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A DHL delivery truck drives outside a DHL facility in Franklin Park, Ill. Tim Boyle/Getty Images

Package delivery company DHL may have conquered the world, but it admitted on Nov. 10 that it couldn't conquer the U.S. The unit of Germany's Deutsche Post (DPWGN.DE) announced it will stop making express deliveries within the U.S., close all of its 18 main distribution hubs there, and lay off all but a few thousand of its remaining 13,000 U.S. workers.

Although DHL will continue to make deliveries to and from the U.S. and other countries, its withdrawal from the domestic express business is another setback for a blue chip German company in the world's biggest market. Last year carmaker Daimler (DAI) sold its stake in Chrysler after it was unable to turn around the No. 3 American automaker.

DHL has lost nearly $10 billion in the U.S. in the five years since it purchased Airborne Express in an attempt to challenge FedEx (FDX) and United Parcel Service (UPS). Despite its dominance in the rest of the world, DHL was never able to take enough share from the two major carriers in their home market. The company's decision to largely withdraw from the U.S. will push parent Deutsche Post to an estimated $1 billion loss for the full year as it books writedowns totaling $3.9 million to cover severance payments to workers and other restructuring.

Focus on International Express Deliveries

DHL's failure is also an early illustration of how the meltdown on Wall Street and the larger economic downturn are likely to cull weaker players in many businesses. "Crises favor the market leaders," Deutsche Post CEO Frank Appel told reporters at the company's headquarters in Bonn. Worldwide, he expects that principle to work in the company's favor. "We will come out of this crisis stronger," he said.

Deutsche Post execs insisted the company will continue to provide good service to DHL customers sending packages from the U.S. to international destinations and vice versa. The company intends to focus what remains of its express network on metropolitan areas, which account for 90% of international traffic.

DHL revealed a proposal last summer to use UPS to provide domestic air express service for its customers (BusinessWeek.com, 6/11/08). But the plan quickly became politicized over fears that it would result in huge job losses in Ohio (BusinessWeek.com, 7/31/08) if DHL closed its Wilmington cargo hub there. The UPS relationship is still being negotiated, and a company spokesperson said on Nov. 10 that no decision has been made to shut the Wilmington hub as part of DHL's restructuring. By most estimates, though, if the UPS deal goes through, as many as 8,000 DHL workers there could lose their jobs by the end of January.

The company also will continue to use subcontractors, including the U.S. Postal Service to deliver to areas it doesn't cover. DHL's profitable freight and supply chain-services businesses in the U.S., which employ about 25,000 people, won't be affected by the cuts.

"Risk Everywhere"

Appel acknowledged that the massive cuts in the express division—15,000 jobs including previous layoffs—will generate bad publicity. Although Deutsche Post generated most of its $17.7 billion in third-quarter sales outside the U.S., about half of the company's top express customers are based in America and about half of all express shipments pass through there. The decision to stop supplying domestic express service provides an obvious opening for FedEx and UPS to try to steal some of those customers.

But Deutsche Post execs, facing early signs of a downturn in profit worldwide, decided to slash the U.S. business before the sales further deteriorated. In the third quarter of 2008, which Deutsche Post also reported on Nov. 10, operating profit at the parent company slipped 8.5% before one-time items, to $550 million. "We are entering unprecedented economic times. We see risk everywhere," said John Mullen, CEO of DHL Express. "We think it's critical to take action now."

DHL has faced massive criticism for the way it managed the U.S. business. Readers responding to an earlier report on BusinessWeek.com (11/6/08), many of them identifying themselves as DHL employees or customers, savagely attacked what they said was lackadaisical service and top-heavy or even incompetent management. Mullen said that while some aspects of the business could have been better executed, "It's hard to see what could have been done that would have led to a different result."

At home, Obama must revive an economy experiencing some of the worst shocks in more than half a century. Abroad, he has pledged to end the war in Iraq and defeat al-Qaeda and the Taliban in Afghanistan. He ran on a platform to change the country and its politics. Now he must begin to spell out exactly how.

Obama's winning percentage appears likely to be the largest of any Democrat since Lyndon Johnson's 1964 landslide and makes him the first since Jimmy Carter in 1976 to garner more than 50.1 percent. Like Johnson, he will govern with sizable congressional majorities. Democrats gained at least five seats in the Senate and looked to add significantly to their strength in the House.

But with those advantages come hard choices. Among them will be deciding how much he owes his victory to a popular rejection of President Bush and the Republicans and how much it represents an embrace of Democratic governance. Interpreting his mandate will be only one of several critical decisions Obama must make as he prepares to assume the presidency. Others include transforming his campaign promises on taxes, health care, energy and education into a set of legislative priorities for his first two years in office.

Obama's victory speech before 125,000 people at Chicago's Grant Park touched the themes of unity, reconciliation and hope that were at the heart of his candidacy. Asking for the help of all Americans to tackle the country's most serious challenges, he prepared supporters and opponents alike for setbacks, disappointments and the need for patience before they succeed.

"The road ahead will be long," he said. "Our climb will be steep. We may not get there in one year or even one term, but America -- I have never been more hopeful than I am tonight that we will get there. I promise you -- we as a people will get there."

Obama's ability to manage relationships with Democratic congressional leaders, with Republicans and with impatient liberal constituencies with agendas of their own will have a lasting impact on his presidency. Can he, for example, fulfill his promise to govern in a unifying and inclusive way yet also push an ambitious progressive agenda?

The first African American elected to the presidency, Obama built his victory with a new Democratic coalition. To the party's base of African Americans, Latinos and women, Obama added younger voters and wealthier, better-educated ones. That helped him raise his support among white voters -- a traditional weakness of recent Democratic presidential candidates.

This new coalition helped redraw the electoral map, adding normally Republican states in the South, Midwest and Rocky Mountains to the states won by Al Gore in 2000 and John F. Kerry in 2004. How he retains their support and enthusiasm as he begins to govern will also influence how successful he may be.

William Galston of the Brookings Institution, who served as domestic policy adviser during President Bill Clinton's first term, predicted a battle over analogies among Democrats seeking to influence Obama.

Some, he said, will argue that conditions require a major infusion of government activism and intervention, as in 1933. Others will point to the start of Johnson's first full term in 1965, which ushered in the Great Society and an era of liberal governance. Still others may point to 1993, the start of Clinton's first term, when Democrats pushed another liberal agenda, only to find that the country was resistant. Within two years, Democrats lost their congressional majorities.

Galston argued that 1993 may be closest to the mark, although he noted that the economic problems are far worse than those Clinton faced. But he said there was little evidence heading into yesterday's balloting that the country had taken a sharp left turn. "It's hard to say substantively what mandate Obama and the Democrats have gotten," he said. "They've gotten a chance to make their case."