DPD plans European growth and B2C services

DPD is planning to grow its European business and is considering expanding its B2C activities, joint CEO Hans Fluri told CEP-Research in an exclusive interview. The La Poste parcels subsidiary is winning European business from express carriers with its new Guarantee product but has no major plans in the German mail market, he said.

Fluri has been joint CEO of DPD GmbH & Co. KG, the German-based franchisor company for the entire DPD network, alongside Arnold Schroven since November following a streamlining of the DPD management board. Fluri remains CEO of DPD GeoPost Deutschland, the Germany franchisee. Schroven moved from his position as chairman of the DPD supervisory board and GeoPost CEO Paul-Marie Chavanne took over the post. The management restructuring at DPD and GeoPost followed the move of Claude Béglé to DHL.
“With this structure we have a transparency that enables us to act faster and even more in the interest of our customers. We face tough competition and we are convinced that with this structure and our motivated employees we are in a position to build on our successes,” Fluri explained. “With Paul-Marie Chavanne as DPD supervisory board chairman, this shows his support for the DPD system.” On the new ‘tandem’ management structure of joint CEOs for DPD, Fluri commented: “We think we have an ideal combination with the ‚tandem’ management structure. Arnold Schroven is very experienced in logistics and helped to make DPD what it is today. I can contribute 30 years’ experience in international companies such as Philip Morris and Kraft.”
The main advantages of the new DPD structure were decentralisation and closeness to customers and the market, Fluri said. “We put a strong focus on decentralisation. Within GeoPost, for example, there is just one management level from a regional managing director in Germany to the executive chairman in Paris.” This meant DPD was close to the market with close contact between sales and customer service staff and management.

Aiming for higher German market share
In its home market of Germany, DPD GeoPost had grown well during 2005, Fluri said. “DPD has had a very successful year and has set itself up for future growth. We have revenue growth of seven per cent.” DPD GeoPost Deutschland had turnover of 852 million euros in 2004.
Looking ahead to 2006, Fluri commented: “The German market still has growth potential. DPD wants to win market share by growing faster than the market.” Price increases, however, appear unlikely given the strong competition. “The increased cost base would demand a price increase. But we find it a shame that in view of the rising costs competition is so often price-based. We want fair pricing. I do not believe that price wars are an effective competitive tool. But if necessary, we will defend ourselves. In short, our pricing policy in 2006 will be in line with the market.”

DPD Guarantee wins express business
The DPD Guarantee product launched at the start of this year and recently extended to cover 11 European countries is proving a clear success, Fluri said. The product, which will be gradually extended throughout Europe, offers a guaranteed delivery time, real-time shipment tracking and money-back guarantees at rates well below express prices. “With the DPD Guarantee product we have shown innovation and closeness to the market. The customers demand a product which guarantees timing and reliability without paying the high express prices. This is an example of how our product management differentiates us from competitors. We see a ‘down-trading’ and we are gaining volumes.”

Plans for B2C services
Although DPD’s core area is the B2B sector which accounts for about 95 per cent of its volumes, it is closely watching developments in the B2C, or home delivery, market. The recent alliance between TNT and Hermes in Germany to intensify competition with DHL, and the continued expansion of GLS in this segment are major market developments. “We are already active in B2C, although it is not our core business,” Fluri said. “B2C is a large market that is showing above-average growth. It’s an area where we need to be aware of what is happening in the market. We certainly need to fine-tune and adjust our strategy in this market. We want to position ourselves more strongly in this area.” One option would be to expand the currently limited network of DPD PaketShops.
In contrast, DPD is not interested in entering the German mail market, which is set for full liberalisation at the start of 2008. “I don’t see mail as a core business for us. We have to focus on what we do well. The tendency is that we will not get into this business,” Fluri commented. In the UK, however, GeoPost’s subsidiary Parceline has set up a new company, Mailplus, to compete in the fully liberalised British market from January 2006 onwards with two-day bulk mail services at reduced rates.

Growth in European markets
DPD remains committed to its international expansion strategy announced earlier this year, Fluri stressed. “Paul-Marie Chavanne has clearly said that the international network will be expanded further. Today we are the number three among the CEP operators in Europe. We want to ensure that we can offer services for our customers wherever their business is in the world.” Europe offered considerable growth potential. “As DPD we now offer services from Portugal to Novosibirsk. While we are steadily growing in most of these markets we still have a lot of growth opportunities.”
These included the Benelux countries and Switzerland, for which Fluri is now responsible on the GeoPost board. “In the Benelux countries we have good growth rates. But we are only number five, and that is not where we want to be. We want to have a leading position in those markets where we are active. In Switzerland we are in third place. We see growth opportunities there because about 70% of Swiss trade goes into markets where DPD has a strong network.” DPD was also growing well in Central & Eastern Europe, particularly Poland and Russia, Fluri pointed out. “ We have a gap in Ukraine but we hope to fill this during 2006.”

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