Executive Briefings

Why DHL Stumbled in America

From the start, DHL found the American market far tougher than expected, and the recent savage decline in consumer spending was the last straw. FedEx and UPS were no cozy duopoly; they competed intensely, and fought DHL's every innovation. When DHL hired the US Postal Service (USPS) to do its domestic deliveries, a move that was popular with customers, FedEx and UPS immediately followed suit. More recently, the government-owned USPS has also become a formidable competitor in its own right, consolidating its number-three spot in the market. "The post office has got really good, and is now competing aggressively on price for the first time," says Hank Mullen of the Visibility Group, a transportation consultancy.
The quality of overnight delivery provided by FedEx, UPS and USPS within America is now remarkable, on time more than 95 percent of the time, says Mullen. DHL was not helped by problems in its infrastructure that affected service quality, including culture clashes when integrating Airborne Express, an express-delivery airline it acquired, and its over-reliance on independent contractors.
Source: The Economist

From the start, DHL found the American market far tougher than expected, and the recent savage decline in consumer spending was the last straw. FedEx and UPS were no cozy duopoly; they competed intensely, and fought DHL's every innovation. When DHL hired the US Postal Service (USPS) to do its domestic deliveries, a move that was popular with customers, FedEx and UPS immediately followed suit. More recently, the government-owned USPS has also become a formidable competitor in its own right, consolidating its number-three spot in the market. "The post office has got really good, and is now competing aggressively on price for the first time," says Hank Mullen of the Visibility Group, a transportation consultancy.
The quality of overnight delivery provided by FedEx, UPS and USPS within America is now remarkable, on time more than 95 percent of the time, says Mullen. DHL was not helped by problems in its infrastructure that affected service quality, including culture clashes when integrating Airborne Express, an express-delivery airline it acquired, and its over-reliance on independent contractors.
Source: The Economist