UPS to Handle DHL’s North America Air Service

UPS Inc. said Wednesday it will provide air transportation in North America for competitor DHL Express, as DHL works to cut costs.

UPS said it expects a contract to be made final later this year and that the deal would be for 10 years and produce up to $1 billion in annual revenue for UPS, which said it would begin phasing in volume this year.

DHL said in a statement it would see cost savings of about $1 billion as it restructures its U.S. service, Bloomberg reported, citing a statement released by DHL parent company Deutsche Post, based in Bonn, Germany.

UPS also would provide air lift for DHL packages between the United States, Canada and Mexico.

“We believe this arrangement with DHL would represent a wise use of our assets and network capacity while creating a substantial and profitable revenue stream for our company,” said David Abney, UPS’ chief operating officer. “We plan to move forward quickly on the final contract.”

The agreement would not involve the pick-up or delivery of DHL packages to their customers, only the transport of packages, primarily between airports, in North America. The work will be similar to that currently performed by UPS for the U.S. Postal Service.

UPS is ranked No. 1 and DHL Americas is No. 3 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.