UPS/DHL Air Uplift Agreement
11-10-2008, 08:35 AM
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UPS/DHL Air Uplift Agreement
Trying to decipher the news today it seems that there will not be much volume for UPS to carry for DHL since they are essentially leaving the US market.
But if you read the presentation points from news conference, they (DHL) state that negotiations with UPS are 'on track' and also that they will be needing Worldport in Louisville for sorting.
It would seem to follow that the UPS/DHL agreement will be much smaller than originally announced. Or possibly UPS is negotiating from a position of significant leverage and will squeeze DPWN for whatever they want.
I also agree with an earlier point from another thread that the politicians in Ohio likely caused more job losses than they saved, as it seems that DHL wasn't bluffing when they said they were going to pull out of the US market if they couldn't complete the deal with UPS.
JMHO.
But if you read the presentation points from news conference, they (DHL) state that negotiations with UPS are 'on track' and also that they will be needing Worldport in Louisville for sorting.
It would seem to follow that the UPS/DHL agreement will be much smaller than originally announced. Or possibly UPS is negotiating from a position of significant leverage and will squeeze DPWN for whatever they want.
I also agree with an earlier point from another thread that the politicians in Ohio likely caused more job losses than they saved, as it seems that DHL wasn't bluffing when they said they were going to pull out of the US market if they couldn't complete the deal with UPS.
JMHO.
11-10-2008, 08:41 AM
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And yes, they did say they are still negotiating with UPS and "maybe" a deal will be reached by years end.
11-10-2008, 08:59 AM
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Taking some points from my post in another thread. Sorry for the repeat.
Just because DHL is pulling out of North America as a viable competitor to UPS & Fedex in the overnight parcel business, does not mean that they will be taking all of their business out of the USA. Most customers are still here in the USA, shipping domestically, and need a new shipper. Enter UPS and Fedex sales teams. Brown and Purple will pick up the domestic freight DHL will leave behind.
As far as the UPS/DHL deal, I think it goes like this. Originally, UPS was going to lift and sort all DHL packages between gateways. DHL employees in yellow trucks and uniforms would still pick-up those DHL packages as they come off a UPS airplane and deliver them. Because of political interjection (thanks Ohio!), DHL made the decision many months ago to pull out of intra North American express delivery service. Thus, the total volume of the deal decreased. Thus, the press releases that the DHL/UPS deal is smaller.
DHL has announced that, while pulling out of the intra-North American express parcel delivery service, DHL will still provide international service to and from North America for it's own customers. But how does DHL get packages in Des Moines, Springfield, Madison, Lansing, Knoxville, Harrisburg, Topeka and all of the smaller US towns to one of the international DHL shipping ports? The UPS/DHL deal. That is all the volume UPS will be carrying for DHL now is international freight. Freight that originates in a domestic US city and needs to get to a DHL international shipping port (JFK, ORD, LAX) where is can be loaded onto a DHL airplane and shipped internationally by DHL.
However, all of those customers that DHL is abandoning in the US will still need an express courier, and the choices are UPS and Fedex.
IMO, you will see volume INCREASES, possibly substantial, for fourth quarter over and above peak projections. That will be the DHL customers entering our system.
Rott
Just because DHL is pulling out of North America as a viable competitor to UPS & Fedex in the overnight parcel business, does not mean that they will be taking all of their business out of the USA. Most customers are still here in the USA, shipping domestically, and need a new shipper. Enter UPS and Fedex sales teams. Brown and Purple will pick up the domestic freight DHL will leave behind.
As far as the UPS/DHL deal, I think it goes like this. Originally, UPS was going to lift and sort all DHL packages between gateways. DHL employees in yellow trucks and uniforms would still pick-up those DHL packages as they come off a UPS airplane and deliver them. Because of political interjection (thanks Ohio!), DHL made the decision many months ago to pull out of intra North American express delivery service. Thus, the total volume of the deal decreased. Thus, the press releases that the DHL/UPS deal is smaller.
DHL has announced that, while pulling out of the intra-North American express parcel delivery service, DHL will still provide international service to and from North America for it's own customers. But how does DHL get packages in Des Moines, Springfield, Madison, Lansing, Knoxville, Harrisburg, Topeka and all of the smaller US towns to one of the international DHL shipping ports? The UPS/DHL deal. That is all the volume UPS will be carrying for DHL now is international freight. Freight that originates in a domestic US city and needs to get to a DHL international shipping port (JFK, ORD, LAX) where is can be loaded onto a DHL airplane and shipped internationally by DHL.
However, all of those customers that DHL is abandoning in the US will still need an express courier, and the choices are UPS and Fedex.
IMO, you will see volume INCREASES, possibly substantial, for fourth quarter over and above peak projections. That will be the DHL customers entering our system.
Rott
11-10-2008, 09:10 AM
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That was always my feeling that UPS would benefit in either scenario (DHL/UPS deal or DHL leaving the USA).
