Wednesday, January 7, 2009

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DHL to Slash US Operations



Struggling shipper DHL said Monday that it would close its 300-employee West Coast hub in Riverside County as it pulls out of the US domestic shipping business, eliminating 9,500 jobs nationwide and closing most of its DHL Express service centers.

Deutsche Post, the Bonn, Germany-based parent of DHL, blamed the move on heavy competition from United Parcel Service Inc. and FedEx Corp. as well as severe financial losses stemming from the weak US economy. It follows 5,400 US job cuts the company had made earlier this year and will leave DHL with 3,000 to 4,000 workers in its US express business.

"We are facing a tough challenge in the US with enormous losses," Deutsche Post Chairman Frank Appel said during a conference call with analysts. "The impact of them has been that we think we have to take even further massive actions."

As of Jan. 30, DHL will focus on its international shipping business, which is "what we are the best at," Appel said.

Because of losses expected to amount to $1.5 billion for its US operations this year, DHL plans to close 18 US airport hubs and shut all but about 100 of its 412 US service centers. The company projected that daily U.S. package volume would drop to about 100,000 from between 1.2 million and 1.5 million.

For the Inland Empire, which once viewed DHL's Southern California hub as an anchor that would help attract businesses and jobs, the news couldn't have come at a worse time.

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