DHL withdraws from US, sacks 14,900

Subject: DHL withdraws from US, sacks 14,900 Mon Nov 10, 2008 6:40 pm

DHL Express, Deutsche Post's overnight-delivery unit, will abandon efforts to compete with United Parcel Service and FedEx in the US, firing 14,900 workers and closing three-fourths of its outlets.

Deutsche Post's spending on US express operations, including the unit's losses, reorganization costs and the price of acquiring the former Airborne Inc.'s ground unit in 2003, will total 7.5 billion euros ($US9.6 billion) by the end of next year, chief executive Frank Appel told reporters at the company's Bonn headquarters.

DHL's retreat may enable UPS and FedEx to expand their US market share, estimated at a combined 80% of package deliveries, according to Sewickley, Pennsylvania-based SJ Consulting Group. Deutsche Post, Europe's biggest postal service, said it's poised to report a net loss for 2008, the first full- year deficit since its stock began trading in 2000, because of the US withdrawal.

"FedEx and UPS have literally spent decades developing a quite formidable position in the US with extremely reliable networks," Dan Ortwerth, an analyst at Edward Jones, who recommends buying shares of both companies, said in a telephone interview. "DHL underestimated this challenge from the start," and was "a languishing competitor in the US that was flailing even in boom times."

Deutsche Post rose 65 cents, or 6.9%, to 10 euros in Frankfurt trading. That pared the stock's decline this year to 57%, valuing the company at 12.1 billion euros.

LNK

DHL withdraws from US, sacks 14,900

DHL withdraws from US, sacks 14,900

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