It seems that FedEx is the big winner after all these months, because now they can scoop up some DHL volume rather than have UPS carry it all.
It seems that FedEx is the big winner after all these months, because now they can scoop up some DHL volume rather than have UPS carry it all.
11-10-2008, 09:31 AM
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Q: Why still need UPS?
A: More than just another provider, capital expenditure avoidance, operate a hub.
Q: As to negotiations with UPS
A: Heavily engaged in trying to bring to successful conclusion by year end, and overwhelming objective to reach agreement with UPS.
11-10-2008, 09:34 AM
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and the winner is..............
I think both UPS and FDX are winners in the demise if DHL in the US. I think we know who the losers are.......
But I think FDX is a lucky winner here. IMO, had the original UPS/DHL gone through, UPS would be lifting all DHL freight. Good for UPS air ops because we have more freight to haul. Job security, expansion of the airline, upgrades, etc.... I still think DHL would have tanked in the US and UPS could have gone to all of those customers and said, "Hey, we carry your freight anyway. Let us pickup and deliver it too." Then we would have seen expansion on the ground side too.
Now that DHL is pulling out of the US, all DHL customers are up for grabs. Good for UPS. Better for FDX.
Rott
But I think FDX is a lucky winner here. IMO, had the original UPS/DHL gone through, UPS would be lifting all DHL freight. Good for UPS air ops because we have more freight to haul. Job security, expansion of the airline, upgrades, etc.... I still think DHL would have tanked in the US and UPS could have gone to all of those customers and said, "Hey, we carry your freight anyway. Let us pickup and deliver it too." Then we would have seen expansion on the ground side too.
Now that DHL is pulling out of the US, all DHL customers are up for grabs. Good for UPS. Better for FDX.
Rott
11-10-2008, 09:45 AM
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Plans for UPS (Latest price: UPS) to make up to $1 billion a year flying DHL packages between cities is being scaled back with the German-owned DHL’s announcement that it would eliminate U.S.-only domestic shipping, close all of its DHL Express service centers and cut 9,500 jobs in the United States.
UPS had been in talks with DHL since spring, with a contract expected by the end of the year that would result in more jobs for pilots and ground workers in Louisville.
Now, with DHL limiting its U.S. operations to focus entirely on international service, the size and scope of the deal would be much smaller, UPS spokesman Norman Black said in Atlanta.
DHL currently handles 1.2 million U.S. air shipments per day. That volume will drop to 100,000 packages or fewer, DHL Express Global CEO John Mullen, said during a press conference in Bonn, Germany.
UPS could still seek a contract for handling the international service, Black said. The Atlanta-based company, which operates its all-points air hub in Louisville, also stands to win a portion of the U.S. domestic service business DHL will abandon by Jan. 30.
"They still have to hire an airline to move these international packages around the United States. So we have to go back to the negotiating table and see if this new contract would still be attractive to us," Black said.
Black said he could not speculate on whether UPS would have been better off with the previously planned deal, or by winning business from customers who had been using DHL.
“The us market is going to lose a competitor, so it’s up to us to win as many of those customers as we possibly can,” Black said. He said it was too soon to say how much new business the company might gain.
UPS had been in talks with DHL since spring, with a contract expected by the end of the year that would result in more jobs for pilots and ground workers in Louisville.
Now, with DHL limiting its U.S. operations to focus entirely on international service, the size and scope of the deal would be much smaller, UPS spokesman Norman Black said in Atlanta.
DHL currently handles 1.2 million U.S. air shipments per day. That volume will drop to 100,000 packages or fewer, DHL Express Global CEO John Mullen, said during a press conference in Bonn, Germany.
UPS could still seek a contract for handling the international service, Black said. The Atlanta-based company, which operates its all-points air hub in Louisville, also stands to win a portion of the U.S. domestic service business DHL will abandon by Jan. 30.
"They still have to hire an airline to move these international packages around the United States. So we have to go back to the negotiating table and see if this new contract would still be attractive to us," Black said.
Black said he could not speculate on whether UPS would have been better off with the previously planned deal, or by winning business from customers who had been using DHL.
“The us market is going to lose a competitor, so it’s up to us to win as many of those customers as we possibly can,” Black said. He said it was too soon to say how much new business the company might gain.
11-10-2008, 10:51 AM
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Maybe the true winners are ABX and Astar?
DHL Still Eyes UPS Deal
11/10/2008
Traffic World Staff
DHL said Monday it is still negotiating with UPS for a scaled-down air transport deal in the United States but the express carrier left open the possibility it could remain with its existing linehaul partners.
Once set at a potential 10-year, $10 billion arrangement, a DHL contract for U.S. air express transport will be sharply diminished under the new DHL plan to drop domestic express service and cut its U.S. operations some 80 percent.
