DHL Express: air cargo volumes lost to express won’t come back
16 / 09 / 2015
EXCLUSIVE INTERVIEW: Airfreight forwarders should not expect to be able to win back the market share they have lost to integrators over recent years because of fundamental differences in their offering.
Speaking at a media event at its European regional hub in Leipzig, DHL Express Europe chief executive John Pearson told Air Cargo News that integrators had been taking market share from airfreight forwarders for at least the last five years.
He did not expect the trend to change anytime soon despite certain forwarders recently stating they hope to reverse the situation after developing their offering.
“There is a slice of business that sits with air forwarders that over the past years, and I’m sure it will continue to be the case, will drift over to air express. I think [express has won market share] because of the service that air express, DHL Express, provides, coupled with the competiveness of a one lump sum price.
“Customers, as they are either being helped by procurement organisations, or even their shipping manager, are increasingly understanding that a 75 kilo shipment from London to China is actually going to be there tomorrow and going to be there cheaper using express.”
He said that the threshold of when it was less costly to use an express operator depended on the trade lane and commodity.
When asked if this trend affected DHL Express’ relationship with its sister company DHL Global Forwarding, he said it was only occasionally that they “got their lines snagged”.
He felt the difference in service meant it was unlikely forwarders could win back the marketshare they had lost.
Pearson said: “We offer a fundamentally different service, right down to track and trace, shipment visibility, customer service, a quick call in ‘hey I’ve got a shipment can you be here in an hour’ and that’s that.
“Ease of use is very important to us, they may only ship once or twice a month; [with us] they can open an account that afternoon and get shipping.”
In a recent interview with Air Cargo News, Geodis global air product director Henk Venema said that forwarders and air cargo had lost around 5-7% marketshare to integrators over recent years.
He felt that the simplified service express operators offered was part of the reason behind the lost marketshare.
"They pay one rate door-to-door and make it simple to move their cargo from a to b. Whereas the traditional freight forwarder and airline industry have a set of tariff lines, so a client gets an invoice of many lines for just two pallets," he said at the time.
However, Venema was optimistic that forwarders could win the volumes back. Geodis itself was offering e-commerce solutions and was on the verge of launching a business-to-consumer service though its road freight and distribution division.
It had also simplified its airfreight services into three separate products; ‘air fast’, ‘air save’ and ‘air flex’ .
It has also been suggested that the digital offering with simple online booking portals that express operators have developed has also helped them win marketshare.
In response, Kuehne+Nagel launched its FreightNet solution, which is an online booking portal, last year, while the wider industry has acknowledged it needs to develop its online offering.
However, others have suggested that air cargo will continue to lose share to integrators because of the business-to-consumer services they can offer.