DB Schenker realigns US domestic operations

DB Schenker has realigned its North American domestic transportation operations, transitioning to a non-fixed asset model.

Under the new business model, Schenker Inc will no longer operate its own dedicated air fleet.

While the company will now focus on a smaller number of customers who require North American domestic transportation management solutions, DB Schenker’s substantial international air, ocean, contract logistics and warehousing operations remain fully supported and unaffected by today’s announcement.

The phasing out of the US dedicated air fleet, which represents less than 10% of the company’s business in the Americas, will take place over the next several weeks. This action is in response to changing marketplace conditions and, along with the renewed focus on transportation management services, is aimed at positioning the company for continued growth and success.

According to Schenker Inc CEO Heiner Murmann, the prolonged recession and spiking fuel prices have led to more customers opting for expedited ground-based solutions instead of domestic airfreight.

Approximately 700 employees at the company’s Toledo-based hub (primarily part-time positions) will be affected. While some layoffs are unavoidable, the company hopes to redeploy as many employees as possible to other positions within the company.

Joe Hete, president & CEO of Air Transport Services Group (ATSG), has responded to Schenker’s announcement:

"We have been advised by our second-largest customer, DB Schenker, concerning its plans to adopt a new operating model that phases out the dedicated air cargo network supported by our airline subsidiaries, Air Transport International (ATI) and Capital Cargo International Airlines (CCIA). While we are continuing to evaluate that notice in the context of our other communications with DB Schenker, we expect a reduction in our role as a provider of main-deck freighter lift for DB Schenker in North America."

He said that ATSG is analysing the continuing and one-time effects this phase-out will have on its fleet and its financial results, but estimates that each of its eight DC-8 and eight 727 aircraft dedicated to the DB Schenker network generates approximately 1% per share in earnings after tax.