In the press release of March 17, DPWN the parent company of DHL has revealed the decision to increase its holding in the Williams Lea. The profitability of William Lea and the demand for corporate information management has influenced this decision.
DHL has plans to expand its operations further in the future. However, the market dynamics suggest that it will perhaps consolidate its operations in different countries with other organizations. I for-see DHL entering into more strategic alliances, and launching more joint ventures in the future. The AeroLogic joint venture with Lufthansa Cargo is yet to be developed by the company as the contract is still in its development phase.
On the other hand, DHL is also facing stiff competition from UPS, Fedex and other express carriers worldwide. There are places in which its competitors are stronger and plans to expand in the wake of such competition does not appear to be a rational strategy for DHL. For instance, DHL Express division has been facing heightened competition in the US. According to Bloomberg “Deutsche Post World Net, the parent company of express delivery and logistics services provider DHL, said today its fourth quarter profit dropped 61 percent to $392 million, which was largely due to an $874 million non-cash write-down on DHL Express operations in the U.S” (cited in DPWN takes hit, 2008). This is too big a loss coming from just one of its operations. It is being speculated that DHL Express’s operations in the US might be up for sale by May 2008 and Fedex is a likely contender to buy this stake. (cited in FedEx + DHL Isn’t Necessarily Bad for UPS, 2008)
It is about time that DHL should trim its extra fat and keep the profitable ventures. It should look for other opportunities arising in the global market and invest in those ventures. Globalization and trade will provide DHL with opportunities to capitalize on. It is better for DHL to develop its strengths and specialize rather than generalize across a different set of services. DHL has a good infrastructure and going forwards joining hands with regional players will be a good strategy to strengthen its operations.
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