DHL Plans $1.2B U.S. Investment

DHL expects to invest $1.2 billion in its North America operations to increase capacity and enhance service, the global express delivery company said this month.

DHL is 100 percent owned by Deutsche Post World Net.

DHL's global network and enhanced strength in North America will provide shippers a seamless product offering and more options to meet daily shipping challenges.

“With this expansion, we are delivering on our promise to fully integrate our network operations and solidify DHL as a competitive force in the U.S. marketplace, allowing our customers to do business more quickly, efficiently and competitively,” said John Fellows, CEO of DHL Express Americas.

The plan includes:

· Seven new regional sort centers, which will increase ground delivery capacity 60 percent.

· Consolidation of air hub operations from Greater Cincinnati/Northern Kentucky International airport into a primary facility at DHL's Wilmington, OH, Air Park.

· Adding five more regional sort centers beyond 2005, bringing the network to 24, double the current number of centers.

· An investment of about $1.2 billion toward the upgrade and creation of DHL sort centers, information technology infrastructure and other enhancements.

The seven regional centers planned for locations nationwide will offer greater connectivity within DHL's pickup and delivery network, supporting air and ground services, the Plantation, FL, company said. DHL plans to synchronize the eventual 24 facilities with Canada and Mexico to fully enhance the North American network.

Consolidating air hub operations at the Wilmington, OH, site will expand the hours of operation and lead to linehaul efficiencies generating annual savings.

“Since DHL's merger with Airborne last year, we've integrated almost all air and ground operations and dramatically improved transit times,” Fellows said. “These additional investments in our domestic network will provide our customers with a more complete and robust delivery platform, leading to greater competition and improved services in the U.S. market.”

United Parcel Service and FedEx have a combined U.S. market share exceeding 70 percent while DHL holds 6 percent, according to reports. The U.S. Postal Service and smaller companies have the rest. The U.S. package delivery industry is valued around $48 billion a year. DHL recently unveiled a $150 million U.S. ad campaign following its purchase of the ground operations of U.S. carrier Airborne last year.

Meanwhile, UPS filed two complaints against Deutsche Post with European Union regulators in April and May, accusing the company of monopoly abuses and receiving excessive state funding.

UPS has taken similar issues to European regulators in the past and won a series of victories over Deutsche Post. However, UPS insists that regulators haven't done enough to curb Deutsche Post.

“Deutsche Post is not changing its behavior,” said David Bolger, a UPS spokesman. “It is still maintaining its use of state aid to provide services and broaden its expansion.”

UPS is renewing its charges before European antitrust chief Mario Monti, a leading opponent of state subsidies, leaves office in September, Bolger said.

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