Specialist
Former divisional C-level executive at DHL International GmbH
Agenda
- Market fundamentals focusing on e-commerce growth drivers in fulfilment and last mile
- Customer preferences by region for time-specific vs day-specific delivery, and integrated fulfilment and last mile
- DHL's (ETR: DPW) competitive positioning on key customer preferences by region
- Alibaba (HKG: 9988) vs Amazon (NASDAQ: AMZN) – growth impacts on delivery landscape
Questions
1.
Can you start by outlining DHL’s business structure, including the likely rationale for it? The e-commerce segment recently became a new business, alongside a slight change to the supply chain division.
2.
DHL’s Post and Parcel business is mainly last-mile delivery, Express is international last mile and then the Freight Forwarding and Supply Chain segments are self-explanatory. Does the eCommerce business provide fulfilment and last mile or just fulfilment?
3.
How is DHL’s sales team structured? Can the company upsell fulfilment and supply chain to merchants so they become fully integrated across the business?
4.
How receptive are DHL’s customers to upselling across categories? What would a typical upsell process be? Does the company hook them with the last mile and then upsell fulfilment, or the other way round? Do merchants like having an integrated provider?
5.
Previous Interviews [see DHL – Group Synergies & Competitive Positioning – 15 April 2021] suggest that UPS and FedEx lead in last-mile technology but DHL leads in its breadth of offering and the upsell process we just discussed, with supply chain and fulfilment on top of last mile. How far ahead do you think UPS and FedEx are on last-mile technology?
6.
How could DHL catch up to UPS and FedEx on last-mile technology? How sufficient is the company’s EUR 11bn CAPEX it has outlined between 2021 and 2023?
7.
How much cost does the UPS Diad system take out?
8.
Does DHL have dynamic routing on half of its operations, so it achieves 7.5% of potential upside?
9.
UPS seems slightly further ahead on last mile. How do you expect customer decision-making to shift towards more integrated offerings, whether it’s supply chain and fulfilment, fulfilment and last mile or all three together? Could a shift enable DHL to grow faster than UPS and FedEx?
10.
What is your 3-5-year outlook for a potential customer shift to DHL? The company’s integrated offering will likely remain unique but there’s potential to catch up on last-mile technology. Do you expect the split to stay relatively stable, with UPS and its strong niche, DHL with its broad offering and customers not changing their mind? There are several moving pieces but it boils down to how customers pick their supplier.
11.
Do you think customers will increasingly consider DHL as the company expands its global supply chain and catches up on last mile?
12.
What is your outlook for the parcel market’s growth, including e-commerce drivers? What growth rate do you expect across supply chain, fulfilment and last mile?
13.
Do you think cross-border growth will continue to outstrip domestic growth?
14.
Alibaba is promising three-day delivery, which it outsources, but Amazon is increasingly considering its own distribution. How big an opportunity is Alibaba’s global distribution for DHL?
15.
Do you think Alibaba will eventually use its own delivery model, like Amazon, or will it continue with its outsourced model?
16.
DDI [Day Definite International] is growing faster than TDI [Time Definite International], according to a specialist in a previous Interview [see Royal Mail – GLS – Parcel Logistics – 21 June 2021]. That seems at odds with last mile and its increasingly specific delivery times. What are the major drivers here?
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