- The Washington Times - Wednesday, May 2, 2001

United Parcel Service, victorious in a recent campaign to gain approval for a new air route to China, has applied its political muscle to another mission: getting the government to boot foreign competitor Deutsche Post out of the U.S. market.

UPS, in a politically potent alliance with the Teamsters union, wants the Department of Transportation to revoke the license of the German company's American subsidiary, DHL Worldwide Express, to do business in the United States, a move certain to draw the ire of a major U.S. ally.

The American package-delivery giant, which contributed nearly $3 million to Republican and Democratic campaigns during the 2000 election cycle, claims that the subsidiary benefits from Deutsche Post's monopoly on letter delivery in Germany.

"The Deutsche Post can funnel monopoly revenues into its U.S. operations," said Tad Segal, a spokesman for UPS. "It's not what Congress had in mind when it deregulated this market."

Deutsche Post, a lumbering state monopoly that has become a dynamic delivery and logistics company, is still 71 percent government-owned, having sold 29 percent of its shares to the public in November. It says that as long as UPS works in the German market, Deutsche Post deserves access in the United States.

"Even if the state owned 100 percent of us, there would be no reason to revoke our license," said Monika Wulf-Mathies, a Deutsche Post senior vice president, who added that more of the company will be sold next year.

The dispute recalls the wrangling last year over whether Deutsche Telekom, another former state monopoly, could acquire VoiceStream, a U.S. wireless telephone carrier. The Senate miffed Germany by approving legislation to block the takeover, although the Federal Communications Commission approved the purchase last week.

For UPS, getting the Department of Transportation to rule in its favor is familiar territory.

The American company last persuaded the agency to award it a slot to deliver packages to the fast-growing Chinese market. After a months-long campaign in which UPS mobilized congressional allies, worked with the Teamsters and marshalled a huge public relations offensive, the company won the coveted slot in November.

The win cemented the reputation of UPS as "a formidable competitor in all respects," especially as a political juggernaut, said Satish Jinel, a principal with SG Consulting Group, a Pittsburgh firm that studies the logistics industry.

Also in November, the Transportation Department planted the seeds of the current dispute when it granted DHL Worldwide Express a license to provide air freight forwarding services, the lucrative business of helping companies manage complex shipments, in the United States.

Deutsche Post owns DHL Worldwide Express through a majority stake in Brussels-based DHL International.

When the decision became public in January, UPS petitioned the Department of Transportation to revoke the license. It also struck a rare alliance with rival FedEx and recruited the Teamsters and the transport division of the AFL-CIO labor federation.

In an echo of its long-standing charges against the U.S. Postal Service, UPS charged that Deutsche Post would undercut U.S. competitors by using profits from its monopoly on letter delivery in Germany to subsidize parcel deliveries.

Deutsche Post has denied the accusations. But under pressure from European antitrust investigators, the company has agreed to more rigorously split its letter and parcel delivery groups.

The department has no deadline to rule on the request, said spokesman Bill Mosely.

But UPS has done more much more than simply lodge a polite request with the agency, a fact not lost on Deutsche Post.

"We don't have the money or the political power than UPS can exert," said Ms. Wulf-Mathies, who added that Deutsche Post has since hired two Washington lobbying firms.

UPS, which had revenues of $29.8 billion last year, contributed $2.9 million to political campaigns in the 2000 election cycle, according to the Center for Responsive Politics. The 1.5 million-member Teamsters kicked in slightly less money during the same period.

Over the past three months, UPS also has summoned its congressional allies, 291 of whom have written letters to Transportation in support of UPS. In virtually identical letters, 29 members of the California House delegation and 19 members of New York's endorsed the UPS bid to revoke its competitor's license.

Deutsche Post has one lobbyist in Washington, though it has hired two District-based firms. As a foreign company, it is barred by law from contributing to campaigns.

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