Shifting international trade patterns, worldwide e-commerce growth, technological developmentsand sustainability are some of the global ‘mega-trends’ underpinning Deutsche Post DHL’s new
Strategy 2020, according to company executives.Although e-commerce is seen as the main growth area, the German group, which is market leader inmany of its business areas, still sees “plenty of room” to grow in the worldwide logistics marketas part of the “Focus. Connect. Grow” strategy, they claimed at yesterday’s press conference topresent the new medium-term plan.
Deutsche Post DHL said it has only about 4% of the total worldwide logistics market, and anoverall combined share of 19% in its core markets, including express and parcels delivery, freighttransport and contract logistics, based on 2011 figures.
Emerging markets
Outlining key structural market trends, CEO Frank Appel told reporters: “I’m convinced thattrade will continue to grow.” However, there are significant shifts in trading patterns as emergingmarkets become more important, he emphasised.
In particular, demographic and economic trends, especially in Asia Pacific, will mean a growingconsumer base around the world as the number of middle class people more than doubles in the nexttwo decades. As a result, the combined GDP of emerging markets, including the likes of China,India, Brazil and South-East Asia, is expected to grow 5.4% on average a year up to 2020 whilemature markets in Western Europe and North America will see only 2% growth, he said.
To profit from this trend, Deutsche Post DHL aims to increase the group’s revenue share fromemerging markets to 30% in 2020 from 22% in 2013. “A 30% emerging market footprint is ambitious butrealistic,” Appel declared.
These trends also impact on how the company believes the various logistics market segments willgrow in the coming years. The worldwide international express market is likely to grow about 5-6% ayear on average between 2011 and 2020. This is the same rate as the contract logistics market (andalso world GDP growth forecasts) but will be higher than air freight forwarding, seen growing justby 2-3% a year and ocean freight forwarding with 4-5% average annual growth. “We don’t believe thatair freight growth will pick up,” Appel commented.
E-commerce
The most dynamic growth area, however, is e-commerce which is generating stronger demand formulti-channel B2C delivery and last-mile solutions as well as more direct shipping, including inthe B2B sector, according to the company.
The German parcel market (B2B and B2C) is seen growing by 5-7% a year but this will be outpacedby the overall worldwide growth of the parcels markets. Deutsche Post DHL predicts 8% averageannual growth for “Parcel Domestic International”, with mature markets growing by 7% a year onaverage, emerging markets by 11% and mainland China by 15%.
Jürgen Gerdes, head of DP DHL’s “Post – eCommerce – Parcel” division (formerly “Mail”), toldreporters that e-commerce is “the opportunity of a millennium” while stressing that the company isonly “at the start of a journey”. At the same time, competition is strong as logistics companiesadd e-commerce to their portfolios and e-commerce companies venture into logistics to support theirbusinesses, he pointed out.
In future, DP DHL wants to build up a broad e-commerce logistics service portfolio. This wouldstretch from the first mile with eFacilitation services such as web marketplaces, marketing andpayment services, through eFulfillment, including warehousing services in collaboration with DHLSupply Chain, to final mile Delivery of both domestic and international B2C parcels.
Within the new sub-division “eCommerce & Parcel”, the new DHL Parcel Europe unit willinclude the existing parcel businesses in Benelux, Poland and the Czech Republic, which will gain astronger B2C focus. The new DHL eCommerce unit, covering the Americas and Asia, will initiallyincorporate the existing DHL Global Mail business in the USA and Blue Dart Express inIndia.
In response to a CEP-Research question, Gerdes confirmed that DP DHL would offer both domesticand international B2C parcel services in selected markets but “time will tell” whether the companydevelops into a pan-European B2C parcels operator or not. He left open the question of whether DHLwanted to be active in the large British and French B2C markets. “How and when we expand (intoother markets) we will see in the next few years,” Gerdes commented.
Outside Europe, Gerdes said that DHL Global Mail’s US business is profitable and parcels nowrepresent 40% of the volumes. DP DHL did not want to compete with UPS in its home market but therewere “attractive niche markets” there, he added. “If you leave UPS and FedEx aside there is still athird place,” he commented.
In terms of last-mile delivery, the PeP division chief said that DHL is “very differentlypositioned” in various countries. In some countries, the parcel firms have their own deliveryoperation, in some they work with DHL Express and in others they use local Posts. “We will look atthe local situation in each market,” he said.
The company is also considering how to “export” its German last-mile delivery solutions, whichinclude self-service parcel terminals, pick up and drop off parcel shops and parcel boxes in frontof private homes, to other countries. “There’s nothing to stop you setting up parcel boxes in othercountries. Regulatory restrictions are much lower,” he said.
Gerdes emphasised that DP DHL is very well positioned for international e-commerce parcelsexpansion as the group is already present in virtually all countries of the world and has “themanagement and teams, the (cultural) understanding and the expertise” in those countries.
DP DHL also sees potential for ‘AllYouNeed’, the German online food retailer in which it owns aminority stake, to expand internationally, especially as e-retailing in the grocery market isalready more developed in many other countries, he added.
In response to a CEP-Research question about how DP DHL viewed competing with local postaloperators in their home parcel markets in future, Appel said that other Posts were both competitorsin some markets and cooperation partners for solutions such as parcel returns.
Discussing other issues, Gerdes told reporters that the company’s paid-for secure e-mail productePostbrief had high levels of customer satisfaction and should double revenues to €200 million thisyear.
Technology and sustainability
DP DHL also highlighted the accelerating impact of technology and automation on the logisticsindustry during its strategy presentation. “We are only at the start of automation,” Appelcommented. “I don’t believe we are threatened by 3-D printing… but we need to look at things likedrones and parcel terminals.” Analysis of operational data to make transport and delivery moreefficient would also become more important, he added.
Furthermore, increasing demands for responsible business activities underlined the importance ofsocial and ethical behaviour as well as a growing need for more environmentally-friendly solutions.DP DHL wanted to move beyond “GoGreen efficiency” activities to reduce CO2 emissions towards “GoGreen Solutions” by commercialising green products and services and helping customers to optimisetheir supply chains and achieve their own sustainability objectives, the CEO said.
