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DHL

Introduction

DHL quickly became a leader in international air express delivery shortly after the company was founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in 1969. Initially the company operated a door-to-door express delivery service, transporting documents between San Francisco, California and Honolulu, Hawaii. With expansion into the Philippines, Japan, Hong Kong, Singapore and Australia the company soon became the leader in international overnight service. Now owned wholly by Deutsche Post, DHL is a part of a global network composed of more than 220 countries and territories and about 275,000 employees worldwide, generating 53 billion Euros in 2011.

Origins of DHL

The idea of an air delivery service for overnight packages was developed by Larry Hillblom who started a courier service between his home in San Francisco and Los Angeles. He would drive around to businesses and pick up packages for the last flight of the day from San Francisco, and returning on the first flight the next morning. The idea grew into delivering bill of lading documents by air to Honolulu ahead of the freight that arrived late. This saved time for the freight company when the goods arrived in Hawaii.

The company expanded into Asia with deliveries to the Philippines, Japan, Hong Kong, Singapore and Australia, hiring one-time couriers as deliveries needed to be made. Within a year of incorporation DHL had over forty customers and operations including Guam and Portland, Oregon. By 1973, DHL had over 3,000 clients and expanded operations into New Zealand, Fiji, Indonesia, Taiwan, Malaysia and Thailand. A year later the volume of deliveries handled by the company had exceeded half a million per year.

Expansion into Europe

After the expansion in the Asia-Pacific region, the company turned to Europe to develop a new market. DHL started operations in London, England in 1974 with offices in Amsterdam and Paris a year later. The company changed direction in 1977 when for the first time it started accepting small parcel express deliveries. Up to that point DHL handled only documents. Further expansion into Italy, Switzerland, Greece, Ireland, Sweden and Belgium before 1979 saw DHL become a very profitable international delivery company that had little competition in the market.

Domestic Expansion

DHL was the number one company for international overnight delivery and in 1983 decided that it would try to bring the same level of service to the US market. The company began operations at two locations Cincinnati and Salt Lake City. However, the competition in the form of UPS and FedEx was well established and breaking into the US market was a costly affair. The company did not gain much traction in the US market with an estimated six percent, which led to significant losses in the 1980’s and into the 1990’s. The issue for DHL was that it offered a single option, overnight, while its competitors, FedEx, UPS and even the USPS, offered a variety of options; overnight, two day, five day, etc. The company did start a two-day delivery service, but the market share failed to increase.

Purchase by Deutsche Post

In 1998, the German company, Deutche Post, began purchasing shares of DHL and within three years the company wholly owned DHL. As the world's largest air courier company, Deutsche Post also purchased the US logistics company Airborne Express in 2003 and merged it into DHL. Unfortunately in the five years subsequent to the purchase of Airborne Express, DHL lost an estimated $10 billion in an attempt to win market share from FedEx and UPS in the North American market. This led to Deutsche Post closing the remaining 13 DHL distribution hubs in the US, laying off its last 13,000 US employees. DHL negotiated with UPS so that its international deliveries in the US could use UPS aircraft at a cost of $1 billion for ten years.

DHL Today

Today DHL, as part of Deutche Post, is the world's largest express and logistics company and is the global market leader in international express, overland transport and air freight. It is also the global leader in ocean freight and contract logistics. DHL offers a full range of customized solutions, which includes express document shipping to supply chain management. Currently DHL employees more than 124,000 people in over 200 countries around the world.

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