Monday, November 17, 2008

Delivery service DHL gives up American dream

Many an ambitious, long-nurtured growth strategy will be abandoned during this rapidly worsening downturn. Bravely sticking to their original plans may ultimately make heroes of a few bosses, but in most boardrooms caution is now the watchword.

DHL, the overnight-delivery arm of Deutsche Post World Net, a logistics conglomerate, is a case in point. On Nov. 10 DHL said it would shut down its express-delivery service within the United States, with the loss of 9,500 jobs.

Five years ago DHL, which had been acquired by Deutsche Post in 2001, targeted the American market with much fanfare, eager to demonstrate that it was at least equal to the two delivery giants, FedEx and UPS. This was a crucial step in the campaign by Deutsche Post's boss at the time, Klaus Zumwinkel, to create a global "one-stop shop" for delivery. (The former McKinsey consultant stepped down in February this year after a raid on his home in Cologne, and on Nov. 7 he was charged with tax evasion.)

From the start, DHL found the American market far tougher than Zumwinkel was expecting; the recent savage decline in consumer spending was the last straw. FedEx and UPS were no cozy duopoly; they competed intensely, and fought DHL's every innovation. When DHL hired the U.S. Postal Service (USPS) to do its domestic deliveries, a move that was popular with customers, FedEx and UPS immediately followed suit. Full Story..........

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