Interview – DHL Express Europe plans new international deferred service

DHL Express is planning a new international deferred service, more retail outlets and selective expansion of B2C services to strengthen its market leadership in Europe, Express Europe CEO Scott Price told CEP-Research in an exclusive interview. He is also seeking more cross-selling between express and logistics.

Price, who took over as head of DHL Express in Europe last July, said the operator was now entering “a new phase” in Europe after completing integration of various past acquisitions and setting up a single management in all express businesses across Europe. “It’s been a challenging process to integrate all the acquisitions into our systems,” he commented. But DHL was now “ integrated into the most powerful network in Europe”, he said.

DHL Express’ European strategy was focused on strengthening the network and enhancing its international and intra-regional time-definite and day-definite products and services, Price said. “ My job is to ensure that we have a ‘Fortress Europe’, that we defend our leadership and continue to make gains. We are very focused on building up our position in our home market.”

In terms of macro-economic trends, and the potential impact of the slowing US economy, Price noted that Europe was no longer so dependent on the US economy. “We are not seeing any signs of a slowdown,” he stressed. However, there was a trend towards slower international transportation, and a modal shift from air to sea or road where there were realistic alternatives. “That is why we are beefing up our day definite international service,” he commented.

In its core B2B express market, DHL Express plans to introduce a new Day-Definite International door-to-door product under the name “Economy Select” to serve this fast-growing market segment, Price said. The lower-priced product was already trialled on Europe-USA routes last year. According to customer information, Economy Select offers delivery times of 3-6 days for single- or multi-piece shipments and pallets of up to 1,000kg to international destinations. The service will be supported by DHL’s new Trade Lane Management structure which is designed to focus on capacity management and two-way trade flows.

Within Europe, DHL extended Europlus, the equivalent day-definite product using road-based transportation, to Russia, Bulgaria, Romania, Turkey and Greece last autumn. More Central and Eastern European countries are scheduled to be added this year. With coverage of 80 pct of Europe on a next-day basis for time-definite services, DHL is “ahead of the competition” while Europlus now had coverage “similar to TNT”, commented Thomas George, managing director marketing and sales Express Europe.

Meanwhile, DHL Express plans to extend its services for small businesses and consumers by expanding the network of “Servicepoint” retail outlets and building up B2C services in selected markets, Price said. The present 7,000 Servicepoints, used as “first-mile” drop-off points and “ last-mile” pick-up points, are due to be increased to 11,000 this year and extended to about 16,000 within the next five years.

In the B2C sector, Europe is still behind the USA and Japan in terms of development, although the UK was further advanced, Price pointed out. “There’s no definitive strategy for B2C across Europe. We will build where it makes sense and makes money.” The operator was “quite happy” with its existing B2C services in the UK, Switzerland and Benelux, he said.

Another priority now the Exel integration had been completed was to “drive collaboration” between DHL Exel Supply Chain and DHL Express to maximise revenues and reduce costs by sharing facilities. “In 2008 we will see a huge amount of gain between the two units,” Price commented. “As global economies become more and more inter-linked, the supply chain is becoming more and more complex. Companies are more aware of the cost of logistics.”

Asked about the impact of the new European air hub at Leipzig, which is due to go into full operation at the end of March, Price said the new location meant DHL Express would be flying more shipments within Europe and would enable it to improve transit times to growth markets in Central and Eastern Europe. Service levels had not been affected by the transfer of Cologne flights to Leipzig last autumn, Price noted. “In January we had our best-ever service quality level,” he said.