DHL needs to close doors in Ohio
08-15-2008, 06:27 PM
#21
Gets Weekends Off
Joined APC: May 2006
Posts: 999
Interesting recent interview with DHL CEO...
http://www.nytimes.com/2008/08/16/bu...l?ref=business
Saturday Interview
For Deliveries, Speed Not Quite of the Essence
By ELIZABETH OLSON
Published: August 15, 2008
HIGH fuel prices and a sluggish economy have taken a toll on overnight delivery services, forcing some significant shifts in how the biggest operators do business. DHL Express, the country’s third-biggest overnight deliverer, recently hired a rival, United Parcel Service, to handle its air cargo operations in the United States.
While its global business is profitable, the American segment of DHL, acquired in 2002 by Deutsche Post of Germany, is expected to lose $1.3 billion this year.
In an interview from DHL’s American headquarters in Plantation, Fla., its chief executive, John P. Mullen, discussed the deal with U.P.S.
Q. What factors drove you to make a deal with U.P.S.?
A. The cost of maintaining our network in the United States has been very painful to us, and it’s been exacerbated by the increasing fuel costs. Under the arrangement with U.P.S., if our volume should continue to fall, our costs fall with it. And we have 110 aircraft in the United States, a lot of which are quite old and will need replacement in the coming years. So we avoid that capital expenditure.
Q. What kind of impact have fuel costs had?
A. Very considerable. First, the straight cost burden, and our fuel surcharge does not cover all of it. But more importantly, it starts changing a customer’s behavior. When you say there’s a surcharge of 5 percent or 10 percent, they read the newspapers and they know fuel is going up. But when you start talking 30 percent and up, which is what we’ve got at the moment, the customer starts saying: “Well, do I really need the package there tomorrow morning at 10:30?”
Q. Has that translated into less demand for air service?
A. We’re seeing that customers are downgrading their service expectations, from air to ground. And once customers change, it’s pretty hard to get them to come back again. And even if fuel prices were to come down significantly, we’re not sure customers would revert to urgent air express. Our whole industry is going to have to adjust because, while it may not be tomorrow, we’re going to see huge amounts of our revenue migrate to ground and other forms of transport.
Q. By outsourcing your air cargo services to a rival, where does that leave the company? What is the business model now — more ground and less air?
A. Our business model hasn’t changed. We’re still picking up the package, we’re still delivering it. But instead of giving it to one operator who is flying just for us, we’re giving it to U.P.S., which, although it is a competitor, is just a service provider. The customers wouldn’t actually know whether we used U.P.S. or someone else for the air segment.
Q. What was the price of this deal?
A. U.P.S. will charge us about a billion dollars a year to move our material. Our savings, taking into account other restructuring, including closing 30 percent of our ground stations in the United States, will save us about a billion dollars a year.
Q. How many jobs will you be cutting?
A. We’re cutting 1,500 to 1,800 of our own employees, including some at our air hub in Wilmington, Ohio. And these changes will have an impact on our suppliers, which will mean several thousand more jobs will be affected. Our cuts will come in smaller towns, and we’ll close stations where there are several in the same area.
Q. What percentage of your business will be affected by these changes?
A. We’re estimating that these changes, while they sound fairly large, will only have an impact on about 4 percent of our shipments. In other words, 4 percent of our shipments will go from early morning delivery to maybe afternoon delivery. We’ll still be delivering them, but they will be slightly slower than before, but only a small percent.
Q. How does this affect the general landscape in the United States for deliveries?
A. It shouldn’t make any appreciable difference, and while the deal should make us both more productive, we remain full-tilt competitors. In the rest of the world, in Europe, Asia and emerging economies — where we are in a much stronger position — we are trying to make life as difficult as possible for them.
Q. How much of a decline in daily package volume have you seen because of the economy slumping?
A. Some customers are not sending altogether. But most are trying to find a cheaper way, such as sending it by ground. We’ve got the double impact right now of fuel costs and the economic recession because we carry an awful lot of mortgage documents, contracts and so on, and that side of our business is very significantly under pressure. Air express overnight volumes in the industry are down anywhere from 5 percent to 15 percent from this time last year.
