This article first appeared in The Edge Malaysia Weekly on January 18, 2021 - January 24, 2021

ALTHOUGH globalisation has been hit hard because of the Covid-19 pandemic, it has had a different effect on DHL Express.

Since the beginning of last year, the German package delivery giant most recognisable by its distinctive red-and-yellow corporate colours, has experienced a 50% surge in e-commerce shipments in Asia-Pacific, excluding China.

In an interview with The Edge, DHL Express CEO John Pearson highlights that digitalisation will be a key focus area for the courier delivery specialist in tackling increased demand from e-commerce.

Moreover, he says, the pandemic has presented the company with an opportunity to further improve its operational systems in terms of efficiency and resilience.

“With the growing need for e-commerce and consumer expectations of parcel delivery, one of the main challenges to becoming a competitive brand in cross-border e-commerce is to ensure that the ever-growing number of parcels are delivered in the shortest time possible. This also includes tracking and managing the accuracy and consistency of delivery timings,” Pearson says.

Owing to the complexity arising from multiple delivery hand-offs in each leg of the journey and unexpected issues that may arise during border clearance, the fulfilment of the package will require close cooperation between all stakeholders.

“This will drive the need to adopt standardisation and digitalisation for cross-border e-commerce and make the entire process seamless. Truly embracing e-commerce as a business means ensuring a seamless customer experience end-to-end while navigating the increased complexity and aligning the various moving parts in the supply chain,” he stresses.

DHL Express is the express delivery arm of German multinational logistics firm Deutsche Post AG, which is listed on the Frankfurt Stock Exchange. With a market capitalisation of more than €50 billion (RM202.2 billion), Deutsche Post is about 20%-owned by KfW Bankengruppe, a state-owned development bank.

According to its annual report 2019, Deutsche Post saw its consolidated net profit grow 26.4% to €2.623 billion in 2019, up from €2.075 billion in 2018.

Its express division — whose global network spans more than 220 countries and territories and some 105,000 employees providing services to around 2.7 million customers — contributed a revenue of €17.101 billion in 2019, of which €6.097 billion, or a third, came from Asia-Pacific.

In January last year, Pearson, a 58-year-old Briton, was appointed CEO of DHL Express, and thus appointed to the board of management of Deutsche Post. The express industry veteran has also had stints in the Middle East, including Saudi Arabia and Dubai, Singapore, the US and Belgium.

Citing the DHL Global Connectedness Index 2020, Pearson points out that there had been an unprecedented collapse in people flows last year.

“For example, a 70% decrease in the number of people travelling to foreign countries has strongly affected the index. Nevertheless, global connectedness overall has been surprisingly robust. It is unlikely to fall below levels seen during the 2008/09 global financial crisis,” he says.

While globalisation has been negatively affected by Covid-19, he observes the current crisis has also shown how indispensable international connections are for maintaining prosperity and continuity.

“Trade in goods has already recovered more than three quarters of its initial decline. And digital information flows have surged, as in-person contact went into the online world. This has boosted international internet traffic, phone calls and e-commerce,” he explains.

While the pandemic has presented significant challenges, Pearson notes that trade has turned out to be a key lifeline for economies and healthcare systems during difficult times.

“At DHL, we’ve had to redesign our network when lockdowns grounded commercial flights; we’ve had to find new routes and solutions when borders were closed. And when companies swung back into action after forced plant closures, we did all we could to ensure that they were stocked to restart production.”

Despite the export bans early in the pandemic, Pearson says trade in products used to fight Covid-19 has boomed, and such a trend is likely to continue with the global rollout of Covid-19 vaccines.

“This also makes me confident to expect a bright future for globalisation in the coming years. Will we see changes? Of course. Among other things, we might see less global business travel and much more e-commerce. But globalisation overall isn’t going away. As I like to say, it is too big to fail. People will want to continue to trade with each other.”

Commenting on DHL Express’ operations in Malaysia, Pearson says that, following the pandemic, he sees potential in the recovery of the country’s trade with other nations.

“Given Malaysia’s trade is closely tied with China, a reinvigoration of this connection, together with the potential rise in regional supply networks, means the country could stand to quickly recover, starting with its export-oriented manufacturing sector, a strong contributor to the GDP (gross domestic product) at 21.46% of the total in 2019,” he says.

“Suffice it to say, Malaysia is a very important market for us and we will continue to invest in our infrastructure and people in the country, strengthening our footprint to support the many local SMEs (small and medium enterprises) looking to reach customers globally.”

A check with the Companies Commission of Malaysia (SSM) shows that DHL Express (M) Sdn Bhd generated a net profit of RM5.95 million, on revenues of RM659.618 million in the financial year ended Dec 31, 2019.

It is worth noting that, for a country with a population of more than 30 million, Malaysia had 109 courier service licence holders operating as at October last year. This prompted the Malaysian Communications and Multimedia Commission (MCMC) to halt the issue of new licences for courier services last year for a two-year period from September 2020.

While acknowledging that there are indeed many players in the Malaysian courier industry, Pearson believes all serve distinct market segments that may be mutually exclusive to others.

“DHL Express fills a niche space with our specialisation in inbound and outbound international express shipping, for instance, next-day delivery to major cities in Asia and Europe. In fact, we represent one of four business units in the larger DHL family, with our other business units dedicated to global forwarding, supply chain and e-commerce solutions,” he says.

According to him, the prolonged period of restricted living conditions has further skewed consumer behaviour towards e-commerce compared with brick-and-mortar businesses.

The greater demand for orders and speed may soon eclipse the capability of online retailers, presenting an opportunity for logistics providers to include fulfilment in their portfolio. As a result, there will be a higher concentration of logistics activity catering for pharmaceuticals, non-perishable foodstuff and other sectors that have remained relatively profitable throughout the crisis.

“The diversity of our businesses reflects the untapped potential still possible in logistics. We see huge opportunities and will continue to invest in our infrastructure and people to enhance our product offerings in meeting the rapid sector development and demands of customers here. Our company has always been about finding growth and service expansion internally, and that remains our modus operandi moving into the future,” he says.

New investments include an order for eight additional Boeing 777 freighters, with first deliveries scheduled for 2022.

“The investment marks a further step in DHL Express’ expansion of its intercontinental air network to meet customer demand in fast-growing international express shipping markets,” the company announced in a media statement last Wednesday.

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