DHL Express CEO John Mullen said in Bonn on Monday the company still is "heavily negotiating" with UPS. But, he said, "If we can't reach agreement, we will have to make other arrangements."
That could include continued use of DHL's existing air contract operators, ABX Air and ASTAR Air Cargo.
DHL had said neither carrier was large enough to carry DHL's U.S. volume in a cost-effective manner. "However, clearly it's a very different situation today in terms of volume," Mullen said. "Today, with the volumes of less than 100,000 shipments, our existing carriers, one or both in combination, would be able to complete service."
Meanwhile, Mullen said DHL should be able to maintain its service levels for existing customers as it reduces its operations. "Yes, of course there will be transition issues, there will be transition difficulties," he said. But DHL will still use stations and staff that Mullen said are providing service "at an all-time high" level.
DHL Still Eyes UPS Deal
11/10/2008
Traffic World Staff
DHL said Monday it is still negotiating with UPS for a scaled-down air transport deal in the United States but the express carrier left open the possibility it could remain with its existing linehaul partners.
Once set at a potential 10-year, $10 billion arrangement, a DHL contract for U.S. air express transport will be sharply diminished under the new DHL plan to drop domestic express service and cut its U.S. operations some 80 percent.
DHL Express CEO John Mullen said in Bonn on Monday the company still is "heavily negotiating" with UPS. But, he said, "If we can't reach agreement, we will have to make other arrangements."
That could include continued use of DHL's existing air contract operators, ABX Air and ASTAR Air Cargo.
DHL had said neither carrier was large enough to carry DHL's U.S. volume in a cost-effective manner. "However, clearly it's a very different situation today in terms of volume," Mullen said. "Today, with the volumes of less than 100,000 shipments, our existing carriers, one or both in combination, would be able to complete service."
Meanwhile, Mullen said DHL should be able to maintain its service levels for existing customers as it reduces its operations. "Yes, of course there will be transition issues, there will be transition difficulties," he said. But DHL will still use stations and staff that Mullen said are providing service "at an all-time high" level.
11-10-2008, 11:04 AM
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Even if they do not reach a deal, 100,000 packages will not save most of the jobs. UPS is down 1 million packages a night, 100,000 will not have much effect on operations here. Picking up internation volume though, could.
11-10-2008, 11:06 AM
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Maybe the true winners are ABX and Astar?
DHL Still Eyes UPS Deal
11/10/2008
Traffic World Staff
DHL said Monday it is still negotiating with UPS for a scaled-down air transport deal in the United States but the express carrier left open the possibility it could remain with its existing linehaul partners.
Once set at a potential 10-year, $10 billion arrangement, a DHL contract for U.S. air express transport will be sharply diminished under the new DHL plan to drop domestic express service and cut its U.S. operations some 80 percent.
DHL Express CEO John Mullen said in Bonn on Monday the company still is "heavily negotiating" with UPS. But, he said, "If we can't reach agreement, we will have to make other arrangements."
That could include continued use of DHL's existing air contract operators, ABX Air and ASTAR Air Cargo.
DHL had said neither carrier was large enough to carry DHL's U.S. volume in a cost-effective manner. "However, clearly it's a very different situation today in terms of volume," Mullen said. "Today, with the volumes of less than 100,000 shipments, our existing carriers, one or both in combination, would be able to complete service."
Meanwhile, Mullen said DHL should be able to maintain its service levels for existing customers as it reduces its operations. "Yes, of course there will be transition issues, there will be transition difficulties," he said. But DHL will still use stations and staff that Mullen said are providing service "at an all-time high" level.
DHL Still Eyes UPS Deal
11/10/2008
Traffic World Staff
DHL said Monday it is still negotiating with UPS for a scaled-down air transport deal in the United States but the express carrier left open the possibility it could remain with its existing linehaul partners.
Once set at a potential 10-year, $10 billion arrangement, a DHL contract for U.S. air express transport will be sharply diminished under the new DHL plan to drop domestic express service and cut its U.S. operations some 80 percent.
DHL Express CEO John Mullen said in Bonn on Monday the company still is "heavily negotiating" with UPS. But, he said, "If we can't reach agreement, we will have to make other arrangements."
That could include continued use of DHL's existing air contract operators, ABX Air and ASTAR Air Cargo.
DHL had said neither carrier was large enough to carry DHL's U.S. volume in a cost-effective manner. "However, clearly it's a very different situation today in terms of volume," Mullen said. "Today, with the volumes of less than 100,000 shipments, our existing carriers, one or both in combination, would be able to complete service."
Meanwhile, Mullen said DHL should be able to maintain its service levels for existing customers as it reduces its operations. "Yes, of course there will be transition issues, there will be transition difficulties," he said. But DHL will still use stations and staff that Mullen said are providing service "at an all-time high" level.
Given the economic pressures how much of a "discount" might ABX offer the Deutsch Dirtbags, never mind the Ohio politicians that now see calling the bluff didn't work?
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