DHL's Q3 results could lead to 40,000 job losses in the US

DHL, the logistics and shipping arm of the world's largest logistics group Deutsche Post World Net, is likely to announce a cost-saving plan that could lead to 40,000 job cuts with nearly half coming from DHL's cargo unit in the US, according to media reports.

DHL's express unit, at its air cargo facility in Wilmington, Ohio, employs approx 18,000, while the rest are employed at its business partners in the country. The expected move may not indicate Deutsche Post's exit from the US although it faces tough competition from its rivals, UPS and FedEx.

The move could threaten employees who work in ground deliveries, drivers, shipping clerks, warehouse workers and even pilots who currently provide air service for some of DHL's shipments while the company's US logistics unit, which employs some 25,000 people, would not be affected.

Deutsche Post will announce its cost reduction plan along with releasing its third quarter results today, which are likely to be as high as $1.6 billion due to high fuel prices and competition.

In May, DHL had initiated a $2.6-billion cost cutting plan to curtail its operations in the US which has posted recurrent losses. The plan entailed a 30 per cent cut in its ground based operations within the US, but it was not successful due to the sudden economic downturn in the US.

Last month, Deutsche Post had cut down its earnings forecasts for both 2008 and 2009, saying it expects pretax profit to fall 8 per cent in the third quarter citing global economic downturn which has deteriorated markedly and also acknowledged the problem of frequent losses since 2003 after it acquired Airborne as also dwindling sales in the US due to tough competition from UPS and FedEx.