DHL, Fedex, and UPS:

Global Challenges

• Facilitators are vulnerable in terms of the value chain.
• Multinational retailers have gone out of business as the market is recuperating.
• Alternative revenue sources needed domestically.

DHL's Current Domestic Standing

• The United States represents 35% of the global logistics market, which is why DHL focuses on international maintenance and innovation.
• However, it is third domestically following FedEx and UPS:
• Aiming to use recent $1.1 billion acquisition of Airborne Express.
• Strategically target small and medium-sized firms

As of 2009, DHL is now owned by a German company Deutsche Post World Net. They decided to completely get rid of the United States sector after hitting 120,000 destinations and more than 200 countries worldwide.

DHL, FedEx, and UPS:

Global Competition

• Package and document delivery worldwide
• Provides global supply chain service

Global Operations

• Vast empire providing transportation, e-commerce
• Strong international influence

Result of Operations

In a recent press release, DHL's result of operations are as follows:

• Holding 35% of the market share of the international express segment in the Asia Pacific region, DHL International is a leader in Europe, China, and Japan.
• DHL is the global leader in airfreight, out-competing domestic firms and covering air and freight network extensively.
• DHL International has 20% more business than competitors in Europe, due to its efficiencies serving national networks with company-owned vehicles.
• In 2005, DHL acquired 81% of Blue Dart, an Indian company to further strengthen its presence in the key Asian markets of India and China.
• DHL targets its services to industries with global logistical needs on a larger scale. Examples of industries of high logistical needs are automotive, pharmaceutical, electronics, consumer goods, and the fashion industry.

• An increase in operating earnings to EUR 2.86 billion
• Sharp climb in net profit and cash flow
• A successful group proposal raised dividends to EUR 0.80 per share
• Earnings momentum to continue in 2014; 2015 guidance confirmed
• CEO Frank Appel: "We will continue to work hard to reach our goals".

Shifting Fortunes in the Global Logistics Services Industry

Spring 2015

DHL Mission & Vision

"The Logistics Company for the World."

1) We want to simplify the lives of our customers

2) We make our customers, employees and investors more successful

3) We make a positive contribution to the world

4) We always demonstrate respect when achieving our results

Bianca LeLuyer

Rachel Leal

Nicole Orapallo

Luke Watson

Derek Jamieson

is focused on international delivery.

• Founded by three young shipping executives: Adrian Dalsey, Larry Hillblom, and Robert Lynn.
• Idea founded upon the idea that if shipping documents were flown from port to port, they could be examined and processed before the ship arrives, which is more time and money efficient.
• "D.H.L": Dalsey, Hillblom, Lynn.
• Began the air-courier company that revolutionized delivery industry.
• First customer to utilize service on international scale was Bank of America, aiming to solidify the delivery of credit and other documents.
• DHL branched into the international market in the 1970's.
• As competitors arose, they focused on overnight delivery, while DHL continued to focus on international expansion.
• As of 1983, DHL left its domestic pursuit to Fedex and UPS.

THANK YOU

Case Questions

2) Supply-chain management has evolved over time, largely due to globalization and technological advances. What does the future hold? Can you anticipate changes to the supply chain that would further alter the express and logistics industry?

Traditional methods of logistics have been evolving from a human based form of operations to newly developed drone and driverless technology. Drones are being used in a variety of applications such as in combat to fly planes and drop bombs. Due to the more frequent use of them and the advancement of their technology, they soon will able to deliver packages without the use of manpower except maybe to load and program the drones. Also, Google’s driverless electronic vehicles could be replacing current delivery drivers. This shift in technology allows companies such as DHL to continue its operations while enormously reducing their costs of many things including human labor.

1) Describe the various services provided by logistics service providers. What is the role of these services in focal firm’ value-chain activities?

The various services that are provided by logistics service providers centralize on the specialization and arrangement of physical distribution and storage or products on behalf of other firms. More specifically, these services include the movement of raw materials, finished goods, packages, and documents across the globe by express services, international air, and ocean freight. Additionally, there are distributional functions that provide warehouses, inventory management, order tracking, and customer service. Essentially, the role of these services in focal firms’ value-chain activities the facilitator. The facilitator’s importance of integration is the overall flow of the dimension of transactions.

3) What factors do focal firms consider when choosing one logistics service provider over another? In what ways do the global logistical and transportation needs of focal firms vary from one industry to another? Give some examples.

Some factors that focal firms consider when choosing one logistics service provider over another is the cost. They should really take in consideration the cost and service level of a logistics service provider to assure they are getting the best there is to offer. Also, they should consider security of cargo, speed and efficiency, and global outreach. They should consider competitive services by checking other channels to see whether or not they fit with the right logistics operations, and if not they should redesign them.

Global logistical and transportation need of focal firm vary from industry to industry in many ways. An industry involving a multination banking that has to deliver important documents will focus a lot on security. Some focal firms may offer higher value service like DHL which provides warehousing and warehouse transportation service. DHL also targets their service to industries with larger global logistic needs like electronics automotive, and consumer goods.

Works Cited

5) What strategies should facilitator companies such as DHL, UPS, and FedEx implement during an economic recession? What steps can they take to ensure their survival, while remaining prepared for the upsurge of new business once the economy improves? Have they overlooked the fast-growing emerging markets?

Strategies that facilitator companies such as DHL, UPS, and FedEx should implement during an economic recession includes rethinking internal processes, cutting costs where necessary, seeking alternative revenue sources, cutting service to certain geographical areas, potentially laying off worker and cutting higher bonuses, emphasizing the areas of business that are most profitable and least costly, and refocusing on value-added portions of the business. Furthermore, facilitator companies often struggle to find a balance between lean operations during hard times, and gearing up for good economic times. With that being said, DHL has capitalized on emerging markets and international trade due to UPS and FedEx dominating the United States' market.

Cavusgil, S. Tamer., Gary A. Knight, and John R. Riesenberger. International Business: The New Realities. Upper Saddle River, NJ: Prentice Hall/Pearson, 2012. Print.

Hesseldahl, Arik. "UPS Vs. FedEx Vs. DHL." Forbes. FORBES Magazine, 17 Jan. 2005. Web.

Liu, Ji. "Study of Competitiveness: DHL." University of Gävle. Department OF BUSINESS and Economic Studies, June 2012. Web.

Scurlock, James. "The Strange, Rocky Beginnings of DHL." Thomson Reuters. N.p., 12 Jan. 2012. Web.

4) Given the importance of the U.S. market in the global express industry, should DHL reconsider its decision to withdraw from this segment? Lacking a significant presence in the United States, what should DHL management do to grow the firm and improve earnings?

The case suggests that with the U.S. comprising such a large share of the global logistics market, DHL’s global position will be hurt if it loses ground in the US. Many of DHL’s global customers are companies with headquarters in the US, and if DHL isn’t present in the US to meet those companies’ domestic needs, it’s questionable if they are in the best position to serve global needs.

DHL might strategically reconsider its decision and reenter the US market, if it has the resources and staying power to do so with the ground and air services the market requires. Finally, many people don’t know that DHL was initiated by three Americans - Adrian Dalsey, Larry Hillbolm, and Robert Lynn - as a door-to-door express service between San Francisco and Honolulu. Perhaps a brand awareness/marketing strategy that underscores these origins might refresh DHL’s image and position them in a more positive light.