Interview with Uwe R. Doerken, Chairman and CEO, DHL
DHL International is the biggest air express service outside the United States. It also owns a 25 per cent stake in its U.S. affiliate DHL Airways, which is based in Redwood, California and handles all U.S. deliveries. Bonn-based Deutsche Post bought a majority in the Brussels-based DHL International 18 months ago as part of a drive to expand into the express mail and parcel business in Germany and beyond, as deregulation erodes its domestic dominance. Europe's largest postal company has agreed to buy the 25 per cent stake in DHL International held by German airline Lufthansa for 610 million euros ($595 million US). It already owns 50.6 per cent and said it plans to take over DHL International entirely in the future. Other shareholders include Japan Airlines.
The DHL network links over 120,000 destinations in more than 220 countries and territories, and employs 71,000 people.
Q: How does DHL fit into Deutsche Posts' overall strategy? What advantages do you feel that being a part of Deutsche Post gives DHL over your competitors?
A: The Chairman of Deutsche Post World Net (DPWN), Dr. Klaus Zumwinkel, has called DHL the “Jewel in the Crown” of the Group. With the acquisition of DHL, DPWN got a global business and infrastructure on which to base its future internationalization strategy, and the investments DPWN continues to make in DHL, with the declared intention of owning 100% of the share by year-end, show the commitment of our new parent company. This is demonstrated visibly by the fact that DPWN this year decided to run its long-standing sponsorship of the Jordan Formula 1 team under the DHL flag, with our logo prominently displayed on the sides of the cars and the team renamed into “DHL Jordan Honda”.
From a DHL perspective, the advantages lie in having a very strong parent with a clear strategic vision, in the context of which we play a key role. The various logistics or express entities of DPWN are complementary rather than overlapping (Danzas, EuroExpress, DHL), offering customers a true one-stop-shop option, and thereby putting the Group in a very strong position on the road to becoming the global Number 1 in this industry.
To give you an example from the field of humanitarian aid that DHL has always engaged in spontaneously when needed, DPWN has shipped free of charge through Danzas 1,000 tons of vitamin-enriched wheat from North Dakota to widows and orphans of the war in Afghanistan, where it is distributed by the renowned relief organization CARE. DHL, on the other hand, at the request of the Afghan ambassador in Washington D.C., is flying medication from US-based warehouses through our global aviation network to Afghanistan. We, and only we, can do this because — true to the old DHL tradition of first in, last out, and first back in — we re-opened our operations in Afghanistan in April 2002.
Q: Which markets do DHL see the best growth prospects in the coming 12 months, in regards to industry verticals (chemicals, retail, automotive etc), business types (express, logistics, airfreight etc.) & geographic regions?
A: Geographically, Asia-Pacific still offers huge potential for business development, and DHL benefits from our long-standing presence there (long before anybody else), and from the fact that we have been able to build a very strong intra-Asian network, making us less dependent on individual national economies and / or industries. This gives us a competitive edge, which is particularly relevant for the China business post-WTO accession. In that huge country, we have had a very successful 50/50 joint venture with Sinotrans for many years, and we are expecting annual growth rates well in excess of 30% for the foreseeable future. Elsewhere, Latin America will continue to provide growth opportunities, while we are determined to maintain our traditional leading position in Europe.
As far as business types go, we see great potential in supplying intelligent logistics solutions to worldwide operating blue-chip companies, where they outsource their whole supply-chain management to us, allowing them to save considerable costs and to concentrate on their core business. In this context, our world-spanning network of Strategic Parts Centers and Express Logistics Centers plays a pivotal role for growing our business by guaranteeing on-time delivery of vital spare or repair parts almost anywhere in the world (within four hours in urban locations or industrial centers), and just-in-time delivery of items needed for production, respectively. Major customers will come from the automotive, telecommunications, computer technology, and pharmaceuticals industries.
Q: Has DHL had to restructure your vision due to the current weak economic situation? What do you see ahead? When do you see the upturn taking place and why?
A: DHL’s vision has remained unchanged – to offer customers tailor-made solutions to their logistics and express delivery needs, combining leading-edge technology with the traditional “can-do” attitude of our 71,000 employees worldwide.
Of course, like the whole industry, we have been affected by the worldwide economic downturn, which by the way set in long before the tragic events of September 11th. In a way, we are, very much a barometer of how business is doing. However, due to our global reach – we operate in more than 220 countries and territories, while the United Nations have 190 member states – we are able to compensate weaknesses in one area or region better than others whose revenues rely heavily on certain routes, e.g., between Asia and the US. In addition, our global network along with the above-mentioned synergies within DPWN will enable us to grow the business further even in times of adversity, i.e., to gain share in a shrinking or stagnant marketplace. One good example of this is the encouraging way DHL is currently developing in Argentina, under the most difficult of possible circumstances.
The general worldwide economic upturn everybody is waiting for is unlikely to happen this year. All indicators point to a longer recovery period than even most experts had anticipated.
Q: What internal re-structuring/re-organising is DHL planning over the next 12 months? Where are you focusing your resources internally?
A: Like any company that wants to be fit for growth, DHL is constantly reviewing the way we do business, how we can be more effective and efficient, and how we can improve our profitability while maintaining the highest level of service to our customers. We are currently engaged on a program which focuses on optimizing our own operations while at the same time taking part in the Group-wide “STAR” initiative introduced to realize quite considerable cost and synergy potentials within DPWN. In autumn, it will be announced which concrete measures are to be introduced in what kind of time frame, and how these will benefit the Group, its employees, its customers, and its shareholders.
Q: With the proliferation of 3PL’s and existing traditional asset based transportation companies starting logistics operations …what is DHL’s response/approach to this particular trend?
A: In brief, DHL has been setting this trend for the past 33 years, and we are confident to continue being leading-edge in the industry when it comes to developing innovative solutions for our customers – more than ever due to the potential inherent in the DPWN Group.
Q: What factors do you believe will differentiate the winners from the losers in the Transport industry over the next year?
A: Those companies that understand their customers’ needs best and develop the appropriate services to meet these will be the winners. At DHL, we believe anything else is out of the question. Losing is a bad habit to get into….
Q: Cargo Security has become a hot topic since 9/11. What actions have DHL already taken to increase security, and what are your future plans in this area?
A: Our security measures have always been very strict, and given the kind of service we offer, and the kind of operations we run, they need to be. From that point of view, September 11th has not changed things fundamentally for DHL. Of course, we comply with, and in many cases exceed, regulatory or legal requirements wherever we operate. It would be quite counterproductive to elaborate in public on all our individual security measures, but suffice it to say that these have for a long time served as benchmarks for many governments, including some NATO member states. We are committed to keeping up this level of security in the interest of our customers, but also of our employees, both on the ground and on board our more than 250 planes worldwide. Their safety will always come first.