Q. When will the new arrangement go into effect?
A. We hope to have a completed agreement with U.P.S. in a couple of months, and we would start to migrate volume across. We would like to see it all in place by mid- to late 2009. But at the end of the year, our busiest season since stores and other parts of industry are ramping up, we will slacken off and try not to make too many changes until the new year.
http://www.nytimes.com/2008/08/16/bu...l?ref=business
Saturday Interview
For Deliveries, Speed Not Quite of the Essence
By ELIZABETH OLSON
Published: August 15, 2008
HIGH fuel prices and a sluggish economy have taken a toll on overnight delivery services, forcing some significant shifts in how the biggest operators do business. DHL Express, the country’s third-biggest overnight deliverer, recently hired a rival, United Parcel Service, to handle its air cargo operations in the United States.
While its global business is profitable, the American segment of DHL, acquired in 2002 by Deutsche Post of Germany, is expected to lose $1.3 billion this year.
In an interview from DHL’s American headquarters in Plantation, Fla., its chief executive, John P. Mullen, discussed the deal with U.P.S.
Q. What factors drove you to make a deal with U.P.S.?
A. The cost of maintaining our network in the United States has been very painful to us, and it’s been exacerbated by the increasing fuel costs. Under the arrangement with U.P.S., if our volume should continue to fall, our costs fall with it. And we have 110 aircraft in the United States, a lot of which are quite old and will need replacement in the coming years. So we avoid that capital expenditure.
Q. What kind of impact have fuel costs had?
A. Very considerable. First, the straight cost burden, and our fuel surcharge does not cover all of it. But more importantly, it starts changing a customer’s behavior. When you say there’s a surcharge of 5 percent or 10 percent, they read the newspapers and they know fuel is going up. But when you start talking 30 percent and up, which is what we’ve got at the moment, the customer starts saying: “Well, do I really need the package there tomorrow morning at 10:30?”
Q. Has that translated into less demand for air service?
A. We’re seeing that customers are downgrading their service expectations, from air to ground. And once customers change, it’s pretty hard to get them to come back again. And even if fuel prices were to come down significantly, we’re not sure customers would revert to urgent air express. Our whole industry is going to have to adjust because, while it may not be tomorrow, we’re going to see huge amounts of our revenue migrate to ground and other forms of transport.
Q. By outsourcing your air cargo services to a rival, where does that leave the company? What is the business model now — more ground and less air?
A. Our business model hasn’t changed. We’re still picking up the package, we’re still delivering it. But instead of giving it to one operator who is flying just for us, we’re giving it to U.P.S., which, although it is a competitor, is just a service provider. The customers wouldn’t actually know whether we used U.P.S. or someone else for the air segment.
Q. What was the price of this deal?
A. U.P.S. will charge us about a billion dollars a year to move our material. Our savings, taking into account other restructuring, including closing 30 percent of our ground stations in the United States, will save us about a billion dollars a year.
Q. How many jobs will you be cutting?
A. We’re cutting 1,500 to 1,800 of our own employees, including some at our air hub in Wilmington, Ohio. And these changes will have an impact on our suppliers, which will mean several thousand more jobs will be affected. Our cuts will come in smaller towns, and we’ll close stations where there are several in the same area.
Q. What percentage of your business will be affected by these changes?
A. We’re estimating that these changes, while they sound fairly large, will only have an impact on about 4 percent of our shipments. In other words, 4 percent of our shipments will go from early morning delivery to maybe afternoon delivery. We’ll still be delivering them, but they will be slightly slower than before, but only a small percent.
Q. How does this affect the general landscape in the United States for deliveries?
A. It shouldn’t make any appreciable difference, and while the deal should make us both more productive, we remain full-tilt competitors. In the rest of the world, in Europe, Asia and emerging economies — where we are in a much stronger position — we are trying to make life as difficult as possible for them.
Q. How much of a decline in daily package volume have you seen because of the economy slumping?
A. Some customers are not sending altogether. But most are trying to find a cheaper way, such as sending it by ground. We’ve got the double impact right now of fuel costs and the economic recession because we carry an awful lot of mortgage documents, contracts and so on, and that side of our business is very significantly under pressure. Air express overnight volumes in the industry are down anywhere from 5 percent to 15 percent from this time last year.
Q. When will the new arrangement go into effect?
A. We hope to have a completed agreement with U.P.S. in a couple of months, and we would start to migrate volume across. We would like to see it all in place by mid- to late 2009. But at the end of the year, our busiest season since stores and other parts of industry are ramping up, we will slacken off and try not to make too many changes until the new year.
Last edited by Precontact; 08-15-2008 at 06:54 PM.
