'Big three' express firms may get a run for their money from more savvy rivals
The ‘big three’ express parcel companies, UPS, FedEx and DHL, are not as immune to ...
DHL Global Forwarding must improve. That was the message from divisional chief executive Tim Schawarth after a poor nine months tarnished otherwise record results for DP-DHL.
Three months into the role, Mr Schawarth did not skirt around the weak performance, recognising the division’s need to change.
“What I have found is that Global Forwarding is sometimes not quick enough when it comes to making a decision,” said Mr Schawarth.
“Our structure also has problems, and certain country divisions work for their own sake and not the network. What distinguishes a large forwarder is an ability to leverage its network.”
Nine-month divisional revenues climbed 5.7% – only Supply Chain’s increase was weaker, at 1.8% – to €10.6bn ($12.3bn). But it was in EBIT that the pinch was felt: down 4.9% to €174m.
This, said Mr Schawarth, was due to margin pressures and volatile rate developments, as well as the company not being “strong enough” to pass on higher rates in a short period.
“We are not in crisis; the business model is there and is solid, but we are working on a strategy to improve processes,” he added.
“Called ‘Easily Simplify’, the strategy focuses on three big topics that will bring us forward in 2018 – not only improving processes, but helping us to make quicker decisions and work together.”
Demand for Global Forwarding’s services, however, has remained strong, with an 11% surge in air freight volumes (2.9m tonnes) and a 7.2% upturn in ocean freight (2.4m teu).
Third-quarter results also showed more optimistic signs, as ongoing strong demand resulted in increased revenue – up 5.1% to €3.5bn – and EBIT – up 6.3% year-on-year to €67m.
“We have made mistakes and, at times, became a little disillusioned, but we really are committed to getting back to being best in class,” said Mr Schawarth. “With the right steps, I believe this is absolutely do-able – we have the staff and the motivation. We were a big brand in the past and can be a big brand going forward.”
Despite Global Forwarding’s struggles, the group recorded its strongest-ever third quarter, with Post and Express leading the charge.
Third-quarter group revenues were up 5.6% to €14.6bn, leading to a 10.5% swell in EBIT of €834m, with group chief executive Frank Appel expecting a “strong” fourth quarter
He said: “By investing in the future and developing ground-breaking innovations, we are continuously expanding our market-leading position. For the fourth quarter, we anticipate a strong Christmas season and are confident that we will attain our targets for the full year.”
Nine-month revenues also jumped 5.8% to €44.3bn, with EBIT up 7.6% to €2.5bn, as e-commerce drove a strong performance in the post-e-commerce-parcel division
Supply Chain’s marginal 1.8% upturn in revenue to €10.5bn would have been stronger were it not for negative currency effects in Europe, Middle East, and African operations, said the company.
Nine-month EBIT climbed 1.4% to €371m, but third-quarter results were more promising, with an 8% EBIT increase to €148m on the back of €3.49bn of revenue (up 2.3%).