DHL Delivers Bad News, for Everyone

Because they haul millions of millions of mortgage and banking documents as well as electronic goods and other items, package delivery companies are a bellwether for the U.S. economy.

By that measure, things are definitely not looking up because DHL's American unit, called DHL Express, today announced it will cut 9,500 U.S. jobs to stanch losses of $5 million daily.

Closing its U.S. operations was a marked departure from a plan that DHL's parent company, Deutsche Post, announced last May to trim costs in North America by hiring rival United Parcel Service to handle its air cargo within the country.

By the end of January, DHL's American operation will focus only on international deliveries - New York to London and back, for example - and discontinue its domestic air and ground services.

The cuts come on top of some 5,400 positions that Deutsche Post had already eliminated at DHL since the beginning of 2008. DHL has been trying to right itself amid a projected $1.3 billion loss for this year. That number is now $1.5 billion, said DHL Express spokeswoman Michele Nadeem.

"The decision announced today was hastened by the wildly fluctuating price of fuel and the decrease in the shipping industry," she said. "We had to take swift action to protect our business worldwide."

DHL Express dominates package delivery globally, but has been running third in the U.S. behind UPS and FedEx. Its situation was already bleak, but worsened as the collapsing economy began taking a toll on demand.

Abandoning the American domestic market is a significant blow for Deutsche Post, the mail and logistics company that bought DHL in 2002 and then Airborne Express the following year. The giant company, a privatized version of Germany's post office, spent almost $4 billion dollars on restructuring but its American venture failed to turn a profit.

Cutbacks at DHL's air hub in Wilmington, Ohio, have made the television news as its workers have protested the loss of several thousand jobs. In addition, all DHL's American ground hubs will be closed, and the more than 400 stations will be reduced to about 100.

It is still negotiating with UPS to transport its international express mail, and up to 4,000 employees will continue to handle that business. FedEx and UPS may get a boost when DHL flees the American market, but the respite may be brief as a growing number of companies feel the economic pinch and decide they can forego next-day deliveries.

by Elizabeth Olson