Deutsche Post DHL suspends all Russia operations and pledges Ukraine support

Deutsche Post DHL Group today confirmed it has suspended all operations in Russia and Belarus and gave a strong pledge to help Ukrainians impacted by the war in their country while doing its best “to keep international logistics chains flowing”.

CEO Frank Appel told journalists at the online presentation of the 2021 financial results that the German group “condemns the (Russian) attack sharply” and stressed that it would do whatever it could to support Ukrainian refugees who have flooded into neighbouring countries over the past two weeks.

“Our priority now is to help the people in the war zone, to ensure the safety of all our employees and to keep global supply chains operating", he declared.

DHL suspended operations in Ukraine, where it has some 450 staff, soon after the Russian attack on its neighbouring country, then halted all international shipments to and from Russia and Belarus, and most recently suspended activities within the two aggressor countries.

Ukraine support

Commenting on Ukraine, the long-serving DP DHL chief executive emphasised: “Our job is to look after people. We are in contact with the UN to offer help. We want to help the refugees.”

Asked how Deutsche Post DHL could help refugees practically, Appel said the group would cooperate with local authorities and had no plans for any separate programme. CFO Melanie Kreis noted the group’s experience from the mass migration of mostly Syrian refugees to Germany in 2015, when it was able to offer jobs to refugees where language skills were not required.

In terms of international flows to the Ukraine, Deutsche Post DHL is transporting imports to the country’s borders and handing the shipments over to the country’s postal operator Ukrposhta for delivery wherever possible, the two executives made clear.

“Very limited” direct impact from Russia suspension

Responding to questions, including from CEP-Research, Appel said that all operations in Russia, including the DHL Express domestic business, had been suspended. The 3,500 local staff employed across all DHL divisions in Russia are at home and are being paid normally.

Kreis explained that the only exception to the suspension of international shipments to and from Russia are specially approved supplies of critical goods, such as medical supplies.

Appel said that the service suspension would have a “very limited” direct impact on DP DHL as Russia accounted for less than 1% of group revenues. Quizzed whether the German group might exit from Russia completely, he said it was “too early” given the current circumstances to comment on the group’s future presence in the country.

Rising operational costs

Kreis said the most immediate wider impact of the Ukraine conflict has been the diversion of long-haul flights between Europe and Asia from Russian airspace to longer southern routes. These required more fuel which was now more expensive while also reducing available freight capacity.

However, both DHL Express and DHL Global Forwarding will be able to pass on some of these increased operating costs to customers through fuel surcharges, she pointed out. DHL Parcel Germany had no plans for a fuel surcharge, she added.

In contrast, rail transportation from Asia to Europe through Russia represented only limited volumes, Appel noted. The situation here was changing daily and volumes had already declined.

Energy supply risks

Addressing the broader impact of the Ukraine conflict on the world economy, Appel highlighted the importance of securing international energy supplies and advised against reducing oil and gas imports from Russia against the background of rapidly rising fuel prices.

“It’s important to stabilise energy prices,” he urged. “Politicians should think about the consequences and what that means for next winter. If imports are reduced, then prices will rise further,” he warned.

Asked about his scheduled departure from the CEO role in 2023, Appel said that it was “good” that the handover to Tobias Meyer was still more than a year away given the current circumstances. His experience would be valuable in handling the crisis in the coming months, he commented.