Thursday, March 06, 2008

FedEx, UPS look to gain if DHL scales back

Analysts expect money-losing DHL will scale back in the United States and could make the announcement as early as today, handing FedEx Corp. and UPS a boon.

If DHL closes terminals and hubs, analysts say FedEx could get 35 percent of the lost business in the air and another 25 percent on the ground.

If the restructuring costs DHL 2 percent of revenue, FedEx stands to gain $45 million in business, according to a research note published Wednesday by Edward Wolfe. UPS, which has a more powerful ground network, stands to realize $71 million.

DHL, a subsidiary of Deutsche Post World Net, is the fourth-largest player in the U.S. overnight package business, with revenues in the Americas for 2008 estimated at $2.3 billion.

With 9 percent market share, DHL trails the U.S. Postal Service, (32 percent) FedEx (31 percent) and UPS (25 percent).

DHL joined the competitive U.S. overnight business in 2003 when it purchased Airborne Freight for about $1 billion, rankling FedEx and UPS, which accused the monopoly Deutsche Post of investing in a U.S. carrier to fight them on their own turf.

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