Deutsche Post DHL aims to “stitch together” its diverse parcel, express, freight forwarding and supply chain e-commerce services following a forthcoming restructuring to offer customers a stronger value proposition in future, according to board member Tim Scharwath.
At present, the logistics group offers e-commerce services such as warehousing and fulfilment, bulk shipment forwarding, freight, parcel and express delivery, through its four different divisions: Post-eCommerce-Parcel, DHL Express, DHL Global Forwarding and DHL Supply Chain.
But in January, DP DHL will hive off its international parcel activities (the current DHL Parcel Europe and DHL eCommerce units) into a fifth division called ‘DHL eCommerce Solutions’, headed by Ken Allen, the outgoing head of DHL Express. The long-serving executive and board member will also have a wider remit to look at the different e-commerce activities of the other divisions.
“Ken Allen will be responsible for stitching together all the (e-commerce) services of the group,” Scharwath told international journalists, including CEP-Research, at a briefing in New York yesterday. With e-commerce rapidly growing into one of the group’s top vertical markets, “it is right to bring these services together”, he commented. “To bring value to customers we need someone to manage it on an over-arching basis.”
The DHL Global Forwarding, Freight CEO cited the example of a ‘customised e-commerce supply chain solution’ for German baby stroller manufacturer Bonavi, with DHL Express providing fast international deliveries of product samples from China to Germany, DHL Global Forwarding flying parts and accessories as air freight, and DHL Parcel providing distribution and final-mile deliveries in Germany.
Scharwath pointed out that more and more e-commerce goods are being transported as bulk shipments from region to region, mostly by ocean but also by air. These are then stored in regional or local warehouses ready for distribution and delivery once orders have been placed by online shoppers.
DHL Global Forwarding therefore needed to offer retailers a clear value proposition, including lead times “positioned between express service and traditional local mail” and competitive year-round pricing. “E-commerce customers want one price for the whole year,” he said. Services had to range from airport-to-airport to full end-to-end solutions, including pick-ups, air and ocean transportation, warehousing and fulfilment, and last-mile delivery.
Outlining DHL Global Forwarding’s overall strategy, Scharwath said the business strived to be “the undisputed industry leader” in freight forwarding, as the “most customer-centric” and “most profitable” forwarder with the best staff. DGF sees itself as market leader in air freight and second to Kühne + Nagel in ocean freight. After years of weak profits, partly due to the heavy costs of the failed IT system NFE, it is now “on track” for better financial results with improved operating profits as its ‘Simplify’ strategy starts to pay off, he said.
Scharwath, who joined DP DHL from Kühne + Nagel in 2017, said the freight forwarder has adopted a ‘hunting’ approach to win more SMEs in order to achieve “a better balance” by reducing its dependence on “too many large customers”.
Moreover, the new Transport Management System had now been introduced for ocean freight in 40 countries, with the US to be added in the first quarter of 2019, along with the first few countries for air freight operations. The global rollout is scheduled for completion by 2020 or 2021.
Quizzed about DGF’s future plans for its two dedicated Round-The-World freighters, Scharwath said the company planned to review these operations after Chinese New Year early in 2019. They had been introduced during a period of high demand and limited capacity, with the second freighter mostly flying e-commerce shipments from Asia to the USA. “If the market continues like this, I do not see so much need for our own capacity,” he commented.
On DHL’s China – Europe rail freight services, Scharwath said these had become “more and more an option”, especially at times of higher ocean freight rates. “We probably had bigger plans for 2018 but it’s still a good business,” he said.
In the US, where DHL sees itself as ‘number four’ in the freight forwarding market, the company plans to further extend its current network of 45 stations to get closer to customers and add more e-commerce services.
