DHL, owned by Deautche Post, Europes Largest Mail and Parcel Delivery Services company, announced yesterday 9500 redundancies in Ohio, USA.  This comes as a consequence of DHL ceasing all domestic US services, during the past 5 years DHL have failed to make an indent against the intrinsic brand domination in the US parcel market of FedEx and UPS. 

The announcement hasn't been unexpected, DHL are already in negotiations with UPS regarding using UPS planes to carry their international parcels, and FedEx has been actively targeting DHL account customers for a few weeks as the probability of DHL's withdrawl from the US market increased.  DHL has traditionally been the cheaper option in the parcel market, viewed as a price discounter and therefore having a significant volume of parcels, and the elimination of DHL from the market will have a significant impact on the pricing strategies of UPS and Fedex.  Although long term price increases are expected, it will probably not be immediate, however it is anticipated that the withdrawl from the market of the major discounter will at least prevent any further aggressive pricing which could push other parcel carriers into financial difficulties.

The major impact of DHL's withdrawl from the US domestic market will be the residents of Wilmington, Ohio, where the DHL closes it's hub.  Wilmington has already seen over 5000 job cuts last year by DHL, and the loss of a further 8000 jobs will devaste not only the town, but also the surrounding 5 states that employees commute from daily.

What is the impact for this for the UK parcel market?  Well, following the announced job cuts and withdrawl from the UK domestic market Deutsche Post Group's share price has risen consecuatively.   The US branch of the group has been loss making, and the decision to terminate has been viewed favourably by the european markets.  Deutsche Post has a very sucessful and strong network in Europe, and is seen as one of the leading European Distribution and Transport companies, the moves announced here represent a return to the core services that have made Deutsche Post so sucessfull in these markets.

Whether this will result in the end of DHL's massive discounting in the UK parcel delivery services market remains to be seen.