Deutsche Post DHL Group is responding robustly to the varying effects of the coronavirus crisis on its international business units thanks to “an intact immune system”, does not foresee a recession this year and will continue to invest as planned, top executives made clear yesterday.
DHL Express is seeing an initial comeback in China volumes, DHL Global Forwarding is organising dozens of charter flights to cope with a dramatic fall in bellyhold air capacity, while DHL Supply Chain does not see signs of production relocation from Asia to Europe.
The German logistics group’s operating profits took a financial hit of about €60 – 70 million in February as production closures in China impacted cross-border express and freight flows.
But CEO Frank Appel emphasised that business in China “is normalising”, firstly in express and then later in air and ocean freight. “We are confident the coronavirus will disappear and business will stabilse,” he told journalists at the 2019 results press conference at the DHL Innovation Center near Bonn.
“Our immune system is intact as a group. We will tackle the challenges that we face,” declared the CEO, who is holding daily management calls on the coronavirus business impacts. “Agility is required at the moment.”
Appel said it was “too early” to judge the potential impact of the rapid spread of the Covid-19 virus on business in Europe but underlined that he did not expect any “recession” this year.
In response to a CEP-Research question, the CEO confirmed that DP DHL Group will go ahead with all major investment projects this year. “There will be no delay in investments. We have no plans to postpone anything,” he said.
CFO Melanie Kreis said the February EBIT hit is now expected to be at the lower end of the €60 – 70 million range and she was confident the group “will get back on its path” once the coronavirus impact was over.
Commenting on DHL Express, she said: “What we clearly see in the first week of March is a normalisation in China volumes. That’s only one week but the dynamics in China are now going in the right direction.”
Tim Scharwath, head of DHL Global Forwarding, confirmed that the dramatic worldwide cancellations of passenger flights had impacted significantly on the freight forwarding business, which relies on maindeck and bellyhold aircraft capacity for large shipments.
“We’re working day-to-day. Worst is intra-Asia,” he said in response to a CEP-Research question. “We are working with customers and charter carriers to find different solutions for different customers.” The division chartered about 50 – 70 flights during February but still faces an air capacity shortage in March and April, he pointed out.
DHL Supply Chain has seen fluctuating demand in recent weeks, with a surge in healthcare shipments but fewer shipments in other sectors. “We’re talking with our customers about their operations. But there are no moves of stockpoints from Asia to Europe,” commented CEO Oscar de Bok.
