Dive Brief:
- DHL Express will increase general average U.S. rates by 5.9% Jan. 1, 2020, the company announced in a press release. The full list of rates has yet to be published.
- DHL's 2020 rate increases are so far in line with U.S. competitors. FedEx announced its Express rates will increase between 4.9% and 5.9% January 6, 2020 last month. USPS and FedEx have indicated that their future pricing models will factor package volume and weight into the equation more prominently. DHL's full pricing guide will reveal if package size will factor into final pricing any differently than in the past. UPS has not yet announced 2020 rates.
- Just days after the rates announcement the carrier launched "Strategy 2025," in which DHL will invest 2 billion euro ($2.19 billion) to speed up digitalization efforts already underway.
Dive Insight:
"We need not reinvent ourselves. We will digitalize ourselves," CEO of Deutsche Post DHL Group Frank Appel said in a statement. The carrier is coming to the end of its Strategy 2020 and thus needs a new set of goals.
Under the banner of "Strategy 2020" DHL streamlined its services with an eye on long-term health and profitability. And Appel touted revenue and margin improvement over the last five years in the 2025 plan announcement.
The new digitalization investments coming with Strategy 2025 will bring profitability into sharper focus, he said. Growing profit centers has been a struggle for carriers in the age of e-commerce as retailers seek to charge less and less for faster shipping. But e-commerce will drive growth in every category across DHL's lines of service from supply chain services to Express, according to the plan.
The digitalization element will involve modernizing existing systems, integrating new technology and retraining staff. New technologies will include automation to improve transaction speed and warehouse operations and more advanced data analytics to better optimize routes and predict volume. All of these efforts will be centralized in a global Centers of Excellence, the CEO said.
Acknowledging the fast-moving nature of logistics demand in light of quickening e-commerce delivery speeds, and an economy that may be downshifting, the carrier will also change the way it forecasts the profits it hopes to wring out of this new plan — warning investors more frequent revisions to financial guidance may be necessary.
The carrier predicts 4% to 5% growth in Express Time-Dependent International market share and 5% to 10% compound annual growth in E-commerce Services revenue.
