Executive Briefings

Empty Planes, High Fuel Costs Stung DHL

Much of the losses that DHL experienced before it joined forces with UPS originated with its low load rate, or inability to fill planes to capacity. "The problem has been that DHL wasn't flying full. If the plane isn't full you can't just say 'I'm sorry those packages are going to be delayed for a day or two until we fill up the plane,'" says Doug Caldwell, executive vice-president of ParcelPool.com, an Orem, Utah, logistics provider. "I've heard some numbers that suggest that they were well under 70 percent of capacity." By contrast, UPS and FedEx will typically fill planes to around 80 percent to 85 percent of capacity. For every light load DHL flew, it lost money in labor and fuel costs.
The skyrocketing cost of fuel itself has become an impediment to DHL's growth in the U.S. in two ways. "It's keeping market growth down because as the fuel surcharges climb to these exorbitant rates, customers are looking to go from air service to ground service. And it increases air costs at the same time," says Caldwell.
Source: Business Week, http://www.businessweek.com

Much of the losses that DHL experienced before it joined forces with UPS originated with its low load rate, or inability to fill planes to capacity. "The problem has been that DHL wasn't flying full. If the plane isn't full you can't just say 'I'm sorry those packages are going to be delayed for a day or two until we fill up the plane,'" says Doug Caldwell, executive vice-president of ParcelPool.com, an Orem, Utah, logistics provider. "I've heard some numbers that suggest that they were well under 70 percent of capacity." By contrast, UPS and FedEx will typically fill planes to around 80 percent to 85 percent of capacity. For every light load DHL flew, it lost money in labor and fuel costs.
The skyrocketing cost of fuel itself has become an impediment to DHL's growth in the U.S. in two ways. "It's keeping market growth down because as the fuel surcharges climb to these exorbitant rates, customers are looking to go from air service to ground service. And it increases air costs at the same time," says Caldwell.
Source: Business Week, http://www.businessweek.com