UPS & FedEx Losing DHL As Competition Via Layoffs (UPS, FDX)

DHL has announced that it was cutting 9,500 jobs as it discontinues air and ground operations within the United States.  DHL Express says that it will continue to operate between the United States and other nations, but it is killing the "domestic-only" air and ground services within the United States by January 30.  Despite an obvious slowdown, United Parcel Services, Inc. (NYSE: UPS) and FedEx Corporation (NYSE: FDX) are probably happy as clams over this announcement.

The company is shutting down all ground hubs and reducing its number ofstations to 103 from 412.  This latest announcement of 9,500 job cutsis on top of 5,400 terminations this year.  The company believes itwill have 3,000 to 4,000 workers after the firings have been effected.

United Parcel Services, Inc. (NYSE: UPS) shares are up 4.8% at $54.43on about 1.2 million shares and its 52-week trading range is $43.32 to$75.82.

FedEx Corporation (NYSE: FDX) shares are up 3.5% at $66.85 on almost400,000 shares and its 52-week trading range is $53.90 to $102.84.

Bad news at one shop is often great news for competitors.  This is alsothe sort of PR that may actually drive business to UPS or FedEx eventhe international side of the operations.  Customers hate uncertaintyin suppliers and service providers.  Think of it as counterparty riskmanagement.

Jon C. Ogg
November 10, 2008