CPL – CEP industry needs more innovation, better customer service
Globalization, the internet, customer service and innovation are the key challenges facing the CEP industry, according to speakers at the Courier and Parcel Logistics Summit held in Barcelona this week.
Expanding international networks, how to leverage leading-edge technology and respond to increasingly global sourcing, production and supply now characterized the sector at a key juncture in its development, a lively first session of the summit on Tuesday heard.
Speaker Colum Joyce, CEO of KBOR Research, spelling out the opportunities and challenges the industry faced, provocatively said express operators seemed “self-satisfied” with their business models. “The industry faces unprecedented challenges and unprecedented opportunities. Globalization wouldn’t exist without the express industry. As it has matured, though, it has decreased in flexibility, leading to commoditization (which) has led to poor profits, falling differentiation and reduced innovation,” Joyce said.
During a panel discussion, UPS strategy vice-president, Frank Sportolari, rejected the notion that the express industry was not responding to customer needs. “I would not say we are self-satisfied. What we have is satisfied customers. We are creating demand, responding to demand and creating global commerce.” FedEx vice-president for central and eastern Europe operations, Michael Mühlberger, agreed with his UPS rival. “Whenever there is a need, we will react to it,” he said.
Peter van Laarhoven, group director strategy at TNT Express, began the session, saying the carrier was looking to expand in eastern Europe, Turkey and South Africa. On Russia, he was more hesitant. “It’s a very big but very difficult market,” van Laarhoven told delegates. TNT’s key focus was on expanding its networks to capitalise upon growth opportunities and optimising its capital structure to provide sufficient funding for a combination of acquisitions, dividends and share buy backs.
Sportolani outlined UPS’ growth strategy, the key strands of which were to build up its leadership position in the US and continue international expansion, particularly in Europe. UPS would increasingly provide comprehensive supply chain solutions, leverage leading-edge technology and pursue further strategic acquisitions.
Mühlberger said the industry was faced with several large trends, one of which was the way in which the value of goods was increasing. Although air cargo is only 3 pct of worldwide freight in weight terms, it represents 40 pct of the total value. Mühlberger said that countries had to provide greater access to goods, services and information if the international express market was to grow as rapidly as forecast. In an Access study by FedEx, Hong Kong and Singapore were the most open trading countries, while the US languished in 12th place, he pointed out.
GeoPost board member Hans Fluri said the DPD parcels network was now No.2 in Europe, behind only DHL, with some EUR 3 billion in sales revenues. The company’s classic international service was growing at 20 pct per year and, since DPD has no requirement to buy aircraft, it was able to provide a Germany-China service at 30-40 pct cheaper than the big integrators, he said. The CEP industry was changing significantly, Fluri told participants. “We have to live up to the expectations and desires of our customers. Worldwide sourcing, producing and supply raise demand for international standard and express shipments,” he stressed.
