Jan. 21 2008 09:56 AM

From Jerry Hempstead

Its 2008.

The Press are reporting that DHL may scale back its operation in the United States and focus on being an International carrier and perhaps reduce service in some areas to reduce their costs. This is a spiral of doom. If they reduce service, they will lose customers (read as revenue) and then have to further reduce service to deal with the reduced revenue, which will lead to more customer defections and so on.

If the shippers let this happen then the shippers are going to pay a big price for allowing the third player with a dedicated express and ground network to become a non entity in the contest for shipments.

Without a third player in the game the two remaining carriers control the game. Shippers will long for the rational rate increases of the past.

I think the shipping community needs to step up to the plate and start moving some of their business to DHL as a signal to UPS and Fed that the marketplace NEEDS a third player.

They have such little market share that a modest shift in share to DHL will insure they can maintain their current configuration.

I did a lot of service analysis for shippers in 2007 who were using UPS, FedEx and DHL.

Save for December which was impacted by weather, there was little statistical difference in the delivery performance of the three carriers when you look at delivering on the correct day. The improvement of DHLs service was also evidenced in the annual shipper survey dont by Morgan Stanley and Parcel Magazine.

Your world will not end if you entrust packages to DHL. But your discounts might end if shippers allow DHL to retreat because of indifference.

I am not sharing this because anyone paid me to write it. Im not writing this because of some nostalgic sense linked to my 32 years peddling their service. I am writing this because for 32 years I represented shippers. I always put my customers first. I always fought to get them the best deal. I got shippers great deals and in so doing kept the market forces in check. I was probably the king of the discounters. I kept the competitors on their toes. Either I got the business because I put together the best package, or my package forced a competitor to do things they would not have ordinarily do in the absence of my offer.

The shipper always won. And I was OK with that, even if I did not win the business.


If shippers want to retain a competitive pricing environment for parcels then they better call in their DHL rep right now.