DHL Express is continuing to invest in its European network, including new air hubs and more electric vehicles in the next few years, and plans to fly goods to and from the UK from January to avoid potential post-Brexit land border chaos, Europe CEO Alberto Nobis told CEP-Research in an exclusive interview.
The moves come after a year dominated by the COVID-19 pandemic during which the international express market leader has focused on maintaining operations without major impacts and on offering high service levels amid a boom in B2C volumes but a decline in B2B shipments.
More regional hubs for European air network
After opening (or expanding) major facilities at East Midlands Airport (£90m), Brussels (€140m), Madrid (€93m) and Cologne (€123m) over the past three years, DHL is pressing ahead with further investments in its European network this year despite the financial constraints resulting from the COVID-19 pandemic.
“We will continue to invest,” Nobis made clear. The biggest investments on the ground are in new facilities at Milan Malpensa, Istanbul, Paris and Copenhagen. In addition, it has taken delivery of four more brand-new B777 freighters so far this year, meaning that eight out of 14 ordered planes are now in the fleet, expanding capacity and reducing emissions.
DHL Express has invested over €100 million in its new Milan Malpensa hub, which started operations this month and will soon become a “crucial” part of the European network. Covering almost 20,000 sqm, the hub has 800 employees, capacity to handle 38,000 pieces per hour and has 32 flights linking Europe, the U.S. and the Middle East.
Another major investment is the new gateway at Istanbul’s new international airport. This is a greenfield facility with over 12,000 sqm and capacity for 9,000 pieces per hour.
A new €170 million hub at Paris Charles de Gaulle Airport is due to go into operation in October 2021, increasing capacity to 38,000 pieces per hour in a 34,000 sqm building. Finally, the company is investing about €134 million in an expanded Nordic regional hub at Copenhagen Airport that is scheduled to open in 2023.
The purpose of this extensive regional air capacity expansion is to reduce reliance on the main European air hub at Leipzig and move to a more decentralised flight network with more intercontinental flights serving the European regional hubs.
“We are looking ahead to work much more point-to-point,” Nobis explained. “Our idea is to connect internationally more through these alternative hubs, to have more connections out of East Midlands, out of Brussels, out of Malpensa, out of Copenhagen, etc.”
Other important DHL Express hubs and gateways in Europe include Amsterdam, Bergamo (Italy), Frankfurt, London, and Vitoria (Spain).
‘Post-Brexit’ road to air switch
More immediately, however, DHL Express faces the question of how to deal with the UK’s departure from the EU customs union at the end of December when the 11-month Brexit transition period comes to an end.
DHL and other logistics operators are likely to face higher operating costs, especially for customs clearance processing for shipments between the EU and the UK. Moreover, there are widespread concerns of about potential chaos at the port of Dover with long truck waiting times in the immediate period after January 1 next year.
Nobis explained that the international express operator plans does not want to “take any risks” that goods on trucks might be delayed. So instead shipments will be flown between its air hubs in Europe and its UK hub at East Midlands Airport.
“All the traffic inbound to the UK will be flown. We don't want to risk anything for our customers. Basically, from January 1 we will be ready to fly all the goods to the UK,” he said.
DHL is currently securing sufficient air capacity to be ready for this switchover. Normally about a quarter of its international volumes to and from the UK are transported by road.
Driving ahead with more electric vehicles
Looking further ahead, another important focus in the next few years will be to increase dramatically the number of electric vehicles in the company’s overall European fleet of about 15,2000 trucks and vans. DHL Express is currently in talks with several manufacturers about its plans.
“I expect an acceleration in the electrification of our fleet in Europe in the next few years,” Nobis declared. “We currently have 15,000 routes, of which currently 3-4% are electric vehicles. Our commitment with the DP DHL Group target is a steep ramp up of our electric fleet by 2025.”
Commenting on the readiness of available electric vehicles for DHL’s needs, the Europe chief added: “The technology is quite advanced and quite mature from an operations standpoint. In terms of cost per km we believe we are not very far from being competitive with the normal diesel vans.”
