On June 3, PARCEL sent you an e-news alert outlining and commenting on the restructuring of DHL-USA. DHL has responded exclusively to PARCEL on the points addressed in that June 3 alert. Here are their comments.
Assertion: DHL has revealed few details about its agreement with UPS
DHL Response: We are finalizing our plans and still in the early stages of our working relationship with UPS. This will not be an overnight action. We will be working methodically to ensure these changes do not interrupt ongoing operations.
Assertion: With the closing of feeder flights, shipments will now have to be trucked to and from another airport. This will cause later deliveries and earlier pickup cutoffs. DHL Sales personnel have not informed customers.
DHL Response: DHLs Sales personnel have been making personal calls to their customers since the announcement to advise them of the impending changes. Less than 4% of all shipments will be affected by the restructuring plans, and only after these plans are implemented.
It should be noted that the feeder flights are located in sparsely populated, very low volume areas of the country.
DHL will continue to deliver to 100% of the ZIP Codes that we deliver to today. The USPS will provide final mile delivery to sparsely populated areas of the country (these shipments represent only about 2.4% of total current volume.)
Customers can view revised transit times online on the DHL website at http://www.dhl-usa.com/ or obtain information by calling DHL Customer Service at 1-800-CALL DHL.
Assertion: DHL is launching its reorganization plan without a signed contract with UPS, and has not communicated to its operations people how local operators are to put shipments into the UPS network.
DHL Response: It would not have been possible to implement the transition to UPS for airlift without first announcing our intentions. We are also still in the early stages of our working relationship with UPS, so it would be premature to communicate any operational instructions to the field.
The UPS aviation proposal is just one part of our comprehensive network plan to restructure operations to reduce costs for the U.S. Express business, while maintaining a competitive choice for U.S. and global customers. DHL is moving forward with several parts of the plan that are unrelated to using UPS as a new airlift provider, including our partnership with the USPS for final mile ground delivery service to remote, sparsely-populated areas of the country.
Assertion: The use of UPS by DHL will impact the special situations and custom solutions that DHL as built with customers over the years
DHL Response: DHL will continue to be a flexible, responsive organization and will continue to invest in the areas that enable us to provide even higher levels of service with a customer-focused orientation.
Customers can also expect greater reliability at a compelling price through a less complex, more focused and cost-efficient network. A market-by-market review of volume versus cost revealed that we can meet our customers needs more efficiently. DHL U.S. will serve the areas where customers told us they need to do business.
Assertion: The removal of C container configuration within the DHL network and the loss of dedicated red dog flights will no longer enable DHL to provide customized services for many large shippers.
DHL Response: While we have just begun to discuss the operational specifics with UPS, we will continue to be a flexible, responsive organization and will continue to invest in the areas that enable us to provide even higher levels of service with a customer-focused orientation.
Assertion: With the UPS aviation arrangement, DHL will disrupt the supply chains of companies that have co-located at the end of the DHL runway in Wilmington, Ohio
DHL Response: We are still in the very early changes of working with UPS on a contract, but we are fully committed to working closely with customers and addressing their needs.
Although its too early to communicate our specific operations plans, some options for co-location customers in Ohio could include feeder flights or line-haul truck transportation from Wilmington to the UPS hub in Louisville.
Assertion: UPS hubs require a UPS Maxicode for tracking; Since DHL does not currently use this type of label, DHL will have to affix a special label, causing shipment delays.
DHL Response: We are still in the very early stages of working with UPS, but this, of course, is an area we are addressing. This is in no way an obstacle to ensuring a smooth transition to a new airlift provider.
Assertion: UPS will see all of the shipping labels of all of the DHL customers, which would be of concern to shippers, salespeople, and potentially regulators.
DHL Response: DHL and UPS would continue to compete in the marketplace for customers, and we are working toward operational arrangements for confidentiality of DHL customer shipments.
Assertion: DHL could co-mingle freight with UPS within containers. In this scenario, UPS would deliver the freight to its service center, leaving DHL shipments behind for pickup. UPS drivers would be able to deliver long before DHL couriers could leave their service center.
DHL Response: It is too early in the process to discuss specific operational procedures, but we are certainly planning for and expect a smooth transition to a new airlift provider.
We can say with certainty, however, that our plan would involve the use of UPS airlift from airport to airport, using containers dedicated to DHL shipments.
We will be working methodically to make these changes in a way that will not interrupt ongoing operations.
Assertion: If the scenario is that UPS will transport DHL only containers, UPS customer shipments would get precedence when there are capacity issues.
DHL Response: We evaluated UPS airlift capacity in great detail and DHL is fully confident that UPS can provide us with the needed capacity. UPS will be committed to serving DHL as its largest customer and in holding with the terms of our contract.
Assertion: DHL will have to tender a shipment to the Bulk Mailing Center (BMC), and there will most likely be two or more days in transit from the BMC to the recipient.
