Business
DHL Announces 8,000 Job Cuts in Germany Amid Economic Challenges
The logistics giant DHL has announced a significant restructuring of its German mail and parcel business, with plans to cut 8,000 jobs. The move comes as the company seeks to counter declining earnings and improve operational efficiency under its “Fit for Growth” initiative.
Financial Struggles and Cost-Saving Measures
DHL, part of the Deutsche Post Group, saw a decline in earnings by 400 million euros last year, prompting CEO Tobias Meyer to introduce cost-cutting measures amounting to over one billion euros. Despite reporting an operating profit of 5.9 billion euros in 2024—slightly exceeding analysts’ expectations—the company remains cautious about its financial outlook.
Although DHL’s total sales reached 84.2 billion euros, higher than projected, Meyer had previously revised forecasts downward, reflecting uncertainties in the market. Earnings per share also fell from 3.09 euros to 2.86 euros. However, the company has maintained its dividend at 1.85 euros per share and increased its share buyback program by 2 billion euros, bringing the total to 6 billion euros through 2026.
Outlook for 2025: Economic Uncertainty
Looking ahead, Meyer has warned of a “subdued macroeconomic environment” in 2025. The company expects an operating profit of at least 6 billion euros but remains wary of geopolitical and economic uncertainties. Potential changes in customs and trade policies—such as increased tariffs from the U.S. on Canadian, Mexican, and potentially EU goods—could have both negative and positive effects on DHL’s global operations.
Competitive Pressures in the Logistics Industry
DHL is not alone in facing financial headwinds. Its U.S. competitor, UPS, recently projected a $2 billion revenue decline for 2025, leading to a 15% drop in its share price. The slowdown in global trade and increasing competition, particularly from Amazon’s expanding logistics network, have created additional challenges. In Germany, Amazon has captured approximately 25% of the parcel market, posing a growing threat to DHL’s 40% market share.
To mitigate financial pressures, UPS has also announced cost-cutting initiatives, including job reductions and facility closures, aiming to save over a billion dollars. Similarly, Swiss logistics firm Kühne+Nagel reported a 13% decline in operating profit in 2024 after a sharp drop in 2023. However, the company remains optimistic about a recovery in 2025.
Rising Costs and Shrinking Profit Margins
DHL’s restructuring efforts focus heavily on its domestic letter and parcel business, which has suffered from increased personnel costs. In 2024, labor expenses rose by 5%, with collective agreements pushing wages up by 11.5%. Further increases of 2% in April 2025 and an additional 3% in 2026 will continue to pressure margins.
Despite an 8% rise in parcel business revenue in 2024, profitability in the sector has declined. Structural shifts in consumer behavior, particularly an increase in shipments from Chinese online retailers such as Shein and Temu, have impacted operations. Meanwhile, traditional letter volumes continue to decrease, and advertising mailings have fallen sharply. DHL also discontinued its weekly advertising newspaper, “Einkauf aktuell,” further impacting its mail division.
A Ray of Hope: Postage Increase
One silver lining for DHL has been the recent approval from the Federal Network Agency to increase postage rates. As of early 2025, the cost of a standard letter has risen by 10 cents to 85 cents. However, CEO Meyer has expressed concerns that this increase may not be sufficient to offset the company’s financial burdens.
Conclusion
DHL’s latest restructuring efforts underscore the challenges facing the logistics sector amid economic headwinds and shifting market dynamics. While cost-cutting measures and strategic adjustments are underway, competition from emerging players and rising operational costs will continue to test the company’s resilience in the coming years.
