CEO Interview - DHL Express volumes recover in key markets
DHL Express has made a resilient start to 2023 with rising volumes in various key markets, including out of Asia, and will expand capacity with new facilities in the Middle East and Europe later this year, CEO John Pearson told CEP-Research in an interview today.
Speaking from Dubai, where the company presented the latest DHL Global Connectedness Index yesterday, he also stressed the importance of the new GoGreenPlus offer, which enables customers to reduce their CO2 footprint by buying Sustainable Aviation Fuel (SAF) for their shipments.
In 2022, DHL Express increased revenues to €27.6 billion (from €24.2 billion in 2021) on higher prices, heavier average shipments and increased fuel surcharges but operating profits dropped 4.6% to €4 billion as costs rose. In Q4, EBIT fell by 15.3% to €941 million while revenue was up by a modest 2.5% to just over €7 billion with TDI volumes down by 7% on Q4, 2021.
Asked about business trends so far this year, Pearson highlighted steadily rising volumes out of China and Asia compared to the same period of last year. “China is going back to work and Asia is definitely picking up,” he commented. As a result, trans-Pacific volumes to the USA are also rising.
Also in Asia, India had been a “star” last year and Pearson highlighted the government’s “very well-timed” new National Logistics Policy and rising international investments in the country.
In Europe, DHL Express saw good business until last October and business had been “resilient… flattish” in the first couple of months of 2023, he added. The company will open a major new facility at Copenhagen Airport later this year to relieve its hubs in Leipzig, East Midlands and Brussels.
Elsewhere, South America and Africa are performing quite well, although at lower levels. “Overall, some of the emerging economies are doing pretty well, Asia to Europe is coming back and intra-Europe trade is very strong,” he noted.
However, the outlook for 2023 as a whole remains unclear, with several working scenarios for an L-shaped stagnation or a U-shaped or fast V-shaped recovery.
Meanwhile, Pearson was upbeat about growth trends in the Middle East and North Africa region.
“The region is growing, and Saudi Arabia and the UAE are looking good,” he said. “Our air rotations through (the hub in) Bahrain are almost 3-4 times more than before the pandemic,” he pointed out.
DHL Express is making several significant investments in the Gulf region at present and is due to open its enlarged regional air hub in Bahrain and a new facility in Abu Dhabi over the next few months.
SAF as a USP
The DHL Express CEO also highlighted the new GoGreenPlus ‘CO2 insetting’ offer, which enables customers to reduce their CO2e footprint by 30% (or more for account customers) by selecting the use of Sustainable Aviation Fuel (SAF) for their shipments.
The company has invested in purchasing 800 million litres of SAF, which is about 15% of the total current global supply of the alternative jet fuel, and is now able to use the fuel to tank planes at five airports (Amsterdam, San Francisco, East Midlands, Stockholm Arlanda and Milan Malpensa).
With GoGreenPlus initially on offer in 10 pilot countries, Pearson said: “It’s early days. We will know by the end of this year if customers will buy it or not.” Two major customers have already signed up for 100% of their shipments to be transported using SAF, he pointed out.
The DHL chief also sees this offer as a competitive advantage over FedEx and UPS. “We are the first doing this. Our competitors are not buying SAF and are not offering it to their customers,” he observed.
Separately, Pearson told journalists at the Connectedness Index presentation that DHL now hopes to have its 12 electric planes, which will operate under the Alice brand-name, in the sky by 2027. This launch date has slipped back after test flights showed the need for some technical modifications, he explained.
DHL Express announced the investment in 12 zero-emission fully electric mid-range cargo planes in 2021, with a target delivery date from 2024 onwards.