Tuesday, November 13, 2012

Scathing Report on DHL Activities as Freight and Logistics Profits Announced

German Group Criticised Again for Employment Practices
Shipping News Feature

GERMANY – TURKEY – Postal and logistics group Deutsche Post DHL has announced its third quarter results (Full figures HERE) which saw the company’s Earnings Before Interests and Taxes (EBIT) fall 6.5% from €646 million in 2011 to €604 million despite showing an increase of 5.7% to €13.8 billion in revenues during the third quarter compared to the previous year. This news comes as the company’s Chief Executive Officer Frank Appel defended the company's decision to dismiss workers in Turkey as the International Transport Workers Federation (ITF) released a report of an investigation into what it claims are illegitimate sackings to prevent unionisation of the freight company’s workforce. Speaking on the company’s financial matters Appel said:

"The strength of our business model keeps us on track in a difficult economic environment: With our strong market position in the international express and the German parcel business still paying off, we have delivered a solid set of results in the third quarter. At the same time it is clear that we cannot afford to rest on our laurels given the volatile economic environment."

Revenues in the mail division totalled €3.3 billion between July and September 2012, 1.9% below the previous year's level. During the three months, the division's EBIT fell from €302 million in 2011 to €247 million this year. The company cited expenditures related to the bankruptcy of the Neckermann mail-order company, the continuing drop in volumes, increased staff costs as a result of new wage agreements and the loss of one workday in this quarter led to the decrease in its mail division’s earnings, and due to the overall drop in mail earnings DHL’s EBIT declined by 6.5%.

DHL’s three other divisions remained profitable with its express sector seeing an increase of 9% to €3.2 billion in revenues during the last three months. The company says the strong growth is from an increase in volumes and international time-definite (TDI) shipments. In terms of EBIT, the division produced a strong gain in the third quarter of 2012, at €231 million, earnings rose 6.9% above the previous year's level of €216 million.

The freight forwarding division boosted its third-quarter revenues by more than €200 million, or 5.6%, to €4 billion. During the same quarter last year, revenues totalled €3.8 billion. While air freight revenues remained stable, ocean freight generated double-digit growth in revenues as a result of rising volume and higher freight rates. At the same time, the division profited from improved purchasing conditions in air freight. Whilst the freight forwarding sector was able to realise further efficiency improvements, its operating earnings slipped slightly as a result of start-up costs related to the introduction of the new IT infrastructure. At €122 million the divisional EBIT in the third quarter of 2012 was 1.6% below the previous year's level of €124 million.

In the third quarter of 2012, revenues in the supply chain branch improved significantly. At €3.7 billion, revenues between July and September 2012 were 10% above the previous year's level of €3.3 billion. The division's strong performance was highlighted by newly concluded contracts with new and existing customers totalling €290 million and is also reflected in a rise in operating earnings: during the third quarter of 2012, EBIT generated by the sector climbed by 9%, from €100 million in the previous year's period to EUR 109 million in 2012. The company says that this improvement in profitability primarily resulted from optimised contract management, continued strict cost controls and the division's increased operating efficiency.

Meanwhile, when asked at the third quarter results presentation about the dismissal of over twenty workers in Turkey for allegedly organising union activities, Appel said that the company is examining the situation very intensively, adding:

“We think what we did is in line with the legal situation in Turkey. If it should turn out in our own investigations that this is not the case then we will accept the consequences from this because what we have committed to the code of conduct and the UN Global Compact applies nevertheless. First of all we will review these accusations before we take any action. We believe what we did was right.”

Critics have raised the point that, as DHL management were advised of the Turkish complaints many months ago, the review seems to be taking an inordinate amount of time. They make the point that this is just another case of the German headquartered group ignoring the status of its overseas workers, something it has been accused of many times in the past. The report released by the ITF, ‘Aggressive and unlawful: a report into Deutsche Post DHL operations in Turkey’, provides testimonies from various groups to support and aid the ITF’s allegations against DHL. The report unveils the results of an investigation by San Francisco State University professor of labour studies Professor John Logan who said:

“Every single interviewee describes instances of anti-union behaviour – some legal under Turkish law, others clearly illegal – that he or she had either experienced firsthand or witnessed directly. For well over a year, almost 1500 workers and about 1000 subcontracted employees who work at DHL Turkey’s supply chain division have been attempting to form a union. In response, the company has apparently fired several workers for union activities and engaged in a host of other aggressive and illegal anti-union actions. This report attempts to uncover exactly what has happened at DHL Turkey and examine whether the company’s actions are consistent with the principles contained in the company’s Corporate Responsibility Code, its Code of Conduct and the external labour standards that it has embraced.”

The report charges the instigators with the use of unfair and illegal sackings, threats and intimidation to create a climate of fear within the company. Despite this DHL, apparently has tried to discredit allegations of abuses, despite compelling evidence from several sources. ITF organising globally coordinator Ingo Marowsky commented:

“This report provides the ‘smoking gun’ that DHL has long denied existed. The fact is that DHL in Turkey is out of control, with responsibility for that going right to the top of Deutsche Post DHL. We and our colleagues in UNI Global Union have raised this scandal face to face with DHL management in Bonn and received nothing but platitudes, excuses and claims that there is no proof. Well, DHL, here’s the proof, what are you going to do now? Nothing less than a clean-up and the reinstatement of these illegally sacked workers will do.”

The two unions have repeatedly called on DHL to enter into a global framework agreement, a negotiated ‘bill of rights’ that would sets out minimum protections and trade union rights for all DHL workers. Germany’s Vereinte Dienstleistungsgewerkschaft (ver.di) union has publicly called on Deutsche Post DHL to honour the right of workers at its subsidiary in Turkey to join a trade union, and on 3rd November sent a six-strong top level delegation to investigate the situation there. A further delegation made up of Eduardo Chagas, ETF (European Transport Workers’ Federation) general secretary and members of the European Parliament has subsequently visited Turkey to investigate further.

The seemingly tardy attitude of Deutsche Post DHL over this matter contrasts sharply with action taken by other shipping groups. When labour problems were reported by the Handy Shipping Guide a year or so ago at the overseas subsidiary of another logistics giant the situation was resolved in hours rather than months and a full statement issued. Professor Logan reports that he found the activities of Deutsche Post DHL management forms part of a ‘sustained and coordinated strategy to limit workers’ freedom of association’ a charge the management should surely be anxious to answer.

Photo: Part of a worldwide protest by DHL workers at the company’s actions in Turkey. These demonstrators are from DHL New Zealand.