Dhl the History of International

DHL

The history of international courier service DHL is important, but only brief history is necessary here. DHL began in San Francisco, but it spread rapidly and now covers 220 countries (History, 2004). Recently, it merged with Airborne Express, so now it covers both domestic and international shipping (History, 2004). Worldwide, DHL services 3 (History, 2004).5 million customers and over 120,000 destinations with over 170,000 employees (History, 2004). It has now been in business for 34 years, which is a relatively short time to grow into the large company that it is today (History, 2004). It was founded in 1969 by Adrian Dalsey, Larry Hillblom, and Robert Lynn (History, 2004). The first letters of their last names combined to make the company name - DHL (History, 2004).

Originally it sent bills of lading between Honolulu and San Francisco (History, 2004). In only a few years it was also servicing Australia, Japan, Hong Kong, Singapore, and the Philippines (History, 2004). In the 1970s DHL also moved into Europe, Africa, the Middle East, and Latin America (History, 2004). It was also the first company to bring Air Express to the countries in the Eastern Bloc beginning in 1983, and the People's Republic of China by 1986 (History, 2004). Trade is becoming much more global, and the rapid growth of DHL reflects that (History, 2004). Most of the DHL offices throughout the world are owned by the company, and those that are not are owned by affiliates that DHL works closely with (History, 2004). Were it not for the rapid expansion of globalization when it comes to business, DHL would likely not have grown so rapidly or done so well.

Finance Status

Financially, DHL appears to be performing well. DHL is a subsidiary of Deutsche Post, and leads the world in express delivery around the globe (Yahoo! Finance, 2004). It is ahead of FedEx and UPS and provides not only freight forwarding services but logistics as well (Yahoo! Finance, 2004). Airborne Express was acquired in 2003 so that DHL would have a ground unit, and this only made the company larger and more powerful when it comes to deliveries around the world (Yahoo! Finance, 2004). In 2003, DHL had 160, 754 employees, which was a 1-year growth of 5.60% (Yahoo! Finance, 2004). Revenue for the 2003 fiscal year was 27570.50 million, which indicated a growth rate of almost 30% (Yahoo! Finance, 2004).

Market Position

One of the reasons that DHL's market position is so strong is that it always finds a way to grow its business and make itself larger without overextending what it is doing and risking spreading itself too thin. Another reason is that it holds strong in logistics as well as in delivery services. For example, a recent ranking of the top 10 companies in global logistics and the explanation of where this ranking came from can be seen in the table below.

Table 1: Top 10 global logistics companies

Transport Intelligence Ltd., a market analyst in Cambridge, England, ranks these third-party logistics companies as the world's 10 largest based on their global contract revenues.

Company

Revenue ($ millions)

Exel

TNT Logistics

Wincanton/P&O Trans European

Tibbett & Britten

UPS Supply Chain Services

Deutsche Post World Net (incl.

Danzas Solutions)

Ryder

Hays

Christian Salvesen

Penske

Source: DHL/Airborne, 2003

As can be seen, when looking at global logistics, DHL is ranked very high, which is important. While they may not be the leader, they have held such strong market position for so long that they are working their way toward being the leader. By acquiring Airborne Express, a new ranking for this year would likely move them up the chain a spot or two. The second table looks simply at the domestic market share for 2002, and it can be seen that DHL does not rank very highly. This was likely due to the fact that the merger with Airborne Express was not yet completed and therefore the abilities that DHL had on the ground in the domestic market were not strong. Although no new data has yet been presented, it would be interesting to see whether DHL's ranking is higher now than it was then, now that the merger with Airborne Express has been completed.

Table 2: U.S. domestic expedited cargo market share

Third quarter 2002

U.S. Postal Service

FedEx Express/Ground

Airborne/DHL

All others

Includes domestic air and ground parcel.

Source: DHL/Airborne, 2003.

Driving Factors

One of the reasons that DHL does so well is that much of the business it gets would have otherwise been handled by the Post Office (Wessel, 1995). Because the postal service has been somewhat privatized recently, however, much of the business that would have gone to it has gone to other carriers. DHL is not the only one, but they are capable of sending packages to areas of the world that the other carriers are not involved in. They are following in the footsteps of UPS and FedEx by signing an agreement with 1200 independent parcel and mail centers (DHL, 2004).