Deutsche Post unit, DHL, is said to be looking at shedding its troubled freight forwarding division either by spinning if off in some form of strategic joint venture, or outright sale with Japan Post highlighted as a potential suitor, according to a Reuters report.
The air and ocean forwarding units would be included in this move, with the land freight forwarding unit likely kept, the report noted citing an un-named source. An outright acquisition of the entire forwarding divison has been estimated to be worth around US$5 billion.
This would then let the DHL group to focus on its mail and express business, without the burden of the loss-making forwarding arm. The beleagured DHL Global Forwarding division has been struggling of late, no better illustrated than by last year’s failed experiment with a new IT system known as the ‘New Forwarding Environment’, which saw a US$388 million write-down, which resulted in a 71 per cent drop in third-quarter core earnings to $222 million.
In a rare admission of failure the company said it had simply been “overwhelmed” by the botched IT rollout. The fiasco saw a number of senior executives leave the company, including CEO Roger Crook.
“The unit has had massive margin problems of late, among others, due to IT (information technology) troubles, so it’s natural that Deutsche Post is mulling ways to turn it around”, Reuters quoted the un-named source as saying.