death by exaggeration

DHL's decision to exit the domestic U.S. market on Jan. 30—and the thousands of layoffs that have occurred at the company's Wilmington, Ohio, air hub—has led some media outlets to predict dire straits for the farm town of 12,000. In late January, the TV newsmagazine "60 Minutes" aired a segment painting a stark picture of the toll DHL's decision is having on Wilmington's citizenry. And this magazine recently predicted that Wilmington would be "staring into the economic abyss" due to DHL's pullout.

Well, not so fast.

The city has received 11 replies to an informal request for proposals on how to transform the Wilmington Air Park, which had been DHL's primary domestic and international shipping hub. Included were proposals to turn the complex into an international logistics hub linked to China, continuing to operate it as an air freight facility, and developing an aircraft maintenance and repair operation.

Cincinnati-based airport planner Landrum & Brown was most aggressive in pushing the concept of an international logistics hub, noting that the air park has sufficient capacity to accommodate wide-body freighter aircraft and ancillary services; an available, educated work force that is familiar with air cargo operations; and a location in America's heartland.

Dan Muscatello, managing director at the planning firm and an air cargo industry veteran, acknowledges that Wilmington might be better off if it were closer to highways that connect Ohio with Northeastern and Southeastern markets. In its proposal, Landrum also notes that Wilmington may have trouble growing its market as an international air cargo and logistics center because of its proximity to Chicago's O'Hare International Airport. But the $250 million to $300 million in improvements DHL made to the park in the past four years will allow a tenant to get up and running without much capital investment, neutralizing any geographic disadvantages associated with the park's location, he adds.

For now, everything hinges on DHL's plans for the park, which it still owns. The company continues to handle about 90,000 international shipments nightly, far below the 1.5 million average nightly shipments it handled when it also operated domestic service. DHL also has contracts through September with its two flying contractors, Astar Air Cargo and Wilmington-based ABX Air. The city hopes DHL will donate the park and then maintain its international presence there.

DHL announced last May that it would turn over its domestic flights to UPS, which would route DHL packages through its own air hub in Louisville, Ky. However, no deal was struck, and many insiders believe UPS, caught off guard by DHL's Nov. 10 announcement that it would pull out of the United States, will eventually end negotiations because the relationship is no longer economically attractive. DHL, for its part, says it is exploring other options for flying services.

John Mullen, DHL Express's CEO, told DC VELOCITY on Feb. 3 that the company remains "very committed to our full international presence in the United States" and that there are no plans to further downsize what's left of its U.S. operations even if losses remain high. Mullen affirmed DHL's public stance that it is willing to discuss donating the air park to the city. "Whether or not this eventually happens depends upon the outcome of our negotiations with UPS, the community's desire to actually take over the air park, and other factors," he said.

However, any future decisions won't be Mullen's to make. In late February, DHL announced Mullen had resigned, citing health problems, a demanding travel schedule, and the "pressure of his role."