U.S. Rejects UPS, FedEx Challenges to DHL

The Transportation Department rejected efforts by United Parcel Service Inc. and FedEx Corp. that challenged the legality of rival DHL Airways Inc. and DHL Worldwide Express Inc. to compete for business.

United Parcel and FedEx filed a complaint with the department in January, saying DHL Airways’ owners violate a U.S. law that limits foreign ownership of a U.S.-based airline to 25%. The department said it found no reason to launch a formal inquiry of the cargo carrier’s citizenship.

The department also denied a petition filed by UPS in February to cancel DHL Worldwide’s registration as a foreign freight forwarder, saying there is no evidence DHL competes unfairly with U.S. companies.

Freight forwarders coordinate shipments for other companies, providing services such as warehousing and customs brokerage.

UPS and FedEx said they were disappointed in the ruling, and UPS said it might file an appeal.

The German postal service since late last year has owned almost 51% of Brussels-based DHL International, which holds a 23% voting stake in Redwood City, Calif.-based DHL Airways. Closely held DHL International owns all of DHL Worldwide.

UPS shares rose 29 cents to $57.99, while FedEx shares fell 79 cents to $38.41, both on the New York Stock Exchange.