DHL forwarding's quarterly airfreight volumes up 8% as gross profit declines

09 / 11 / 2017

Deutsche Post DHL Group (DP-DHL) registered positive results during the third quarter of 2017, with total revenue up 5.6% over like period last year, to €14.6bn.

“We had a strong third quarter with record earnings yet again,” said Frank Appel, group chief executive of the Germany-based global mail and logistics company.

“All divisions of our company registered growth thanks to our strategic focus on rapidly expanding sectors such as international e-commerce.

The group’s forwarding arm saw an 8% rise in quarterly air cargo volumes to 982,000 tonnes versus like period 2016, while airfreight gross profit fell 3.2% to €213m.

The Post– eCommerce–Parcel division achieved a revenue rise of 6.9% to €4.3bn, due mostly to growth in demand for e-commerce services.

Express, meanwhile, also maintained its upward trend. Driven by growth in international time-definite deliveries, revenue rose by 8.5% to €3.6bn. DP-DHL has been investing in expanding and modernising its express hubs and aircraft fleet.

DP-DHL’s Supply Chain division’s revenue increased by 2.3% to €3.5bn for the quarter.

The group’s Global Forwarding, Freight division saw its revenue increase by 5.1% to €3.5bn in the reporting period as volumes of air and sea freight continued to grow.

Gross profit fell by 2.7%, but EBIT was up 6.3%. A statement said that measures to increase the division’s profitability “are taking effect, despite the challenging market conditions resulting from sustained pressure on margins”.

Tim Scharwath, chief executive of DHL Group Global Forwarding, noted that besides overcoming short-term pressures such as high levels of volatility in the market, long-term measures must be implemented – among them, the implementation of state-of-the-art IT systems.

Scharwath took up his post at DP-DHL following the departure of Roger Crook, who had been overseeing DP-DHL’s troubled freight forwarding IT platform.

In October 2015, DP-DHL had said it would write off €345m in relation to the platform, which it had been developing as part of its New Forwarding Environment (NFE) transformation project.

Part of Scharwath’s remit is to continue work on the Global Forwarding division’s IT Renewal Roadmap. In a presentation, he said roll-out of the Global Transport Management System is “well underway” in several pilot countries, with further deployment of selected systems in progress too.

Scharwath observed: “digital players address important customer needs, especially visibility and invoice accuracy” but also that DHL Global Forwarding has a “strong hand”.

“Pure digital does not seem to work; start-ups shift into physical models (operational personnel, warehouses).

“With [our] IT Renewal Roadmap we can deliver similar or better functionalities. We have forwarding expertise and are close to the customer to build superior solutions.”

Appel stated: “For the fourth quarter, we anticipate a strong Christmas season and are confident that we will attain our targets for the full year.”