Logistics giant announced: layoffs of 8,000 employees!

Deutsche Postal giant DHL announced that it would lay off 8,000 employees, the largest layoff in decades.

Recently, German logistics giant DHL announced a layoff plan that will cut about 8,000 jobs this year as part of a cost strategy of saving 1 billion euros (about .08 billion) by 2027. Previously, DHL reported a 7.2% decline in its annual operating profit.

The layoffs are mainly concentrated in the letter and parcel delivery industry in Germany, which employed about 187,000 employees by the end of last year. The layoffs are the largest in Germany's DHL's domestic market in at least two decades, aiming to deal with a decline in email volume and what the company calls too strict regulatory environment. Despite the recent increase in postage prices by DHL, restrictions from German regulators have made the move insufficient to support profits, DHL CEO Tobias Meyer said.

Affected by the announcement of the layoff plan, DHL's share price rose to its highest level since February 6, 2024, with an increase of 12.3%. However, the Verdi union criticized the layoffs and urged politicians to take action while placing the blame on poor regulation and insufficient price increase in postage.

It is worth noting that this layoff only accounts for 1.3% of the total number of DHL’s global employees. Germany still holds a 16.99% stake in DHL through state-owned bank KfW. Prior to the results, HSBC's head of global transportation and logistics research, Parash Jain, said that logistics companies' profit growth could slow this year due to weak demand and ease of supply chain disruptions. He expects shipping companies to cut costs and predicts the growth of global container trade and air freight volumes to halve by 2025.

Meyer said in a conference call that U.S. President Trump's decision to suspend the cancellation of "minimum" tariffs (i.e., low-value parcel tax exemption policy) has little impact on the DHL. He also told Reuters that although the postal business has been plagued by rising costs and falling letter counts for years, DHL has no plans to split the business.

"We expect global political and economic situations to remain volatile in 2025," DHL CEO Tobias Meyer said in a statement. DHL's EBIT will fall 7% to €5.89 billion in 2024, but it is still higher than analysts' average expectations of €5.81 billion. For 2025, the group expects operating profit to exceed €6 billion, but below analysts' expectations of €6.29 billion. This forecast does not take into account the potential impact of tariffs or trade policy changes.

The layoffs are part of DHL's "Fit for Growth" program, which, according to a DHL statement, has approximately 602,000 employees in more than 220 countries and regions around the world, of which 190,000 are in the Deutsche Post parcels division.

It is worth mentioning that during a recent online conference call with stock analysts and investors, DHL CEO Tobias Meyer elaborated on DHL's plan to enhance profitability through business streamlining strategies and expressed his determination to catch up with major competitor DSV. "Whether it is because of the accelerated development of DHL itself or the setbacks of DSV, from a long-term perspective, I firmly believe that we can catch up with DSV," Meyer emphasized.

Looking back at last September, DSV announced a major acquisition plan that will soon take over German counterparts DB Schenker. The deal is expected to be completed later this year, when DSV will become the world's premier freight forwarding company. Against this backdrop, Meyer pointed out that he is working hard to strengthen the financial foundation of DHL through measures such as layoffs, and believes that DHL has made positive progress in catching up with competitors in the industry.

When asked about the 35% conversion target set by DHL, Meyer said: "We are committed to continuously narrowing the gap with benchmark companies in the industry, especially in terms of volume growth and conversion rate balance, and we expect to ultimately surpass it." He further pointed out that DSV's conversion rate in 2024 is 37.5%. Although DSV's business structure is significantly different from DHL, DHL has shown good development momentum in the global freight field, especially in maritime transportation.

“Faced with the high uncertainty of the current global geopolitical and economic situation, DHL will focus on areas we can control to ensure the company’s steady progress,” Meyer concluded, emphasizing the importance of DHL’s flexibility and strategic determination in a complex and changing market environment.