DHL Response: We have communicated that in low volume areas of the country that are not cost effective for us to serve, we will be partnering with the USPS for final mile ground delivery service. Naturally, overnight delivery service to these areas will not be available. Customers will be able to view revised transit times online on the DHLwebsite at www.dhl-usa.com or obtain information by calling DHL Customer Service at 1-800-CALL DHL.
Assertion: DHL customers will not be able to track shipments handled by the USPS
DHL Response: DHL will offer track and trace capabilities for shipments handled by the USPS. Customers will continue to call DHL Customer Service or visit the DHL website to track shipments with their DHL airway bill number. USPS shipment delivery confirmation data will be uploaded into DHLs tracking system.
Assertion: DHL may use Priority Mail for USPS shipments, which is expensive for the last mile.
DHL Response: We plan to tender the domestic USPS shipments to the local Bulk Mailing Center, using the Parcel Select rates. For shipments above the USPS maximum weight we will provide an alternate delivery mechanism.
Assertion: DHLs current USPS relationship is built on DDU delivery, and this new model does not take a package anywhere near a DDU.
DHL Response: The partnership with USPS will provide a reliable delivery service to a limited number of sparsely populated areas.
Assertion: Shipments that are tendered to the USPS and are over 70lbs will be tendered to LTL carrier ABF.
DHL response: This is correct, USPS has a limit of 70 lbs or a girth of 130 for domestic and a girth of 108 for international shipments. In addition, USPS has a list of restricted items (for example alcohol) that cannot move through its system. These items that are over the USPS limitations will be moved by ABF Freight Systems, Inc.
Assertion: DHL is not telling the truth when it says that less than 4% of all shipments will experience a change in transit times as a result of the network restructure, and is not accounting for the effect of earlier pickup times due to station closures and flight groundings.
DHL Response: Impact may vary by customer but overall we expect only 3.3% of our total current volume will experience a change in transit times as a result of the network restructure. Only 0.6% of our current volume comes from areas where we will no longer offer pick up service.
Assertion: DHL will be getting rid of a lot of unprofitable business, and will no longer be of value when they increase rates. Customers should be concerned if their business is perceived as unprofitable or undesirable.
DHL Response: DHL will continue to provide the best value in the shipping business and be a competitive choice for U.S. and global customers. We are confident we can offer a compelling value proposition to our customers.
Assertion: The deal with UPS will decrease excess air capacity, causing price increases in the industry
DHL Response: Both the ABX/ASTAR fleets used by DHL and the UPS air fleets have excess capacity. The eventual agreement will alleviate costs, benefiting UPS, DHL, customers and the environment. The arrangement in and of itself will not impact pricing in the industry. DHL and UPS are being innovative in leveraging the best air network in the North American parcel market.
Assertion: There are profound consequences when DHL no longer has its own captive lift, operating as a forwarder customer of UPS.
DHL Response: We can no longer afford to operate our business at current losses, but DHL will continue to be a flexible, responsive organization and will continue to invest in the areas that enable us to provide even higher levels of service with a customer-focused orientation.
Customers can also expect greater reliability at a compelling price through a less complex, more focused and cost-efficient network.
Assertion: Thousands of jobs will be lost in Ohio, which is a concern for American jobs
DHL Response: We did not make these decisions lightly. Our continued losses in the U.S. are not acceptable and the state of the U.S. economy requires more immediate action. A key component of our costs is in aviation. UPS provides a comprehensive solution to solve our domestic and international airlift needs in a cost effective and reliable way.
Customer Response to Restructuring Plan:
- Direct customer quotes include:
What's good for DHL is good for L&T. DHL needed to do something quick, and we were all anticipating it. We are in and along for the ride.
Lord & Taylor
Your changes have been positively received by our organization. We want DHL to succeed, and we recognize that you needed to make bold changes. The proposed agreement is seen as really positive. At the end of the day, how you move our product is irrelevant. Its service and value that counts, and DHL provides great service at a great value.
Its a very smart business move and a clever, innovative way to become stronger in the market. I have always been a DHL champion, and I know you can be brilliant. Your presence in the market keeps FedEx and UPS in line!
So long as its still a DHL courier that is picking up and delivering, and that our sales contacts havent changed, then we have no issues over the announcement. It makes sense from a cost basis, and we look forward to our continued partnership with DHL.
What sometimes appears to be a crazy idea turns out to be the best. DHLs and UPSs goal is to move packages in an efficient manner at a competitive rate. Why not take advantage of each others strength to create a win-win for both parties? This can only positively impact our business!
We trust that DHL will make whatever business decisions you need to provide better service. As long as DHL will still accept responsibility for our packages, and will still be picking up and delivering our shipments, then all is well.
I am glad to hear DHL is working with UPS's infrastructure. This is an excellent move to help save energy resources. And catching a ride with the mailman for the last mile is perfect since he delivers the same every day. This shows a conscience effort by DHL to not duplicate and waste precious resources. I look forward to more "green" news from DHL.
The move is going to be a positive one and makes sense. Also, it only should improve the overall service we receive from DHL.