February 14, 2008 – 9:32 pm
UPS and FedEx (to a lesser extent - having just dealt with its own tax issues) must really be singing a merry little tune at what looks like the beginning of the end for competitor DHL. German prosecutors are looking into whether or not DHL CEO Klaus Zumwinkel cheated on his taxes. This is not a good time for DHL, which has lost its monopoly on the domestic postal system and is in the middle of a major self-examination of strategy. It is reportedly considering selling is US-based DHL service to FedEx as well as looking at possibly dumping its German banking subsidiary.
Consumers - on the other hand - have little to sing about because the end of DHL would also mean the end of meaningful competition in the industry. DHL, while failing to turn a profit - is serving a purpose in the market. It makes the other two - Fedex and DHL - earn their customers. History has shown us that for an industry to be truly competitive, three players are needed and right now, DHL is that third player in the parcel delivery business.
- When your primary choices were between Microsoft’s Internet Explorer and Netscape’s Navigator, most people who are not computer illiterate would tell you that neither option was very attractive.
- When it was just between FedEx and UPS, most would agree that services were higher and less efficient. Thanks to competition, packages are delivered much quicker now than they used to be. Some places used to be 10 day destinations for UPS, but those days are long gone.
- Sports card collectors have often moaned about the fact that two main companies - Upper Deck and Topps - control nearly all trading cards made today. When a plan for these two companies to merge came forward, a huge uproar ensued. Thankfully, that idea never got off the grounds.
Competition is a dish best served in three courses. A third competitor - especially one like DHL - whose entire business plan is based on low prices and no frills - will help to ensure that UPS and FedEx don’t run over consumers or their packages with outlandish rates and shoddy business practices - at least not too much more than they already do.
Posted in All Items, Competitors, Crime & Security, DHL, FedEx, Profits, USPS | 9 Comments »