Catching up as always this week on a variety of letters. Remember, feedback now is also available at the bottom of each article.

We received a ton of Feedback on various pieces we published related to DHL’s strategy to pull back in its US network and outsource air lift operations to UPS as well as more local deliveries to the US Post Office. Many were clearly from DHL employees or others directly impacted by the decision, most of whom think that many mistakes led to the operational problems DHL had in the US.

We print a selection of these letters below, including our Feedback of the Week from Mark Medley on the topic.

Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedback of the Week - On DHL US Changes:

What difference does it make if the UPS/DHL arrangement is an anti-trust violation or a fraud against the pilots?

DHL was faced with a choice. Pull out of the US or significantly reduce their operational losses by outsourcing the airlift to UPS. Either way 8,000 jobs are lost. By partnering with UPS, DHL will still be able to maintain a presence in America. This is important for their global business.

I see a significant amount of DHL's freight moving to FedEx and UPS over the next two years. It is disappointing because the company was run so well before 2003. The management that was put in place after that literally destroyed the company.

I have never experienced such incompetence. It was literally unbelievable. Now the damage is done and the market is left with two carriers. One is union and one is not. Shippers still have a choice when choosing a small package carrier. I would make sure I was using a company that would not go on strike. Maybe DHL will shrink enough and become the quality carrier they once were. I wouldn't count on it.

Mark Medley

More on DHL:

DHL is biting the bullet -- a must move --

1. ABX/ASTAR fleets are very old and very poor in comparison to FDX/UPS fleets. Fuel burn, package density loads, aircraft reliability (a must in the overnight business) are much superior at FDX/UPS.

2. Both FDX/UPS have known for many years that it was a matter of time --losses of $900 million in 2007, plus another $1 billon estimated in 2008 that would continue year after year unless DHL spent $20-$30 billon for new aircraft (down side is that it would take years to get these aircraft) to just break even. FDX/UPS just sat back and watched the blood flow.

3. Yes, shutdown operations will cost many dollars over a 1-2 period, but not to the extent of losing $1 billon per year and the cost of investing billons to purchase a modern fleet. After putting a bad plan in place several years ago, DHL had no choice but to bite the bullet and do something to cut loses.

4. State and local officials nor federal congressman or senators may be able to delay the switch to FDX/UPS, but they can't do anything to do stop a new plan of action by DHL.

5. ABX/ASTAR employees need to look for employment elsewhere. In the end, had DHL looked at UPS operations in the middle 1980s, they would have never set up their current operation. UPS bought a fleet of 90+ aircraft, and let five airlines operate the aircraft in the UPS system carrying UPS packages. It didn't work, dispatch reliability was not there and FDX knew it. UPS bit the bullet and in late 1987 began building its own airline and today is the 8th largest in the world.

Tim Tomeny

Response to Tim Tomeny:

I have to respectfully disagree with your comments Mr. Tim Tomeny. I will address the points he has made.

1. ABX ASTAR fleets are very old and very poor in comparison to FDX/UPS fleets. Fuel burn, package density loads, aircraft reliability (a must in the overnight business) are much superior at FDX/UPS.

FDX has 94 B727 aircrafts in their fleet, which is their largest number in their fleet composition. UPS plans to bring back DC-8 from the dessert to accommodate the extra lift for DHL's packages. Both of these aircrafts are used in the Astar Fleet. Astar's reliability has been 98-99%.

2. Both FDX/UPS have known for many years that it was a matter of time --losses of $900 million in 2007, plus another $1 billon estimated in 2008 that would continue year after year unless DHL spent $20-$30 billon for new aircraft (down side is that it would take years to get these aircraft) to just break even. FDX/UPS just sat back and watched the blood flow.

Acquiring modern fuel efficient airplanes is a costly capital expenditure compared to cheaper less fuel efficient aircrafts. In the long run this would be feasible over time; however, this was not the problem with the losses that accumulated over the years. It was poor management and decisions from DPWN that led to their current losses. All you have to do is compare DHL operation to FDX and UPS operation to get the picture. It would be just too lengthy for me to explain it all in detail.

3. Yes, shutdown operations will cost many dollars over a 1-2 period, but not to the extent of losing $1 billon per year and the cost of investing billons to purchase a modern fleet. After putting a bad plan in place several years ago, DHL had no choice but to bite the bullet and do something to cut losses.

Yes, they have to do something to cut loses, but to have all your packages shipped by your competitor is not the best business decision. Think about the conflict of interest involved. What if UPS wants to eliminate DHL from being a competitor? What if an aircraft is full and which boxes get left behind? Do you see FDX or UPS following this line of business model? Absolutely not.

4. State and local officials nor federal congressman or senators may be able to delay the switch to FDX/UPS, but they can't do anything to do stop a new plan of action by DHL.

Hmm. If it is an antitrust issue they can. Think about pricing. I know for a fact DHL has undercut price to gain business from UPS and FDX. Now if DHL customers are getting UPS service for a cheaper price, wouldn't UPS customers flock over to DHL to get the cheaper deal? Of course they would, but UPS would not stand for that. To prevent this, there would be price fixing. There would not be a price war between them too, but price collusion. How can they really compete against each other? This is a form to eliminate competition. The consumers would not benefit from this deal.

5. ABX/ASTAR employees need to look for employment elsewhere. In the end, had DHL looked at UPS operations in the middle 1980s they would have never set up their current operation. UPS bought a fleet of 90+ aircraft, and let five airlines operate the aircraft in the UPS system carrying UPS packages. It didn't work, dispatch reliability was not there and FDX knew it. UPS bit the bullet and in late 1987 began building its own airline and today is the 8th largest in the world.

UPS did the right course of action which DHL can do. You didn't see UPS going to FDX back in the middle 1908s to have them carry all of their packages did you? If DPWN would make the right decision and follow a business model similar to UPS or FDX, they would have a thriving business in the future and thus save some of the employees of ASTAR and ABX from needlessly look for employment elsewhere.

It really is a shame that poor decisions from management can destroy companies and people lives. The good thing is that this still can be prevented.

Andy Raymond

Actually, the primary problem that DHL has in the US is its ground delivery network. It's a mix of DHL employees, and Independent Contractors. The delivery failure rate is tremendous, and has resulted in a steep loss in revenues.

Of course, with DPWN micro-managing DHL's decision making processes, and in many instances ignoring DHL's recommendations outright (the UPS alliance is the prime example of this) they have elected to keep the part of the company that is directly responsible for the losses in the US.

Bryan Hilliard

Q. What is China’s average non-farm tariff on imported goods?

A.9%