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Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

Allowing the German Government-controlled Deutsche Post, with its monopoly on mail and other government subsidies, unfettered access to the domestic U.S. market is not in the public interest, since it would undermine and contravene the stated basis for permitting foreign air-freight forwarders such access to the U.S. market. By effectively affording cabotage rights to a Government-controlled foreign monopoly, maintaining the grant of the license contradicts the underlying statutory goal of promoting competition that exists free of government intervention. As such, DHL-W's license to engage in interstate transportation within the U.S. should be cancelled.

Counsel:  UPS and Kelly Drye, David Vaughan, 202.955.9864 and Wiley Rein, Fred Fielding, 202.719.7320

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

On January 18, 2001, UPS filed a Petition for Review of Staff Action granting DHLWE authority to operate as a foreign air freight forwarder under Part 297 of the Department's Regulations. The Petition was accompanied by a Motion for Leave to File since the time afforded to seek review of the staff action had expired. Pursuant to Parts 302.6 and 385.31 of the Department's Regulations, answers to the UPS filing would be due on January 29, 2001. In light of the broad assertions made by UPS in its Petition and Motion, additional time is required by DHLWE to prepare its answer. No person will be harmed by this short delay; UPS, the sole petitioner in this docket, has agreed to the extension sought.

Counsel:  Stephan Lachter, 202.862.4321, lachter@starpower.net

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

On January 18, 2001, United Parcel Service Co. (UPS) filed a Petition for Review of Staff Action concerning approval of the registration as foreign freight forwarder of DHL Worldwide Express, Inc. UPS accompanied its petition with a Motion to File an Otherwise Unauthorized Document. Answers to the petition are due on January 29, 2001.

On January 25, 2001, DHL Worldwide Express filed a request to extend the answer period for the petition to February 5, 2001, stating that it requires additional time to prepare its answer in light of the broad assertions made by UPS in its petition. The request also stated that UPS, the sole petitioner, does not object to the extension sought.

We believe that it is in the public interest to grant DHL Worldwide Express' request to extend the answer date in this case to February 5, 2001. Due to the pendancy of the date for filing, we are acting without waiting for answers to the request.

By:  Susan McDermott 

The Department should accept review of the staff action and, upon review, it should act to cancel the foreign air freight forwarder registration of DHL Worldwide Express, Inc. Although the staff apparently believed that the generally open competitive regime for U.S. indirect air carriers in Germany justified the grant of DHL-W's application, that analysis failed to consider the insurmountable competitive advantage DHL-W enjoys over U.S. air carriers. The difficulty with DHL-W's application is not just that a wealthy European government is being permitted to compete with a private U.S. air carrier. Rather, FedEx's concern is that Deutsche Post enjoys access to Germany's postal monopoly, the rents from which Deutsche Post is able to divert to DHL's logistics and indirect air carrier operations. Deutsche Post reported that rents from its domestic mail monopoly generated more than 75% of the group's operating profits for the first six months of 2000, and more than a third of its revenues.

As UPS's petition shows, Deutsche Post's ability to use these monopoly rents to cross-subsidize the services in competitive market sectors has been the subject of several government investigations. As UPS noted, the German cartel office has confirmed that "Deutsche Post used state aid to subsidise its corporate parcels delivery service."8 The European Commission currently has these and other unfair competitive practices under investigation.

By:  FedEx, Thomas Donaldson, 901.434.8586

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

The entry provided by the foreign air freight forwarder license into the United States trucking industry by a German government monopoly which is capable of abusing its monopoly and government privileges, presents unacceptable risks to the 9.7 million jobs employed in our industry. Of the more than 500,000 interstate motor carriers in the U.S., 80 percent operate 20 or fewer trucks. These small businessmen and women operate on the narrowest of profit margins, as was evidenced by the effect of recent fuel price spikes. Their businesses, and those they employ, should not be jeopardized by the harm that could follow the action taken by the DOT staff in granting DHL-W authority to operate as a foreign air freight forwarder pursuant to Part 297 of the DOT regulations.

