SINGAPORE: German logistics giant DHL has boosted earnings in its international shipping business by staying flexible and adjusting operations in response to shifting United States trade rules, said its chief executive Tobias Meyer.
Meyer was speaking to CNA on Thursday (Nov 6), following the release of the company’s third-quarter earnings.
DHL, which also operates Germany’s postal services under Deutsche Post, reported a higher-than-expected third-quarter operating profit.
It recorded 1.5 billion euros (US$1.8 billion) in earnings before interest and taxes, beating analysts’ expectations of 1.28 billion euros.
The company said that structural cost improvements and price adjustments helped it cope with a volatile economic environment, even as quarterly revenue slipped 2.3 per cent to 20.1 billion euros, weighed down by currency exchange rates and weaker shipment volumes to the US.
Meyer said that US trade policies had impacted the business “quite a bit”.
“We had a contraction of volumes, especially as it relates to flows to the US, that has also influenced our third quarter,” he noted.
He added that the strong euro had hit the company’s top line, but despite weaker revenue from exchange rates, DHL still managed to increase profits.
“We had a good third quarter, and we're fully geared up for the fourth, looking forward to the traditional peak season.”
US customs regulations for low-value imports – known as de minimis rules – which took effect in August, have not yet caused a major earnings hit, the company said.
But these have begun to affect shipping volumes, Meyer noted: “Those (smaller) goods now become significantly more expensive for the US consumer. That triggers certain elasticity, so less volume is being shipped.”
The CEO said that the company’s ability to adapt quickly – by adjusting capacity and using technology to handle customs processes in response to tariffs – was key to maintaining service levels.
“That led to some earnings growth, even in our international shipping business,” Meyer said.
While trade tensions with the US pose challenges, Meyer said that Asia remains a “second home” for DHL.
“We feel very much at home in the whole geography, ranging from China down to Australia. So, it's a key focus area for us.”
DHL is also watching as Chinese companies expand globally, not just in distribution but also in manufacturing, Meyer said.
Southeast Asia, too, remains firmly on the radar, with recent investments in Malaysia and Singapore, among others. India, through DHL’s Blue Dart subsidiary, is another pillar of its Asia strategy, he added.
DHL has also been leaning on new technology in its operations. It recently opened an innovation centre in Germany to showcase robotics, artificial intelligence and sustainability solutions to customers.
AI is also being deployed widely across the company’s operations, from customer service to customs clearance.
“We're very excited about the use of AI and our customs clearance operations … the additional trade hurdles that the US has imposed take a lot of effort and work to deal with, and it's fantastic to see what that technology can do for us to make the work of our staff easier.”
Asked about the biggest geopolitical or trade risk facing DHL, Meyer said the company remains focused on customer relationships amid the global uncertainty.
“There are many negative scenarios that you could think about. What I think is important to us – stay close to our customers, see what those changes mean for them, have discussions with them on how we can support their business model, their global supply chains, for them to deliver to their customers. That is what we are focused on,” he said.
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Meyer was speaking to CNA on Thursday (Nov 6), following the release of the company’s third-quarter earnings.
DHL, which also operates Germany’s postal services under Deutsche Post, reported a higher-than-expected third-quarter operating profit.
It recorded 1.5 billion euros (US$1.8 billion) in earnings before interest and taxes, beating analysts’ expectations of 1.28 billion euros.
The company said that structural cost improvements and price adjustments helped it cope with a volatile economic environment, even as quarterly revenue slipped 2.3 per cent to 20.1 billion euros, weighed down by currency exchange rates and weaker shipment volumes to the US.
Meyer said that US trade policies had impacted the business “quite a bit”.
“We had a contraction of volumes, especially as it relates to flows to the US, that has also influenced our third quarter,” he noted.
He added that the strong euro had hit the company’s top line, but despite weaker revenue from exchange rates, DHL still managed to increase profits.
“We had a good third quarter, and we're fully geared up for the fourth, looking forward to the traditional peak season.”
US customs regulations for low-value imports – known as de minimis rules – which took effect in August, have not yet caused a major earnings hit, the company said.
But these have begun to affect shipping volumes, Meyer noted: “Those (smaller) goods now become significantly more expensive for the US consumer. That triggers certain elasticity, so less volume is being shipped.”
The CEO said that the company’s ability to adapt quickly – by adjusting capacity and using technology to handle customs processes in response to tariffs – was key to maintaining service levels.
“That led to some earnings growth, even in our international shipping business,” Meyer said.
FOCUS ON ASIA
While trade tensions with the US pose challenges, Meyer said that Asia remains a “second home” for DHL.
“We feel very much at home in the whole geography, ranging from China down to Australia. So, it's a key focus area for us.”
DHL is also watching as Chinese companies expand globally, not just in distribution but also in manufacturing, Meyer said.
Southeast Asia, too, remains firmly on the radar, with recent investments in Malaysia and Singapore, among others. India, through DHL’s Blue Dart subsidiary, is another pillar of its Asia strategy, he added.
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EXCITEMENT OVER AI
DHL has also been leaning on new technology in its operations. It recently opened an innovation centre in Germany to showcase robotics, artificial intelligence and sustainability solutions to customers.
AI is also being deployed widely across the company’s operations, from customer service to customs clearance.
“We're very excited about the use of AI and our customs clearance operations … the additional trade hurdles that the US has imposed take a lot of effort and work to deal with, and it's fantastic to see what that technology can do for us to make the work of our staff easier.”
Asked about the biggest geopolitical or trade risk facing DHL, Meyer said the company remains focused on customer relationships amid the global uncertainty.
“There are many negative scenarios that you could think about. What I think is important to us – stay close to our customers, see what those changes mean for them, have discussions with them on how we can support their business model, their global supply chains, for them to deliver to their customers. That is what we are focused on,” he said.
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