DHL's CEO hopes to add 777s to fleet to boost efficiency, cut costs

on Wednesday, April 6, 2011

DHL's CEO hopes to add 777s to fleet to boost efficiency, cut costs  DHL Express is the world's third-biggest logistics company and is regularly tasked with delivering packages throughout the globe. Its main rivals, UPS and FedEx, have moved in recent years to cut costs and boost profit margins. Over the past year, the price of oil has steadily climbed amid economic and political instability throughout the Middle East and North Africa; to combat that price rise, DHL plans to replace some of its jets with more fuel efficient alternatives. 

According to company executives, DHL hopes to cut its greenhouse gas emissions, increase efficiency and better compete with its chief rivals by replacing 15 percent of its fleet of jets. The company plans to buy Boeing's 777 jets, but first needs the proposal to pass its German parent company's chief executive.

DHL is also looking to cut costs and boost efficiency in its fleet of vehicles. In New York City, for example, the company plans to replace its 80 transportation vehicles with electric or hybrid alternatives within the next six months; that plan calls for the company to buy 50 large, hybrid trucks and 30 smaller, battery-operated electric vans, the Wall Street Journal reports.

DHL Express chief executive Ian Clough said the U.S. air fleet had successfully replaced inefficient planes like the DC-8 and DC-9 aircrafts. DHL transitioned from those outdated planes to Boeing 747s and 767s, and now the company hopes to have Boeing 777s make up 15 percent of its fleet by 2015.

Such a move will help the company to cut costs and greenhouse gas emissions. The move also sets it up to better compete with rivals like FedEx, which currently has a fleet of the planes capable of making non-stop flights to Asia. DHL has a strong market share in Asian countries and hopes to grow its share of business there through its plane-buying plans.

Nonetheless, though Clough has put the plan forth, it is unknown whether Deutsche Post chief executive Frank Appel, who ultimately controls the company, would approve the plan. In New York City on Tuesday, Appel said that oil prices would have to rise "a lot more" before it could start to eat into profit margins as the company's fuel surcharge system allows the company to pass cost increases on to its customers.

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