DHL Express is adding extra flights to avoid capacity shortages as China scales up production and volumes start to normalise again after an effective four-week stoppage in many areas due to the coronavirus crisis, CEO John Pearson told CEP-Research in an interview yesterday.
The express operator saw trade out of China slump dramatically in February as Chinese New Year was extended by a fortnight due to the widespread coronavirus lockdown, hitting volumes and forcing substantial flight cutbacks.
“But we have seen a normalisation in the first week of March. We’ve seen it in China, globally and in Europe,” Pearson said after the Deutsche Post DHL Group results conference at the DHL Innovation Center.
Over the past few weeks, DHL sales staff have stayed in close contact with customers while operational quality has remained at the targeted 96% service level, he emphasised. “Our customers are very happy about that.”
In terms of air capacity, DHL Express downscaled China flights “dramatically” in early February as demand declined but returned to normal seasonal levels by the end of the month as more factories resumed production.
Now it is adding more regional flights operated by local airline partners to increase available capacity as Chinese production is stepped up in March.
“We’ve added rotations in Asia, significantly intra-Asia out of China, with effect from Monday. That is above normal levels. We want to avoid backlogs out of China into Asia,” Pearson explained.
In terms of Europe, the situation is about four weeks behind that in China but it is too early to comment on how Italy volumes might develop, although some companies might be able to switch production from northern Italy to other European sites, he added.
“Going on past experience, trade is very resilient. I’m feeling very comfortable about developments in China over the last 6 – 7 days, and in Europe and globally likewise,” he underlined.
Looking ahead, Pearson confirmed that DHL Express will again be investing about €1 billion in Capex this year. Major facilities scheduled to go into operation later this year include Milan-Malpensa and Istanbul while expansion work is continuing in Cologne, Copenhagen and Paris.
Elsewhere, DHL Express is stepping up investments in the Mexico domestic business, seeing good business in Latin America while business in the Middle East and Africa remains “very resilient”, he commented.
