Management Shake Up Doesn't Slow DHL

Mixed in with the announcements of a new hub in Minneapolis and the acquisition of India’s Blue Dart, DHL and its parent Deutsche Post World Net (DPWN) announced management changes. Uwe Doerken, head of DHL Express Americas, Asia and Emerging Markets is out after forecasting losses in the U.S. could reach $640 million, 67% more than originally expected. In a separate announcement, DHL said John Fellows, CEO of DHL Americas will transition into a new role with Deutsche Post World Net effective Jan. 1, 2005.

Doerken will be replaced by John Mullen, currently CEO of Asia Pacific.

Klaus Zumwinkel, CEO of DPWN said Fellows had been brought out of retirement to help create the DHL Americas business strategy, hire a senior management team and integrate Airborne and DHL USA. “With the strategy complete and the majority of the integration activities finished,” said Zumwinkel, “I have asked John to take on another role within DPWN that will focus on other strategic projects,” adding that this was a move he had discussed with Fellows for some time. Zumwinkel’s own contract with DPWN was recently extended by four years to November 2008.

The management shake up has not slowed DHL’s momentum. The company also announced its seventh regional sort center since it began a $1.2 billion U.S. expansion. The Minneapolis facility announced on November 9th, combined with the other six regional sort centers, will increase DHL’s ground delivery product capacity by 60%. The other sort centers are in Denver, Colorado; Salt Lake City, Utah; Memphis, Tennessee; Baton Rouge, Louisiana; Erie, Pennsylvania and Phoenix, Arizona.

DHL also began expansion of its Wilmington, Ohio Air and Ground Hub.

On a global scale, DHL committed €128 million ($165 million) for investment in Blue Dart a domestic courier and integrated express package carrier in India. Blue Dart’s network covers 13,700 locations in India.

The investment gives DHL 68% of Blue Dart, which, under Indian law, requires DHL to make a 20% mandatory open offer to the public shareholders.

This comes on the heels of a €180 million ($233 million) commitment in China.

The Blue Dart acquisition has fueled speculation that express operators Gati and Elbee Services could also become takeover targets. Both saw their share price rise after news of the Blue Dart deal, reports Transport Intelligence.

India is an attractive market that is growing at a 30% rate, nearly as fast as the Chinese market, adds Transport Intelligence.

DHL has been trying to build a fully owned operation in India but was blocked by the India government last year when it attempted to buy 45% of its joint venture DHL India from present shareholders. Transport Intelligence points out that there was no law against DHL owning its subsidiary, but it would not allow DHL to dominate the express market without providing services to the interior of the country. “The purpose of this was to protect its national post office from what it saw as ‘cherry picking’. DHL’s acquisition of a largely domestic player seems to have side stepped this issue,” concludes Transport Intelligence.

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