08-16-2008, 06:15 AM
#22
Gets Weekends Off
Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
Unfortunately for ABX and Astar guys, the hearings will reveal just how poorly those two contractors were managed. If anything, it will only solidify the need to switch contractors in order to preserves tens of thousands of US jobs.
You guys really should be focusing your efforts on getting new flying jobs, rather than trying to scuddle this deal. JMHO.
You guys really should be focusing your efforts on getting new flying jobs, rather than trying to scuddle this deal. JMHO.
08-16-2008, 10:10 AM
#23
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Settle down Brown. Maybe Deutsche Post or some other foreign entity will buy UPS and make UPS pilots contractors. Then in 5 years give the flying to FedEx. Think it can't happen? UPS is a public corporation, right? DHL and ABX were at one time hauling their own freight at an American owned corporation..just like UPS. To tell these pilots to "get a new flying job" is self serving at best. You are just salivating over the potential new flying at Brown. Some of these guys at DHL/ABX are pulling down 200K per year. What are they going to do...fly an RJ for Skywest? hahaha. I suspect you would be fighting for your job too. If you're honest with yourself, you know you would.
Fighting
Narrator: OK. Give me some water!
Tyler Durden: Listen, you can run water over your hand and make it worse or...
[shouts]
Tyler Durden: look at me... or you can use vinegar and neutralize the burn.
Narrator: Please let me have it... *Please*!
Tyler Durden: First you have to give up, first you have to *know*... not fear... *know*... that someday you're gonna die.
08-16-2008, 10:58 AM
#24
Retired Doug herder
Joined APC: Mar 2005
Position: Former DC8 73 Capt DHLAirways/Astar. Retired
Posts: 424
Fighting
Narrator: OK. Give me some water!
Tyler Durden: Listen, you can run water over your hand and make it worse or...
[shouts]
Tyler Durden: look at me... or you can use vinegar and neutralize the burn.
Narrator: Please let me have it... *Please*!
Tyler Durden: First you have to give up, first you have to *know*... not fear... *know*... that someday you're gonna die.
Narrator: OK. Give me some water!
Tyler Durden: Listen, you can run water over your hand and make it worse or...
[shouts]
Tyler Durden: look at me... or you can use vinegar and neutralize the burn.
Narrator: Please let me have it... *Please*!
Tyler Durden: First you have to give up, first you have to *know*... not fear... *know*... that someday you're gonna die.
08-16-2008, 11:16 AM
#25
Line Holder
Joined APC: Jul 2007
Posts: 76
Tyler Durden is the narrator. Does jungle have a similar disorder? This DHL-UPS thing is played out. Either DHL dies or DHL dies. I support you guys fighting it. Die with your boots on I always say. And always with your hands on the throat of the one that is trying to take you down. If you are lucky or good, he goes down before you do.
08-16-2008, 11:18 AM
#26
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Sorry you didn't like it, I am sure the "Hearings" will make you whole again, but all of us are in the same boat.
UPS/Fedex pilots didn't do this and we can't control DHL/DP or UPS/Fedex for that matter.
Keep us posted.
UPS/Fedex pilots didn't do this and we can't control DHL/DP or UPS/Fedex for that matter.
Keep us posted.
08-16-2008, 11:21 AM
#27
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Tyler Durden is the narrator. Does jungle have a similar disorder? This DHL-UPS thing is played out. Either DHL dies or DHL dies. I support you guys fighting it. Die with your boots on I always say. And always with your hands on the throat of the one that is trying to take you down. If you are lucky or good, he goes down before you do.
08-16-2008, 11:28 AM
#28
Line Holder
Joined APC: Jul 2007
Posts: 76
Not a figment of the narrators mind, a split personality. It is called a disorder and as such already knows the answers to the questions he asks. Rather that telling others to keep up, maybe you should be better educated.
08-16-2008, 11:36 AM
#29
Gets Weekends Off
Joined APC: Jun 2006
Position: UPS Captain
Posts: 837
IMO...there will be NO jobs created over this deal for UPS....the company will just use bigger airplanes for existing routes and truck everything else they can.
As far as fighting for your job...You cant believe what anyone is saying in this deal. If DHL is able to show they are losing this much money, NO ONE can force them to not go forward with this contract.
Brown is just stating the obvious that, as pilots we have almost no control over who our companies do business with.
JUP
08-16-2008, 11:38 AM
#30
With The Resistance
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
That's OK bro, take it out on me if it makes you feel better. I'm here for you.
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