHL’s withdrawal however, with DHL’s 4% market share now up for grabs which had represented $3.4 billion in revenues for the company in 2007.