Deutsche Post, the German mail and logistics group that runs DHL, said Monday that it would cut 9,500 jobs at its United States unit as it effectively conceded the American market to its rivals, FedEx and United Parcel Service.
The move was a sharp reversal for Deutsche Post, which had said it planned to maintain its American operations by turning over its domestic air-cargo service to UPS. But the express package business has been suffering under the sharp downturn: express shipments in the United States carried by the big three fell in the third quarter for the first time since the 2001 recession.
U.S. Express, as the American unit is known, will discontinue its domestic-only air and ground services in January to focus entirely on its international offerings. DHL said it would close its U.S. Express ground hubs and reduce the number of stations from 412 to 103, resulting in 9,500 job cuts on top of the roughly 5,400 positions it has eliminated since January. The company said it would retain 3,000 to 4,000 employees to serve its international express customers.
Even after the layoffs, DHL Express will employ 30,000 people in its American operations, which are critical to its international network.
Deutsche Post also said Monday that third-quarter net profit rose to 805 million euros, or $1 billion, compared with 350 million euros a year earlier. Sales rose 4.1 percent to nearly 14 billion euros. Its shares rose 5.6 percent in Frankfurt.
Deutsche Post acquired DHL in 2002 and combined it with Airborne Express in 2003. But it was unable to rise above third place in the North American overnight delivery business. The American unit has never made a profit, instead losing billions of dollars.
Deutsche Post said in May that it was holding discussions with United Parcel Service with the aim of having the latter take over its U.S. air-cargo services, an arrangement known as a line-haul contract.
Ulrich Horstmann, an analyst at Bayerische Landesbank in Munich, said Deutsche Post should have been satisfied with being No. 1 in Europe. “The DHL story is a disaster,” he said. “Going after the U.S. market was a huge mistake.”