DOT Won’t Stop the DHL-UPS Deal

Saying the move by DHL to use UPS for transporting its shipments by air does not represent unfair competition, US Secretary of Transportation Mary E. Peters told Ohio Governor Ted Strickland the Department of Transportation (DOT) would not block the action.

In a letter to the Governor, Peters wrote, "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." Strickland and Ohio’s Lieutenant Governor, Lee Fisher, had asked DOT to block the agreement between the two carriers.

Seeking to restructure its US operations in order to cut its significant losses DHL has entered negotiations with UPS to have it provide air lift for shipments from one airport to another. Ground transportation to and from the airports would continue to be operated by DHL. Part of the plan calls for UPS to use its WorldPort in Louisville, KY to function, essentially, as a major hub for DHL air shipments. DHL has two other major world hubs—in Hong Kong and a brand new one in Leipzig, Germany.

The shifting of its air freight to the UPS Louisville location will mean the closing of what had been a DHL world hub Wilmington, OH. The State of Ohio had granted tax breaks to DHL when the carrier consolidated operations at Wilmington in 2004. The Ohio hub employs 6,000, with an additional 2,000 employed by ABX Air and ASTAR Air Cargo that have handled domestic air moves for DHL.

The State of Ohio has asked the US Department of Justice to investigate the agreement, once it is concluded, on the grounds that it may be in violation of anti-trust laws.

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