Jan. 25 2008 12:35 PM



At least one German source has reported that DHL is interested in selling its money-losing US operation to FedEx. However, most US observers are discounting this possibility, pointing to a more likely scenario-a restructuring of the US business to reduce losses, with the possibility of outsourcing some none-core functions. In fact, DHL announced earlier this week a global outsourcing of IT functions, including those in the US, to Hewlett Packard.  


Here are some reasons why an outright buyout by FedEx are unlikely:

  • DHL execs in both the US and Germany have repeatedly stated that they are "strongly committed" to the US market. John Allan, DPWN CFO said yesterday: "The US Express business is a key management priority and we are looking at a variety of options to improve performance. In doing so, we are committed to maintaining a significant presence in the US market, which remains of strategic importance to the group."
  • DHL USA just cut a separate, long term deal with Walgreens.
  • Approximately 40% of DHLs drivers are members of the Teamsters union. So far, FedEx has resisted efforts to unionize.

We have also heard that DHLs peak December season was slightly above expectations.