DHL to Exit US market- Cut 9500 jobs

NEW YORK (CNNMoney.com) -- Global delivery company DHL announced Monday that it was cutting 9,500 jobs as it discontinues air and ground operations within the United States.

DHL said its DHL Express will continue to operate between the United States and other nations. But the company said it was dropping "domestic-only" air and ground services within the United States by Jan. 30 "to minimize future uncertainties."

DHL's 9,500 job cuts are on top of 5,400 job reductions announced earlier this year. After these job losses, between 3,000 and 4,000 employees will remain at DHL's U.S. operations, the company said.

The company also said it was shutting down all ground hubs and reducing its number of stations to 103 from 412.

DHL said it was making the cuts to improve profitability and "to prepare the company for the economic challenges ahead."

The company said this latest action would add $1.9 billion to its restructuring costs, for a total of $3.8 billion over two years, most of it during 2008. The company said the cuts would reduce the annual operating costs of DHL U.S. Express to less than $1 billion, from its current cost of $5.4 billion.

DHL is owned by the German company Deutsche Post World Net.

DHL's U.S. pullback should help competitors FedEx Corp (FDX, Fortune 500) and UPS Inc. (UPS, Fortune 500), said Donald Broughton, analyst for Avondale Partners.

"Obviously, it's good news for FedEx and UPS, because this puts the 3-4% market share that DHL had [for domestic ground and air shipping within the U.S.] up for grabs," said Broughton. "Makes it a jump ball, if you will."

UPS stock rose nearly 5% in the first hour of Monday trading, and FedEx stock rose about 4%. Both outperformed the Dow Jones industrial average, the Nasdaq and the S&P 500.

DHL has been hammering out a deal that would extend its airport-to-airport shipping services within the U.S. to competitor UPS. DHL spokesman Robert Mintz told CNN that the company is still "in full negotiations with UPS [and] expects to reach an agreement by the end of the year."

The U.S. job market has been bleeding jobs all year. The Labor Department said nearly 1.2 million jobs were lost in the first 10 months of this year, with 240,000 jobs lost in October alone.

DHL's main hub is in Wilmington, Ohio, a town of about 12,000 people. Sen. John McCain, R-Ariz., visited Wilmington in August as part of his bid for the presidency, noting at the time that he was "deeply troubled by the specter of job loss confronting Wilmington" and the surrounding area.

But a DHL spokesperson said the cuts would take place nationwide "so it's not concentrated in the one place."