DHL has sold its UK domestic parcel business to Home Delivery Network.
HDN will take on all employees and facilities of the business.
The two companies have also entered a wider preferred supplier relationship in a bid to leverage the core strengths of each party, which under HDN will continue to use the DHL Domestic brand in the short-term.
The move will enable the companies to offer customers of both businesses a wider range of services.
The agreement also covers joint customer management processes, as well as preferred supplier status of DHL for logistics services.
Ken Allen, chief executive officer of DHL Express, said: “We are confident that this move will help us improve the overall quality of our international services while at the same time enhancing domestic parcel services for UK customers. The agreement allows us to concentrate our resources on further growing the profitable express businesses.”
The agreement is limited to DHL’s domestic parcel business, also known as the Day Definite Domestic business, which concentrates on shipments delivered within the UK on a certain day rather than at a specific time of the next day.
DHL Express will now focus on its Time Definite International and Same Day express services, both internationally and throughout the UK.
DHL’s Servicepoint facilities and the company’s online offering DHLitNow are unaffected by the move.
Ken McCall, chief executive officer of DHL Express UK, added: “HDN is a strong and well-respected player in the B2C field and thus ideally complements the B2B focused services we currently offer… [we]will work closely with HDN to ensure a smooth transition process.”
DHL plans to transfer its UK day definite parcel operations to HDN by the end of the first quarter 2010.
The business currently employs some 4,700 people and operates five hubs as well as 71 service centres throughout the UK.
DHL Domestic will continue to use a wide range of DHL services from DHL that are currently supporting the domestic parcel unit, such as air transport, IT and financial services.
At the core of Deutsche Post DHL’s UK parcels business is the old Securicor Omega Express operation. This started out in the 1960s as an add-on service to the Securicor security business with local managers carrying packages for clients in the back of their cars. The business grew to become the main rival to the Royal Mail parcels operation.
In 1998 Deutsche Post took a 50 per share in Securicor Distribution, the parent company of Securicor Omega Express, going on to take full control and merging it with its DHL business.
Deutsche Post DHL has been struggling for profitability in parts of its express business – notably in the United States where it has also exited from the domestic business.
In its results for the first nine months of 2009 Deutsche Post DHL said express division sales in Europe were down 17.4 per cent and highlighted exchange rate losses in the UK as a major contributor.
Overall, the express division’s EBIT slumped to a 432m euro loss as a result of non-recurring costs from a profit of 12m euros in 2008.