Logistics giant announced: 8,000 layoffs!

The German postal giant DHL has announced it will cut 8,000 jobs, its biggest reduction in decades.

German logistics giant DHL has announced a plan to cut around 8,000 jobs this year as part of a strategy to save 1 billion euros ($1.08 billion) in costs by 2027. Earlier, DHL reported a 7.2 percent drop in annual operating profit.

The job cuts are concentrated in Germany's letter and parcel delivery industry, which employed about 187,000 people at the end of last year. The planned job cuts are the biggest in DHL Germany's home market in at least two decades and are aimed at coping with falling mail volumes and what the company says is an overly restrictive regulatory environment. Although DHL recently raised postage prices, restrictions by German regulators made the move insufficient to support profitability, said Tobias Meyer, chief executive of DHL.

Following the announcement of the job cuts, DHL's shares rose to their highest level since February 6, 2024, up 12.3%. However, the Verdi union criticised the job cuts and urged politicians to act, while blaming poor regulation and insufficient increases in postage prices.

It is worth noting that the job cuts represent only 1.3% of DHL's global workforce. Germany still holds a 16.99% stake in DHL through its state-owned bank KfW. Speaking ahead of the results, Parash Jain, global head of transport and logistics research at HSBC, said profit growth for logistics firms is likely to slow this year due to weak demand and easing supply chain disruptions. He expects carriers to cut costs and forecasts that growth in global container trade and air freight volumes will halve by 2025.

Meyer said on the conference call that DHL would have little impact from President Donald Trump's decision to suspend the elimination of "minimum" tariffs, or tax exemptions for low-value packages. He also told Reuters that DHL had no plans to break up the postal business, which has been plagued for years by rising costs and declining letter volumes.

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

The job cuts are part of DHL's "Fit for Growth" plan, according to a statement from DHL, which employs around 602,000 people in more than 220 countries and territories worldwide, including 190,000 in the Deutsche Post parcel division.

DHL's goal: to catch up with rival DSV

It is worth mentioning that in a webcall with equity analysts and investors held recently, DHL CEO Tobias Meyer explained DHL's plans to increase profitability through business streamlining strategies and expressed its determination to catch up with its main competitor DSV. "Whether it is because of DHL's own acceleration or DSV's setbacks, I am confident that we can catch up with DSV in the long term." "Meyer stressed.

Back in September, DSV announced a major takeover plan to take over German peer DB Schenker. The transaction, which is expected to close later this year, will make DSV the world's leading freight forwarder. In this context, Meyer noted that he is focusing on strengthening DHL's financial foundation through measures such as job cuts, and believes that DHL has made positive progress in catching up with competitors in the industry.

When asked about DHL's 35 per cent conversion target, Meyer said: "We are committed to continuously closing the gap with the benchmark players in the industry, especially in terms of volume growth and conversion balance, and we expect to eventually exceed that." He further pointed out that DSV has a conversion rate of 37.5% in 2024, and despite the significant differences between DSV's business structure and DHL's, DHL has shown good momentum in the global freight space, especially in ocean freight.

"In the face of the current high degree of global geopolitical and economic uncertainty, DHL will focus on the areas we can control to ensure the company's steady path forward." Meyer concluded, stressing the importance of DHL's flexibility and strategic focus in a complex and changing market environment.

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