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Cablegate: Dhl Executive Briefs Ambassador On Nigeria

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ABUJA 002043

SIPDIS

E.0. 12958: N/A
TAGS: ECPS EAIR ELTN ECON AMGT NI
SUBJECT: DHL EXECUTIVE BRIEFS AMBASSADOR ON NIGERIA
OPERATIONS

1. Summary. Nigeria is DHL's second largest market in all
of Africa. Despite DHL's difficulty and unpredictability in
dealing with several government ministries and agencies, DHL
makes money in Nigeria. Lagos is DHL's West and Central
Africa hub, although it bases its fleet of aircraft
elsewhere. NIPOST, Nigeria's government-owned postal
agency, is a marginal competitor. DHL would welcome a
contract to deliver USG pouches to the Mission in Nigeria.
End summary.

2. On December 10 the Managing Director of DHL
International Nigeria, Richard Seaver, briefed Ambassador
Campbell on DHL's Nigeria operations. Seaver said DHL
accounts for about 70 percent of Nigeria's in-bound cross-
border express package delivery market; that is, of packages
weighing less than 50 kilos. Anything larger is considered
freight. DHL has 75 offices in Nigeria and employs about
900 people, of whom only three are expatriates. Only South
Africa accounts for a larger operation. Egypt ranks third.
Each day, a Boeing 757 flies from Brussels to Lagos to
deliver packages. DHL Nigeria ensures distribution in
Central and West Africa via a fleet of 12 South African
registered Boeing 727s that may fly daily to Lagos, but that
return to Accra, Ghana or Libreville, Gabon where the
aircraft are based. Within Nigeria, DHL relies on
commercial aircraft or a large fleet of its own trucks to
ensure delivery. Members of Nigeria's mobile police are
assigned to each truck, at DHL expense, which permits
overnight delivery to places like Port Harcourt. In DHL's
25 years of doing business in Nigeria, its trucks have been
fired upon, but none of its employees has been injured.

3. Seaver, a veteran of nine years in Nigeria, described
Nigeria as a challenge. He said the company's difficulties
stem in large part from the unpredictability that it
encounters dealing with Nigeria's Customs Service or its
Food and Drug Administration. The difficulties are
compounded by virtue of DHL Nigeria being regulated by
NIPOST, which reports to the Minister of Communications.
Concurrently, DHL Nigeria is responsible to the Ministry of
Aviation, since DHL is an aviation company, although not an
airline. To be considered an airline, DHL aircraft would
have to be registered in Nigeria, which would impose onerous
obligations DHL prefers to avoid. Lastly, DHL answers to
the Ministry of Finance, the parent agency of Nigeria's
Customs Service. While all these Nigerian entities monitor
DHL operations, their interagency coordination is weak.

4. Seaver said NIPOST no longer is involved in ex-Africa
mail delivery, in part because NIPOST could not pay the
connection charges associated with delivery of mail to
America and Europe. In Africa, NIPOST may have
arrangements with ECOWAS member states. In Nigeria, NIPOST
does run a small package delivery service, EMS. It and
another 120 companies control only about 20 percent of that
market; DHL, USP, FEDEX, and TNT account for the remaining
80 percent.

5. Seaver told the Ambassador that DHL Nigeria does
business with the Embassy and Consulate, and said DHL would
be pleased if it had the contract to deliver the diplomatic
pouches to us. The Ambassador replied that the Mission
needs reliable and predictable delivery service, one
ensuring delivery three times weekly despite the harmattan,
labor strikes, or fuel shortages. Seaver responded that DHL
can assure such service. Moreover, since the delivery of
packages that weigh less than 50 kilos is DHL's core
business, and since DHL ensures express delivery, whether a
consignment is 10 kilos or 1,000 kilos on a given day,
delivery occurs that same day. Ambassador recommended that
Seaver discuss the matter with the Embassy's Management
Counselor at the earliest opportunity.

6. Seaver said Deutsche Post acquired DHL and Airborne
Express in the United States this year. Seaver believes
that 40 percent of Deutsche Post's shares are traded on
German stock exchanges; he expects more of the company to be
privatized soon. Since Deutsche Post also bought Danzas,
one of Western Europe's largest freight handler, Deutsche
Post is grappling with the complexity of ensuring proper
meshing of its express package and freight handling
operations in Western Europe and the United States.

7. Three of Seaver's associates accompanied him to the
Embassy. The two who gave us business cards were Morgan
Uloko, the General Manager for the Northern Region, and
Afolabi Olufade, the Divisional Manager for Abuja.

8. Comment. British Airways, which has the contract to
deliver pouches to the U.S. Mission, has been performing
most unsatisfactorily. Should it be possible to work with
DHL, and if it were to be as good as its word, the effect on
Mission morale might be notable.

CAMPBELL

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