Counsel:  American Trucking Association, Beth Law

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

The Transportation Trades Department, AFL-CIO hereby answers the Petition for Review by United Parcel Service Co., pursuant to Section 385.3 l(e) of the Procedural Rules of the Department of Transportation. UPS has petitioned for a review of the action taken by the staff of the Department in granting DHL Worldwide Express, Inc. authority to operate as a foreign air freight forwarder pursuant to Part 297 of the Department's regulations. For the reasons explained below, TTD supports the position taken by UPS that it is inappropriate, given the unique policy issues raised by this application, to allow DHL-W to operate as a foreign air freight forwarder and we therefore request that the authority granted to the company be revoked.

Counsel:   Transportation Trades Department, Edward Wytkind

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

Counsel:   International Brotherhood of Teamsters, Gary Witlen

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

UPS, by any measure a dominant competitor in the domestic small package delivery business, has belatedly sought leave to intervene in this proceeding, in an unfortunate -- but all too typical -- attempt to have the U.S. Government shield it from competition that would benefit cargo shippers. UPS's untimely and unauthorized petition 2 makes a single argument: the Department should bar DHLWE from competing in the U.S. freight forwarding market because a shareholder in DHLWE's ultimate parent company is partly owned by the Federal Republic of Germany and has been the subject of proceedings outside the United States totally unrelated to DHLWE's activities. The petition clearly fails both as a matter of law and as a matter of policy.

Counsel:   Wilmer Cutler, Bruce Rabinovitz, 202.663.6000, brabinovitz@wilmer.com 

Compliance with U.S.- Citizenship Requirements of DHL Airways, Inc.

It is important to remember that the DP, through its ownership and control of DHL International, which wholly-owns DHL-W and also controls DHL Airways, is trying to access the U.S. domestic market, which it could not do as a direct air carrier. This is why UPS believes the DP applied for the interstate foreign air freight forwarding license. If the DOT allows such a license, it may once again, perhaps soon, face the same issues if DHL Airways were to announce it intention to purchase an existing U.S. air carrier. This case is not about free trade versus protectionism, as DHL-W puts forth. Rather, this is a case about ensuring that competition on a level playing field continues to cxist in the United States.

Counsel:  UPS and Kelley Drye, David Vaughan, 202-955-9864

Compliance with U.S.- Citizenship Requirements of DHL Airways, Inc.

Counsel:  Airline Pilots Association, Daniel Brannan

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

UPS's unauthorized Reply merely serves to confirm the weakness of its Petition, both as a matter of law and policy. It appears that UPS's Petition -- like its complaint against DHL Airways, its media offensive and its lobbying -- is simply part of a broad UPS campaign to hamper DHL in whatever way possible, with the ultimate goal of shielding itself from competition in the U.S. market for as long as possible. We respectfully urge the Department to reject the Petition -- not only because it is legally baseless, but to reaffirm the Department's longstanding commitment to free and open competition to the benefit of U.S. communities, U.S. consumers, and the overall U.S. economy.

Counsel:   Wilmer Cutler, Bruce Rabinovitz, 202.663.6000, brabinovitz@wilmer.com

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

The pleadings in this proceeding raise complex issues that need to be considered. Therefore, we believe that it is in the public interest to grant the UPS Motion to File an Otherwise Unauthorized Document and Petition for Review, enabling us to accept and consider the pleading on its merits.

By:  Susan McDermott

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

At the time that UPS filed its Petition for Review of Staff Action, initiating this proceeding, the public had not been notified of either DHL's application or the DOT's approval of this application. Since then, Weekly Summaries for the majority of this period have not been available at the Docket Section. Only recently has the Weekly Summary of Filings for the week ending October 20, 2000 been placed on the DMS. This Weekly Summary, posted onl February 24, 2001, contains notice of DHL's registration application which was filed on October 18, 2000, and requires that answers be filed ("objections" under 297.21) no later than November 15, 2000. Accordingly, the public was not provided with notice necessary to file objections to the application until just a over a week ago.

