DHL Expands Capacity and Logistics to Meet E-Commerce Fulfillment Demands

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The rapid rise of e-commerce has posed many challenges and opportunities for global freight and logistics providers, and DHL is scaling up on multiple levels to meet those demands.

At a press conference in New York Thursday, executives from several divisions of the mega logistics company discussed how they are strategizing and expanding capabilities and services. They also revealed some new initiatives as DHL, which had revenue of $60 billion in 2016, forecasts growth of 15 percent to 40 percent in its four logistics business units in the U.S. this holiday season.

The company will hire about 6,000 additional seasonal workers across its four business units in North America to support its contract logistics, fulfillment, freight transportation and express delivery operations in December, and it’s also introducing upgrades to its service capabilities, including additional flights, new customer applications and piloting new warehousing technologies that leverage robotics and augmented reality to increase productivity.

With U.S. retailers posting record sales of roughly $6.6 billion on Cyber Monday, the growing role of e-commerce in the retail sector is also bringing new revenue opportunities and operational challenges into focus for both the retail and logistics industries, he noted.

“E-commerce is fundamentally changing the way in which logistics companies operate,” Lee Spratt, chief executive officer of DHL E-Commerce, said. “To help our retail customers in the U.S. meet the demands of online shoppers for greater transparency, convenience and speed, we have to balance increased capacity with improved efficiency and to offer flexible omni-channel solutions. DHL is expanding its services across all operating divisions, from fulfillment to the last-mile, in order to support this dynamic and fast-growing segment.”

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[Read more about DHL: Industry Evolution has Created the Human-Centered Supply Chain]

He noted that with 1.7 billion people shopping online this year, e-commerce is expected to reach a 12.8% share of global retail spend by 2019. This holiday season, $107.4 billion is projected to be spent on online sales, and by 2020, the value of domestic and cross-border e-commerce transactions is forecast to reach $3.4 trillion worldwide.

“That’s why e-commerce is so important to DHL,” Spratt said. “The needs of today’s consumers are changing. Consumers now want it faster and easier, and they want routing convenience. While two to three days delivery is the norm, they have shown a desire to pay for the convenience of some day shipping, although 75 percent still want free shipping. This is changing the landscape of e-commerce shipping.”

Travis Cobb, senior vice president of network operations for DHL Express, said a recent DHL customer survey of holiday shipping plans and global trade showed 45 percent of respondents expect an increase in e-commerce sales of at least 10 percent, while 47 percent identify fulfilling shipment orders in a timely manner as their biggest challenge.

Cobb said peak season pickup and delivery volumes are forecast to be 26 percent higher year over year, and his unit is expanding weekend deliveries and adding to its courier network.

“We’re also expanding intercontinental aircraft capacity and facilities in major trade lanes,” Cobb said. “We also have a continued focus on improving last-mile delivery with more pick up and drop off locations, such as retail lockers and new retail locations.”

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He added that the On Demand Delivery service designed to reduce failed delivery attempts and improve the receiver experience “has successfully been deployed across all countries in the Americas.” Under the service, customers receive SMS and email messages to keep them informed of estimated delivery dates. Receivers can choose from six delivery options via the On Demand Delivery website, and shippers have the flexibility to choose which delivery options are presented to receivers.

Paul McMillan, vice president of sales and marketing for DHL Global Forwarding, announced said that in 2017, “we have expanding operations in 18 new branch locations in U.S..” with additional operational expansion in U.S. local markets on tap for 2018.

“We have a full fleet of logistics services,” McMillan said.

These include e-commerce warehouse value-added services such as pick and pack, sorting, labeling and inventory management. He said a dedicated e-commerce IT platform for tracking and tracing global B2C business just finished a trial run in China and is ready to be rolled out globally.

Global Forwarding also has a specialized program to support Amazon FBA customers both in the U.S. and abroad from cargo pick-up to delivery.

In addition, McMillan said, “The tightening of freight capacity between Asia and the U.S. in the third quarter provided a clear indication that major retailers were importing goods in anticipation of strong holiday demand. To ensure that we can meet our customers’ needs in a still tight market–in addition to our market-leading capacity, we have invested in dedicated, twice-weekly, round-the-world B747 freighter service that can provide reliable uplift between Asia, the Americas and Europe during peak season.”

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Jim Gehr, president of retail for DHL Supply Chain, said key e-commerce fulfilment trends include compressed order cycle time, greater use of automation and continued evolution of omni-channel fulfillment solutions.

“U.S. retailers’ success for the entire year can hinge on sales and supply chain execution over the last eight weeks of the year,” Gehr said. “With fast-changing consumer habits, rapidly increasing volumes and a tight labor market, we see significant potential for new technologies, such as robotics and augmented reality, to drive productivity improvements within our customers’ supply chains.”

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