There will be a suspension of express deliveries by the DHL, the package delivery company in the US. The company, which has a strong presence globally, admitted its defeat in the US.
At least 18 distribution quarters will be closed down and all operations related to express deliveries in America would be shut down. This act will leave at least 13,000 of its workers jobless.
This is a big setback for the blue chip German company as the US domestic market is huge. Operations to destinations to and from US will however continue according to sources. Last year saw Daimler the carmaker selling its stake in Chrysler after it failed in its efforts to turn around the American automaker.
This move follows the huge loss of approximately $10 billion after DHL took over Airborne Express as a challenge to United Parcel Service (UPS) and FedEx (FDX). The two carriers could not be outsmarted in their home ground however and DHL could not match its rest-of-the-world performance in the US.
Shutting down its major operations in US will cost the parent company Deutsche Post a whopping annual loss of $1 billion. Restructuring and severance payments for workers will cost the company write downs amounting to $3.9 million.
This development is no surprise as the economic crisis and Wall Street meltdown naturally led to the wipe out of players who could not sustain in many segments.
According to John Mullen, DHL Express CEO, risk is everywhere now due to the economic crisis which is unprecedented and it was quite critical they acted immediately.