Counsel:  Kelly Drye, David Vaughan, 202.955.9864

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

UPS's motion offers no legal basis or factual evidence whatsoever that would warrant the Department taking such draconian action. The summary revocation of DHLWE's authority that UPS seeks is totally unsupported by the Department's regulations and precedent, in which stays are strongly disfavored. Even if a stay technically could be granted, UPS clearly has failed to and cannot -- bear the heavy burden of showing that a stay is appropriate here.

Counsel:  Wilmer Cutler, Bruce Rabinovitz, 202.663.6000, brabinovitz@wilmer.com

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

Postcom does not have a direct interest in this proceeding. Postcom's members do have a vigorous and important interest in principles that are implicated by this proceeding. Postcom generally supports the virtues of competitive market, or competitive market-like, activities. Where it is legally permissible, that is, consistent with the Private Express Statues, Postcom has advocated for delivery services alternative to those offered by the Postal Service and by foreign postal administrations. Competition in the provision of delivery functions is good for mailers and shippers and the regulatory positions taken by Postcom has consistently reflected a dedication to this theme.

Counsel:  Venable Baetjer, Ian Volner, 202.962.4800, idvolner@venable.com 

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

On January 18, 2001, United Parcel Service Co. commenced this proceeding by the filing of a Petition for Review of Staff Action pursuant to 14 C.F.R. § 385.30 et. seq. accompanied by a Rule 6(c) motion for leave to file. On March 1, 2001, the Department issued a Notice granting UPS' motion and accepting its Petition for consideration on its merits. On March 20, 2001, subsequent to the filing of UPS' Petition and issuance of the Department's Notice, the European Commission announced its Decision in case COMP/35.141 -Deutsche Post, which addressed issues of cross-subsidies of competitive mail-order parcel services and abuses of dominant position in violation of Article 82 of the EC Treaty. UPS now respectfully moves for leave to file under Rule 6(c) a copy of the EC Decision and related EC Press Release, attached hereto, to supplement and to update its Petition on matters mentioned therein. In further support hereof, UPS states as follows:

In its Petition, at 7-8, UPS drew attention to the fact that Deutsche Post, the majority owner of DHL Worldwide Express, Inc.'s second tier parent company, DHL International, Ltd., had been and was under investigation by the EC's Directorate General for Competition which was looking into allegations that Deutsche Post had abused its dominant position as a state-owned postal monopoly. In its February 5, 2001 Answer to UPS' Petition, DHL Worldwide Express, Inc., at 17, noted that "[tlo date, no tribunal or regulatory or competition authority has found these charges to be true." The EC Decision has now addressed some of these matters. Another case involving the Deutsche Post's misuse of state aid (Article 87) is still pending.

Counsel:  UPS and Kelley Drye, David Vaughan, 202-955-9864

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

Counsel:   Wilmer Cutler, Bruce Rabinovitz, 202.663.6000, brabinovitz@wilmer.com 

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

I am writing to urge the Department of Transportation to revoke the Foreign Air Freight Forwarding license recently granted to DHL Worldwide Express, Inc.

The recent entry by Deutsche Post, the monopoly postal service of the German government, into the deregulated domestic U.S. air cargo market through DHL Worldwide Express, Inc., a "private" foreign company that it owns and controls, is bound to distort free and fair competition in this market. Accordingly, I believe that DHL Worldwide Express, Inc./Deutsche Post should not be granted a license by the DOT that would create an unlevel playing field in the U. S. domestic air express/cargo marketplace.

The DHL license raises serious public policy concerns. Therefore, labor unions and industry groups have asked the Department to review the staff's decision permitting Deutsche Post's entry through its controlled agent via a foreign air freight forwarding license. It is my understanding that DHL Worldwide Express has requested that these petitions be dismissed on procedural grounds, and that the Department not even address the underlying policy question. I would strongly object if DOT granted this request and ask accordingly that the Department respond favorably to these petitions. I believe it is in the public interest to do so.

