DHL Axes 8,000 Jobs in Shocking Cost-Cutting Move – What Drove The Decision?

DHL Group, the German logistics leader, announced plans to cut 8,000 jobs in Germany, targeting its Post & Parcel division, which employs 187,000 people. The move, revealed on Thursday, follows a 7.2% drop in 2024 operating profit to €5.9 billion ($6.36 billion), despite a 3% revenue rise to €84.2 billion ($90.8 billion). It’s part of the “Fit for Growth” program, aiming to save over €1 billion ($1.08 billion) by 2027 amid declining letter volumes and rising costs.

CEO Tobias Meyer stressed the cuts would be “socially responsible,” relying on natural attrition like retirements rather than layoffs. The division faces pressures from a recent Verdi union wage deal, costing €360 million ($388 million) by 2026, and a shrinking mail market. Unions, including Verdi, criticized the decision, blaming unfair competition and regulatory challenges rather than wages alone.

Despite the profit dip, DHL’s Q4 results beat expectations, boosting its share price 10-12% on March 6. Investors cheered the cost-cutting and an expanded €6 billion ($6.47 billion) share buyback program through 2026. DHL also maintained its 2024 dividend at €1.85 per share. The company forecasts slower global container trade and air freight growth in 2025, reflecting economic headwinds.

The cuts highlight the postal sector’s struggles in a digital age. While DHL avoids forced redundancies, the loss of over 4% of Post & Parcel jobs raises concerns for workers. Analysts see the strategy as pragmatic, with logistics expert Anna Berger noting it trims costs without drastic measures, potentially setting a trend.

DHL remains upbeat about its express and freight businesses, but balancing efficiency, workforce needs, and shareholder value will be key. The announcement underscores the challenges of adapting a legacy operation to modern realities.