Deutsche Post to cut 9,500 jobs in US

The decision announced Monday could lead to higher shipping prices and greatly scale back a possible venture between UPS and DHL, the fourth-largest shipper of packages in the U.S.

Deutsche Post AG, the German parent of DHL, said it will no longer offer U.S. domestic-only air and ground services as of Jan. 30, though it said international shipping to and from the U.S. would continue.

DHL has tried to be a major player in the U.S. since it bought Airborne Inc.'s ground delivery network for $1.05 billion in 2003, but it has lagged in the air and ground markets combined, analysts said.

Now, as other shippers pick up some of DHL's business in the U.S., it could cost customers more but boost the bottom lines of the shippers.

"The real upside might be two, three or four years down the road, when the economy is feeling better and FedEx and UPS are able to raise prices, because they won't have another competitor nipping at their heels," said Avondale Partners analyst Donald Broughton.

Monday's news follows Deutsche Post's announcement in May that it was working on a deal with UPS to allow the Atlanta-based company to carry some of DHL's air packages.

The DHL-UPS venture was expected to last up to 10 years and generate up to $1 billion in annual revenue for UPS, the world's largest shipping carrier.

UPS has said the contract with DHL, which it has been working to complete, would mostly involve the transport of DHL packages between airports in North America--not the pickup or delivery of DHL packages to customers.

UPS spokesman Norman Black said his company would continue to work on an air-haul vendor contract with DHL. But, he added, "Today's announcement by DHL certainly could affect the size and scope of that contract. We'll go back into talks and see what develops."