Wednesday November 14, 2018
09-07-18

Interview – E-commerce boom powers 2-digit growth for DHL Express in Germany

Markus Reckling - CEO DHL Express Germany
Markus Reckling - CEO DHL Express Germany

DHL Express is profiting from double-digit growth in Germany, rapidly expanding its e-commerce customer base, and remains confident about this year despite the escalating international trade tariff dispute, CEO Markus Reckling told CEP-Research in an exclusive interview.

Commenting on business development in 2017, he said: “It was a very successful year. It was when the focus strategy really came together for Germany. We’ve seen great overall growth and an even stronger increase in our core TDI (international express) product. Overall, we had very solid double-digit growth, and within TDI we had an even better development. That’s obviously pleasing us very much.”

With the German international express market growing at high single-digit rates in the last few years, Reckling was optimistic that DHL Express had further improved its market share. In 2016, according to the company’s most recent German market study, DHL improved its TDI market share to 33%, which put it level with UPS.

“I believe we are growing faster than the overall TDI market at the moment. And with the strong double-digit growth in 2017 I would assume that we already have gained further market share,” he said.

“Our clear aspiration is to do the same in Germany as we are doing in most markets around the world. In other words, our aim is to establish DHL as the clear TDI market leader in Germany. I think we are at the verge of doing that.”

Asked about his expectations for 2018, the Germany chief commented: “We also see the momentum driving on into this year. Q1 clearly saw double-digit growth and I have no reason to believe that this will change. As far as we can see, there will be the same growth drivers as in 2017, that’s industry consolidation, market growth and e-commerce.”

DHL Express Germany has not seen any major effect from the escalating trade tariff dispute between the USA and the EU, he made clear. “So far we do not see any dramatically sharp impact. But if global trade slows down overall, this will not be good for anybody. We’re obviously watchful but at the moment we are still in a confident mood. At the moment our business momentum is intact.”

E-commerce shipping with myDHL+

Looking back at 2017, Reckling said: “E-commerce was a key driver. But we also saw very strong organic growth in our Express B2B customer base in 2017.”

Among the main B2B vertical markets, DHL Express Germany saw very strong growth last year in the Life Sciences sector, especially for clinical trials where it is positioned differently to ‘premium’ specialists such as World Courier and UPS-owned Marken. The company also gained many contract renewals in the automotive sectors.

E-commerce, however, is the big growth driver as more e-retailers launch and expand cross-border sales, and now generates about 25% of DHL Express Germany volumes.

“We see a huge opportunity. We have really been picking up a lot of business in that area. There is a solid number of e-commerce companies among some of my largest customers,” Reckling said. 

International e-commerce offers clear benefits to retailers, and to SMEs in particular, Reckling emphasised. “International eCommerce comes with low return quotas and a high shopping basket, so it usually is much more profitable than domestic eCommerce. The express industry offers a unique opportunity for many of these (SME) players to internationalise their offering with very little risk. You don’t need to invest in partners or big warehouses abroad.”

One successful internal measure to boost e-commerce sales was the Power Up Your Potential training programme, providing in-depth information on how international e-commerce works with the aim to making all sales staff into ‘e-commerce specialists’ with broader consulting skills. DHL has also developed IT programmes to analyse e-retailer websites, enabling sales staff, for example, to spot opportunities to offer shipping services to new markets.

Moreover, Germany was one of the first countries to roll out the new MyDHL+ shipping platform, which is now live in more than 40 markets. This enables e-retailers of any size to create shipments (at negotiated rates for account customers and standard rates for non-account customers), book a pickup, and automatically track and trace all shipments. It also offers other functionalities, including integrated e-billing.

“Every new customer is already on-boarded onto the new MyDHL+ platform and we are starting step-by-step to migrate the existing customers from the current platforms. The customer feedback is very positive,” Reckling said.

In parallel, the recipient-focused On Demand Delivery service will expand to include redirected B2C deliveries to the Deutsche Post retail network of post offices later this year. From Q1 next year it will incorporate the Advanced Duty Collection function, which informs recipients in advance which charges will need to be paid and offers optional pre-payment by credit card or Paypal.

However, DHL Express generally encourages shippers to integrate all costs through the DTP (Duties & Taxes Paid) option so that online shoppers only have to pay everything at one go. Delivery charges, too, are increasingly being absorbed into all-in pricing, according to Reckling.

“We clearly see the trend that online retailers offer ‘one price’ to their customers, which includes standard shipping. And now we also see a second trend, that express shipping is also possible without any additional charges to the consumer if the shopping basket exceeds a certain amount,” he explained.

New locations sought in Berlin and southern Germany

Meanwhile, DHL Express Germany is pressing ahead with its ongoing €200 million network investment programme, which runs until 2020. Openings last year included large stations in Hamburg and Leipzig as well as several smaller stations. This year new stations will open in Neumünster (near Kiel in northern Germany) and near Dresden, while the Munich station is being completely refurbished with new systems. However, two significant new projects are also very much on the agenda.

“We are in very advanced conversations about opportunities in Berlin,” Reckling revealed. “We have been looking there for a long time. Berlin is one of the key locations in Germany for e-commerce so of course it’s important.” And he added: “We will hopefully very soon have news about a new and expanded airport gateway location in southern Germany.”

DHL Express Germany is also working on different schemes to reduce city centre emissions, testing the group’s electrically-powered StreetScooter delivery vans, and in talks with various local authorities on setting up ‘city hub’ operations combining consolidated shipment transportation to a small city centre branch and zero-emission final delivery by bike or electric van.

Overall, Reckling was confident about the company’s positioning in the German market compared to major rivals UPS and FedEx/TNT.

“I believe we have a very unique positioning in the market with our Certified International Specialists, with our clear international and global orientation rather than a regional or even country focus. That allows us to offer to our customers a one-of-a-kind solution. I think we also have a clear edge and advantage in being the provider for premium international e-commerce. We seem to be in the right position not only to benefit from the good market situation but also to gain market share.”

Fundamentally, motivated people are the key for success in a service industry, he concluded. “We are convinced that by investing in our people we create superior results. We are putting our money where our heart is, and putting our heart where our strategy is.”

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