DHL to Try Ground Parcel Delivery Again in U.S.

Source: DHL

Almost 10 years ago, DHL pulled the plug on parcel ground delivery in the U.S. as it struggled to find any significant foothold in the market.

On Friday, the company announced DHL Parcel Metro, a new fast and flexible service for online retailers to meet consumers demand for same-day and next-day delivery.

While this is very much a different operation from the UPS and FedEx like national delivery network it was trying to replicate in the 2000s, it will bring the DHL name back into select urban residential deliveries.

When DHL exited the domestic ground service in the U.S., it left the profitable international delivery and logistics operations in place.

While the company serves both commercial and residential addresses with DHL international, the exposure of the DHL name to the average consumer was severely diminished.

DHL Parcel Metro

The company has been testing DHL Parcel Metro in Chicago, Los Angeles, and New York for the last two years. DHL plans to roll our service in Dallas, Atlanta, San Francisco, and Washington, D.C. by the end of 2018. Additional cities will come online in 2019 and beyond.

DHL Parcel Metro relies on contract couriers and an app-based logistics tool to pick up and deliver shipments within the metro areas. The service offers 2-hour, same-day, and next day delivery and the company plans to add Saturday delivery soon.

Do these “delivery times” sound familiar. They should, as they mimic Amazon Same Day or Next Day services.

Helane Becker, a Cowen & Co analyst told CNBC that she believes Amazon is working with DHL to expand its presence in the United States.

“Amazon is growing 35+ percent per year, and they need to figure out a way to get stuff to the buyers. FedEx and UPS have told Amazon they won’t scale with them, meaning that Amazon has to figure out a way to support their delivery network themselves,” Becker said.

Amazon and DHL as partners is not a new concept. Currently, Amazon uses DHL’s ramps at the logistics company’s America’s hub at Cincinnati/Northern Kentucky International Airport (CVG) for Prime Air operations.

And Amazon recently purchased land to build its own air hub at CVG. Coincidence?

DHL Parcel Metro and SWA Future Backbone Logistics Connection?

On the surface, it appears that DHL and Amazon may be competitors in the eCommerce fulfillment business.

But building out a nationwide logistics network is not easy and cheap as DHL already learned a decade ago.

Amazon is a retailer, not a logistics company, and having its own in-house logistics operations may be good for some parts of the business, but servicing every address in the U.S. or beyond would not be easy to build out.

When one looks at the clues and puzzle pieces already in place or announced, it’s not unreasonable to believe that Amazon and DHL may find more success in collaboration than in competing.

According to Reuters, DHL eCommerce Chief Executive Charles Brewer told the news service Amazon is a large customer but Parcel Metro was not designed with Amazon in mind.

But could the two companies collaborate to build out a nationwide parcel logistics network to move packages between local delivery areas? And could the U.S. Domestic logistics backbone integrate with DHL’s international parcel logistics operations?

What do you think about DHL and Amazon possibly working together? Head over to our Facebook Discussion Group or use the comments section below.

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