Aug. 29 2008 10:07 AM

The U.S. Department of Transportation will not block DHL in its attempt to hire UPS to handle its domestic air cargo.


Transportation Secretary Mary E. Peters informed Ohio Governor Ted Strickland that the German-owned express carrier's attempt to restructure does not constitute an unfair or deceptive practice or an unfair method of competition.


Strickland and Lt. Gov. Lee Fisher had asked Peters in July to investigate the action. The state of Ohio stands to lose more than 8,000 jobs if DHL closes its hub in Wilmington, Ohio. ABX Air and ASTAR Air Cargo currently use the hub to fly domestic cargo for DHL, but they are being phased out as the company seeks to turn around its U.S. operations, which lost more than $1 billion last year. The state offered tax breaks to DHL in 2004, when the company decided to consolidate operations at the Wilmington hub.


"While I understand your concerns over Deutsche Post AG's proposed restructuring of DHL, it is our view that this restructuring would not constitute an unfair or deceptive practice or an unfair method of competition," Peters wrote in an Aug. 15 letter to Strickland and Fisher. "The department's regulations do not impose restrictions on a foreign air freight forwarder's choice of U.S. carrier to transport its cargo."


Ohio has also asked the Department of Justice to investigate the move on the grounds it may violate anti-trust regulations. However, Justice cannot investigate prior to a finalized agreement between DHL and UPS.