GERMANY's DHL's cancellation of contracts with cargo airlines is part of a new cost plan to achieve first-quarter operating profit despite reduced volume, reports New York's FreightWaves.
dhl Express' operating profit increased 4.8 per cent year over year to $754 million as efficiency measures ramped up, while better pricing and product mix boosted revenue two per cent, according to DHL Group financial results.
Management said improved capacity utilization, seasonal network adjustments and higher yields countered the drop in volume. Demand for time-definite international parcels, the Express division's core product, fell 7.1 per cent to 975,000 items per day, while aviation supply costs for DHL's own fleet and purchased transportation declined seven per cent year over year. Operating costs at Express air hubs decreased one per cent.
In March, DHL unveiled a plan, called Fit for Growth, to eliminate more than US$1.1 billion in annual structural costs by the end of next year. (FedEx and UPS have similar programmes called Drive and Efficiency Reimagined.)
One way the integrated logistics provider will take out cost and drive efficiency in the air network is by streamlining the number of partner airlines that supplement the transportation provided by DHL's own fleet, top executives said during the fourth-quarter earnings call.
The recent end of several air cargo partnerships is more clearly understood in the context of DHL's desire to eliminate excess capacity.
DHL in February, for example, pulled out of its Polar Air Cargo joint venture with Atlas Air. The parties said at the time they mutually decided to close one of the best-known air cargo brands after 18 years.
DHL Aviation is a group of airlines, either wholly owned or chartered by DHL Express. The company regularly flexes the fleet to handle shifts in volume.
Aircraft space not filled by overnight packages is sold to shippers, either by guaranteed blocks for businesses with large, repetitive loads or on the spot market. The largest buyer of remaining capacity is DHL's Global Forwarding business unit.
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dhl Express' operating profit increased 4.8 per cent year over year to $754 million as efficiency measures ramped up, while better pricing and product mix boosted revenue two per cent, according to DHL Group financial results.
Management said improved capacity utilization, seasonal network adjustments and higher yields countered the drop in volume. Demand for time-definite international parcels, the Express division's core product, fell 7.1 per cent to 975,000 items per day, while aviation supply costs for DHL's own fleet and purchased transportation declined seven per cent year over year. Operating costs at Express air hubs decreased one per cent.
In March, DHL unveiled a plan, called Fit for Growth, to eliminate more than US$1.1 billion in annual structural costs by the end of next year. (FedEx and UPS have similar programmes called Drive and Efficiency Reimagined.)
One way the integrated logistics provider will take out cost and drive efficiency in the air network is by streamlining the number of partner airlines that supplement the transportation provided by DHL's own fleet, top executives said during the fourth-quarter earnings call.
The recent end of several air cargo partnerships is more clearly understood in the context of DHL's desire to eliminate excess capacity.
DHL in February, for example, pulled out of its Polar Air Cargo joint venture with Atlas Air. The parties said at the time they mutually decided to close one of the best-known air cargo brands after 18 years.
DHL Aviation is a group of airlines, either wholly owned or chartered by DHL Express. The company regularly flexes the fleet to handle shifts in volume.
Aircraft space not filled by overnight packages is sold to shippers, either by guaranteed blocks for businesses with large, repetitive loads or on the spot market. The largest buyer of remaining capacity is DHL's Global Forwarding business unit.
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