DHL cuts losses and does a deal with US rival

 DHL cuts losses and does a deal with US rival
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Deutsche Post, owners of the DHL parcel delivery service, has signed a deal for the American market with rivals and world number one UPS.

UPS will provide air transport within the US for DHL parcels in a 10 year deal, part of a more than one billion euro restructuring plan for DeutschePost’s lossmaking American operation, DHL Express. It will affect up to 1800 jobs.

It is a bold step into the unknown for new DeutschePost boss Frank Appel, who was thrown in at the deep end in February when his successor resigned under a tax-dodging cloud.

Appel expects losses at DHL Express to continue into 2011, but falling rapidly from this year’s estimated billion-euro tumble. American firms UPS and FedEx dominate the market, with the German DHL and Dutch pretenders TNT lagging behind. When DHL went into America it was to take on the big two in their home market, but it has been scuppered by the coincidental downturn in the US economy.

So much depends on timing in the battle for market share, a factor logisitics concerns grapple with daily. DHL may be gambling a strategic partnership with its number one rival can earn it breathing space.

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