BONN, Germany: DHL plans to cut 8,000 jobs in Germany this year, marking its most significant domestic workforce reduction in at least two decades.

The decision comes as the logistics giant grapples with declining letter volumes and regulatory constraints.

Shares surged following the announcement, rising 12.3 percent and reaching their highest level since February 6, 2024. The company aims to save more than 1 billion euros (US$1.1 billion) by 2027.

CEO Tobias Meyer acknowledged that while DHL recently increased postage rates, earnings remain pressured due to price limits set by German regulators.

The Verdi labor union criticized the job cuts and called for political intervention, citing stringent regulations and inadequate stamp price adjustments as contributing factors.

The reductions represent 1.3 percent of DHL's global workforce. Germany still holds a 16.99 percent stake in the company through state lender KfW.

Logistics firms are bracing for slower profit growth amid softening demand and easing supply-chain disruptions, according to HSBC's global head of transport and logistics research, Parash Jain. He predicts cost-cutting measures across the industry, with global container trade and air freight volume growth expected to halve in 2025.

Meyer noted that despite ongoing challenges, DHL is not significantly impacted by U.S. President Donald Trump's pause on eliminating the "de minimis" duty exemption for low-value packages.

DHL has underperformed compared to the broader logistics sector over the past year. However, Meyer told Reuters there are no current plans to spin off its struggling Post & Parcel (P&P) business, which has faced persistent cost inflation and declining mail volumes.

The company reported a 7 percent decline in 2024 earnings before interest and tax (EBIT), totaling 5.89 billion euros. Still, this exceeded analysts' expectations of 5.81 billion euros.

For 2025, DHL forecasts an operating profit of over 6 billion euros, below analysts' projections of 6.29 billion euros. This estimate does not factor in potential changes to tariffs or trade policies.

DHL maintained its 1.85 euro dividend per share for 2024 and expanded its share buyback program by 2 billion euros to a total of 6 billion euros, extending it through 2026.