Business Success Story: How DHL Revolutionized The World’s Air-courier Delivery Service

By | August 8, 09

I love success stories. And they have been one of my greatest motivators to success. When you read the success stories of businesses or people who have gone before you to achieve what you are now striving for, it will make it easier for you to achieve the goal.

You will be aware of the possible challenges on the way to reaching the goal, and from the strategies applied by the one who came out successful; you also have the solution to the obstacles in your hand.

It’s like having the answers to an examination even before sitting for it. Your chance of succeeding in achieving the same goal is sure higher if you knew the story of how someone else succeeded in it.

That’s why I like bringing you these stories because I know they are immensely valuable, and will greatly motivate, inspire, and guide you to achieving success in your business.

Although some of these stories may not be about modern day entrepreneurs or businesses, however, the principles they exhibited or applied that enabled them to start and build their businesses to global enterprise, touching lives in several places around the world for decades (or centuries), is timeless, immutable, and universal.

Your geographical location might be different, and time may have changed very much from the settings in the stories, but one thing is certain, if you implement the principles that made success possible for these entrepreneurs or businesses, you will surely hit success also in your business and in your life.

Today, I’m bringing you the amazing success story of DHL, a company formed by three young men with a common passion to help shippers quickly process their documentations at the ports and so save lots of money and time. Propelled by that desire, DHL is now the global leader in international express and logistic business.

Here goes the story…

DHL was founded in 1969 by three young shipping executives by name, Adrian Dalsey, Larry Hillblom, and Robert Lynn, who observed the huge cost shippers incur because their documents arrive late for processing.

They reasoned that if the shipping documents could be flown from port to port, they could be examined and processed before the ships arrived, and that speeding up the process would decrease port costs for shippers.

With this in mind, the trio combined the first letters of their names to form the acronym DHL, thus beginning an air-courier company that revolutionized the delivery industry.

DHL rapidly developed into an express delivery service between California and Hawaii, then quickly expanded to points east. The company’s primary customer was the Bank of America, which needed a single company to carry its letters of credit and other documents.

DHL branched into the international market in the early 1970s when it began flying routes to the Far East. And when its competitor Federal Express was developing its domestic overnight delivery network, DHL focused on further developing its international service.

In 1972, the three original investors recruited Po Chung, a Hong Kong entrepreneur, to help them build a global network. Chung started DHL’s sister company, DHL International Ltd., headquartered in Brussels, Belgium.

Beginning then, DHL Worldwide Express functioned as two separate companies, DHL Airways Inc., based in Redwood City, California, and DHL International. While each company acted as the exclusive agent for the other, by 1983 DHL International had grown to be five times its domestic counterpart.

DHL International’s rapid expansion continued throughout the 1970s, adding destinations in Europe in 1974, the Middle East in 1976, Latin America in 1977, and Africa in 1978.

The 1980s would bring the firm increased growth as well as greater competition. During this time, DHL continued to expand, by turns cooperating with competitors and warring with them.

The company also sought new outlets for service, working out an arrangement with Hilton International Co. in 1980, agreeing to provide daily pickup of documents at 49 Hilton Hotels, and arranging for international delivery – its couriers moving the packages through customs – then delivering them locally.

It was a win-win situation as Hilton was able to offer its patrons a high-class delivery service and DHL was guaranteed new outlets for its business.

The next year, 1981, DHL flew ten million shipments between 268 cities and made approximately $100million in sales.

In 1983, DHL estimated it carried 80 percent of the bank’s material traveling by courier from Europe to the United States. Revenues jumped to approximately $600million.

In 1984, as former courier-driver, Joseph Waechter, became President of DHL Airways, DHL provided service to more than 125 countries, and its 500 stations were handling 15 million international and domestic shipments annually.

Yet, just as DHL was looking to cut into the business of its domestic competitors, those same companies were aiming to siphon off portions of DHL’s international business.

In 1985, both Federal Express and UPS entered the international express market. As competition became more intense, DHL increasingly began to co-operate with businesses in similar areas.

The company teamed up with Western Union to deliver documents generated on Western Union’s EasyLink electronic mails, allowing people to send documents via courier without having to hand-deliver the material to the courier’s office.

Revenues for the entire DHL network, in 1988, were calculated to be about $1.5billion, helped in part by another joint venture with a Hungarian company to create DHL Budapest Ltd. That year, DHL controlled 91 percent of the packages bound for Eastern Europe from the West and 98 percent of all outbound shipments.

In 1990, despite a 60 percent share of the international overnight delivery market, the company began to expand into new areas of business. To keep up in an increasingly competitive industry, DHL Worldwide entered the freight services industry and began carrying heavier cargo.

In the company’s 20-year history of carrying small packages – generally under 70 pounds – this was DHL’s first major departure from its core business.

In 1991, DHL Worldwide’s revenues were $2.3billion, and it was the 59th largest private company in the United States, with 21, 000 employees handling more than 80 million shipments.

By 1994, DHL Worldwide was 25-years in business, and it controlled 52 percent of the Asian express shipment market, leaving FedEx and UPS with 24 percent each.

The following year, DHL poured over $700million into expansion of its Pacific Rim operations. DHL was not only shoring up facilities in Hong Kong and Austria, but also venturing into 16 new cities in China, India, and Vietnam.

DHL Worldwide grew even larger in August 2003 when it completed the acquisition of Airborne, Inc. for $1.05billion. Based in Seattle, Airborne was the third largest express delivery company in the United States.

By acquiring Airborne, DHL augmented its air express operations within the United States, and, perhaps more importantly, gained control of Airborne’s nascent ground delivery network and thereby gained ground on its US arch-rivals, FedEx and UPS.

With the vision to remain highly competitive, and maintain its market leadership in future, DHL unveiled its state-of-the-art research and development center, The DHL Innovative Center in 2007 with the mission to develop new, highly innovative and marketable products from the logistics trends of the future.

Starting as a three-man business only four decades ago, DHL now has over 300,000 people in its workforce in more than 200 countries, and generating tens of billions of Euros annually in revenue.

How was DHL able to achieve such monumental feat in just forty years? Read the strategies and keys to DHL business success here: Keys to DHL’s Business Success.



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