DHL Express has announced a 5 per cent average global general price increase for 2013, effectiveJanuary 1, that is slightly higher than its rate rises for 2012 and designed to take account of
cost inflation and to begin reversing a trend of yield erosion experienced by the express sectorsince 2008.CEP-Research has learned that price increases in Asia Pacific and the Middle East and Africaregion are expected to average 4.9 per cent, while most major European countries are also set tosee increases of 4.9 per cent, including Germany, France, Italy and the UK. Switzerland will seerises of 2.9 per cent, while Russia will see increases of 6 per cent, reflecting its higherinflation rates.
Latin American and Caribbean countries are set for rises averaging 6.9 per cent, althoughthese will be offset by a 2 per cent reduction in fuel surcharges. Within the region, Brazil willreceive increases of 7.9 per cent and Argentina 10.4 per cent, although both will be offset by the2 per cent fuel surcharge reduction. Rate increases for other individual countries, including forthe key North American market, would be communicated in due course, the company said.
DHL stated that its annual rate increase was based on a number of factors, including theimpact of general price inflation on input costs, as well as costs that are specific to the expressindustry that are not directly linked to inflation, including the impact of regulatory measuressuch as additional security requirements.
The company said the industry had absorbed costs in order to comply with these externallyimposed requirements “whilst ensuring that delivery times and service quality continued to improve”. But it also quoted a recent AT Kearney study stating that volumes for the express industry hadincreased consistently in recent years, while revenue per shipment had not yet returned to 2008levels.
Ken Allen, CEO for DHL Express, said the company’s annual price increase was “an importantfactor in maintaining the significant investments we make in our global network”, and ensuringdelivery quality. He commented: “The price increase that DHL Express is putting in place globallyfor 2013 is aimed at offsetting rising costs, including external costs that are out of our directcontrol and cannot be compensated through productivity improvements or economies of scale.”
DHL said the specific price adjustments would vary from country to country, depending onlocal conditions, and would apply to all customers, where contracts allow. A spokesman said thecompany always announced the annual changes in good time in order to allow customers to build thechanges into their budgets for 2013.
Although the company’s global average price increases for 2012 were never formally stated,information from the company’s various operating regions indicates that the increases for 2012 werelower than those just announced for 2013. In Europe, DHL Express introduced a general average priceincrease for 2012 ranging between 2 per cent and 4.9 per cent, while in the Asia Pacific region,prices increased by 4.5 per cent on average for most countries in 2012. Latin America and Caribbeancountries saw effective rate increases of 3.5 per cent – a general average price increase of 5.5per cent that was partially offset by a 2 per cent reduction in the fuel surcharge index.
A spokesman told CEP-Research that the company didn’t benchmark against the previous yearwhen setting price changes, but based the increases primarily around the cost increases faced byits various country markets. Inflation and other uncontrollable costs were the main factors, but hesaid the company was also looking to start addressing the recent decline in yields this timearound. “The aim is to reverse that trend of yield erosion that we have seen since 2008,” he said.
The DHL Express price rises for 2013 closely follow an effective 3.9 per cent rate increasefor 2013 announced by FedEx Express last week for US customers, for import, export and domesticexpress parcel services. This is based on a 5.9 per cent rate increase offset by a 2 per centreduction in the fuel surcharge starting level. That followed a 3.9 per cent increase to FedExExpress’s 2012 prices for US customers.
UPS last week told CEP-Research that it was premature for any discussion of the company’srate plans for 2013, although a spokeswoman said pricing had “remained rational” in themarketplace. She said the company’s rates would always reflect changing business conditions thatinclude not only costs, but also demand for its services, the competitive landscape and investmentsin new innovations and technology.