Understanding that undistorted competition in the free and open market would best serve the shipping and traveling public, the Congress deregulated the U.S. aviation industry in 1978. this decision to deregulate was grounded in its belief that private companies competing with one another in fair and open competition would be best for U. s. consumers. Indeed, in deregulating the U. S air cargo industry, the Civil aeronautics Board saw the U. s. domestic cargo marketplace as one completely "free of government intervention" - an impossibility if foreign government distortions were allowed to intervene through the guise of a private company.

Counsel:  Joint Council of Teamsters No. 87, W.C. (Willie) Smith

Counsel:  Joint Council of Teamsters Local 891

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

DHLWE and UPS are members of the international aviation industry. One of the major principles regulating the industry is that no service can be provided unless two or more nations agree to it. The United States trades in aviation services with many nations that permit governmental entities to own and control their national air carriers. While we strongly prefer private enterprise, and we are encouraged with the progress that has been made towards privatization in the industry, we must also respect the different views of other nations so as to ensure our airlines' access to the world's aviation markets.

In these circumstances, we have granted operating authority to many foreign air carriers with strong government ties, including international air freight forwarders. These include a foreign air freight forwarder partly owned by foreign postal monopolies.' This liberal entry approach has promoted our international aviation objectives to the benefit of our airlines and our consumers and there is no evidence on the record that there has been any unfair competition in the U.S. market by these foreign air freight forwarders. In fact, there is no evidence that over these past 20-plus years any of these foreign air freight forwarders has achieved a significant market share, unlike UPS and FedEx, which hold approximately 53% and 26% of the domestic market, respectively.' Moreover, our strongly pro-competitive "'open skies" aviation relations with Germany and the Netherlands have helped to provide UPS with the opportunity to serve those countries. Today, both countries afford UPS and other U.S. forwarders open access to their freight forwarding markets.

We have also carefully considered UPSs contention that circumstantial evidence requires denial of DHLWE's application, including the fact that Deutsche Post has been the focus of numerous investigations. Specifically, UPS asserts that the European Commission's March 2001 decision and continuing investigation of Deutsche Post for abuses of a dominant market position in the European Union indicates that Deutsche Post, DHLWE's ultimate owner, will engage in unfair competitive practices in the United States. However, UPS has failed to provide any information showing that those investigations involve DHLWE and, as just noted, that DHLWE has benefited from improper state aid and cross-subsidization. In addition, we are reluctant to restrict competition based on a speculation that Deutsche Post may cause DHLWE to act in such a manner in the United States. There is no evidence on the record to establish that Deutsche Post or DHLWE (or its predecessor company) have engaged in unfair competitive practices in the United States. Nor is there any evidence on the record which demonstrates that DHLWE's U.S. competitors have been or will be harmed by DHLWE's very small presence in the market (0.6%).

Thus, while we are concerned about the impact of those considerations raised by UPS on competition in general, UPS has failed to demonstrate that those concerns warrant a denial of DHLWE's application in this docket. Nonetheless, if in the future there are specific allegations of unfair competition against DHLWE, there are sufficient specific statutory remedies available through this Department or the Department of justice, as well as private lawsuits, to address any such alleged abuses.

FedEx's argues that DHL Airways, Inc. is not a bona fide U.S. direct carrier (which implies that DHLWE's and DHL Airway's joint-participation in the U.S. market includes cabotage in violation of the statute). We have already begun to conduct a review of the citizenship of DHL Airways in an informal continuing fitness review proceeding.' The Assistant General Counsel for Aviation Enforcement and Proceedings is contemporaneously dismissing, without reaching their merits, FedEx's and UPS's Third-Party Enforcement Complaints, by Department order in the dockets OST-2001-8736 and OST-2001-6937.

By:  Susan McDermott

Registration of DHL Worldwide Express, Inc. as a Foreign Air Freight Forwarder Pursuant to 14 CFR 297

By:  State of Maine/House of Representatives, Michael Saxl 

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