William B. Cassidy | Apr 14, 2010 5:16PM EDT
Two years after leaving the U.S. domestic package market, Deutsche Post DHL says it is growing again in the United States as rising international trade spurs a global recovery.
“We are still relevant in the U.S.,” CEO Frank Appel said today in a speech at the U.S. Chamber of Commerce in Washington. “Our business in the U.S. is growing.”
That business includes not just international express, but air and ocean freight forwarding and contract logistics, Appel said, and employs 35,000 people.
“Logistics is a lot more than delivering parcels or containers,” he said.
The company’s restructuring since its withdrawal from the U.S. domestic express market “delivered better results than expected,” he said, thanks to “very loyal” customers.
Still, the company took a blow to its prestige and its bottom line when its attempt to compete with UPS and FedEx in the U.S. express package delivery market failed.
“We had a massive infrastructure buildup after 2003 and that investment didn’t pay off,” Appel said. “Too many customers walked away, uncertain we’d remain in the market.”
Revenue at its DHL Express division fell 24.4 percent in 2009 to about $14 billion, a decline blamed on its U.S. pullout, exchange rate fluctuations and lower fuel surcharges.
DHL reduced losses from U.S. express operations to less than $400 million in 2009. Last month DHL said it saved $1.5 billion last year through better management in the United States.
“We’ve had a very difficult two years,” Appel said. “We had a bit of a problem with our brand, I’m afraid.” DHL’s U.S. restructuring is turning that around, he said.
He sees opportunities for expanding DHL’s international express and contract logistics businesses in the United States. “We are gaining customers in the last month,” Appel said.
He said the company’s failed venture into territory claimed by FedEx and UPS spurred a company-wide review of its business, and an acknowledgement of its mistakes.
“We learned you can’t just think about revenue and profit, but about how you make life for your customer easier,” Appel said. DHL made that mistake in the United States, he said.
“We said we had to be in the U.S. market because we’re a global player and we never asked what the value-add was for our customer in being there,” said Appel.
“This is a journey for us,” he said. “We are not everywhere simple to deal with and we’re aware of that. We are definitely not the logistics company we want to be yet.”
Contact William B. Cassidy at wcassidy@joc.com.
