Logistics players are expected to focus on automation and digitalization post Covid-19 with anticipation of a continued e-commerce boom. The industry will also enhance efforts to further promote sustainability in its operations.
Oscar de Bok, the Bonn-based CEO of DHL Supply Chain, said the coronavirus pandemic prompted the emergence of several key trends in the industry which will likely remain even after the pandemic is over.
“During Covid-19, many trends have accelerated and will stay for a large part,” de Bok told Asia Cargo News. “[This includes] the exponential growth of e-commerce, both B2C and B2B, the acceleration of the effective use of digitalization and data analytics, [and] flexible solutions in robotics at large scale.”
The industry will also set its sight on building more resilient supply chains as the pandemic revealed the weakness of having a single-source market, which had caused major disruptions to the global supply chain at the height of the pandemic.
“[There will be] creation of more flexible international supply chains that can respond fast to changes in any part of the value chain, be it production or sales channels. This, together with the increased focus on sustainability will be the agenda of our customers for the coming period,” de Bok added, noting that DHL is “well-equipped” to support this need.
DHL operations during the pandemic
de Bok went on to say that during the pandemic, DHL’s global footprint played a major part in allowing it to better prepare for the disruptions that occur – although like most in the industry, it wasn’t spared from the overall impact of Covid-19.
“Regarding operations, our global footprint was one of our advantages. We received early warnings from our colleagues in APAC, which enabled us to adapt relatively quickly,” the DHL executive said.
“However, the pandemic has certainly impacted our company, and we’ve had to cope with a fluctuation in business. On the one hand, some industries were completely shut down, while others increased their capacities. So, we needed to be flexible and react fast to each respective situation,” he added, further saying that “freight capacity was low due to grounded passenger aircraft, which caused a disruption in the overall flow of goods.”
de Bok said DHL’s earlier investments on data analytics and robotics also proved helpful in keeping its operations up and running amid social distancing rules and lockdown restrictions.
“We were in a very good position prior to the pandemic, which has considerably helped us to manage our operations. As part of our strategy, we had already invested in digitalization, which enabled us to keep business up and running,” he added, noting that during the period, the turnaround time for decisions – which would usually take “a few months” – were also made in “matter of days and weeks.”
The DHL executive told Asia Cargo News that the biggest boost for the company was in the life science and health care (LSHC) segment as the pandemic drove a surge in demand for PPEs and other life-saving medical supplies and equipment.
He noted that prior investments in cold chains also allowed DHL to quickly offer services to move vaccines worldwide, which came with various temperature requirements.
“Regarding the vaccine distribution, [some of] the Covid-19 vaccines need to be stored at temperatures down to -70 degrees Celsius. We made further investments in the cold chain, for example in deep freezers, and are currently operating 140 LSHC facilities that are perfectly equipped for the distribution of such sensitive goods,” de Bok said.
“We were also fortunate that some of the investments we made before the pandemic have paid off doubly by allowing us to adapt more quickly.”
E-commerce boom anticipated to continue
DHL noted that aside from growth in the LSHC segment, Covid-19 also led to a surge in e-commerce due to disruptions in brick-and-mortar operations.
“The biggest impact we experienced was the shift in volumes, especially, in the LSHC, pharmaceutical, retail and groceries sector. In general, e-commerce volumes increased, whereas other industries found their operations being completely shut down due to lockdown,” de Bok told Asia Cargo News.
“E-commerce is becoming more and more important not only for us but for global trade. The sector’s growth has undoubtedly accelerated this year due to the pandemic,” adding that due to this growth, one of the challenges that the company had to face “logistics-wise” include establishing fast and trackable deliveries that are flexible in terms of cancellation and return policies.
There was also the challenge of being able to handle a high volume of small lot sizes, de Bok said.
To manage the “unprecedented increase in demand” during this time, DHL hired more manpower and continued to invest in technology to ease its operations. For the US market alone, the German logistics company said it added 7,000 workers. It also introduced new services in Europe, which it said especially helps with “speedier” same-day or next-day deliveries.
“We are also continuing to expand our investments in technology, building on the US$300 million we committed in 2018, as well as this year’s commitment to expand to 1,000 LocusBots across 12 sites in 2020,” de Bok said.
DHL earlier noted that it predicts a strong growth for the B2B e-commerce market in the coming years, noting in its The Ultimate B2B E-commerce Guide: Tradition is out. Digital is in white paper that by 2025, 80% of all B2B sales interactions between suppliers and professional buyers will take place in digital channels.
Within DHL Express alone, the company earlier said in total the B2C e-commerce volumes increased in 2020 by approximately 40%, compared to 2019.
Sustainability efforts to take centre stage
Meanwhile, as the world looks ahead to an eventual recovery from the lingering impacts of the coronavirus pandemic, the DHL executive noted that sustainability will also take centre stage in logistics operations.
For DHL, de Bok said sustainability has been a “key part” of its strategy for years – and moving forward, this commitment will be evident in various efforts to further promote ways to conduct its businesses in a more eco-friendly way.
“We acknowledge our special responsibility as a global logistics company regarding sustainability,” de Bok noted, adding that some of these initiatives include the use of clean pick-up and delivery solutions, such as bicycles and electric vehicles as well as “significant” investment in renewable energies and energy reduction efforts.
“By 2025 all our DHL Supply Chain warehouses will be carbon neutral,” he added.
de Bok noted that the role of the logistics sector has never been “as important as it was” during the pandemic as countries relied heavily on supply chains to keep the economy going.
“We have been delivering hygiene products, sanitizers, PPE and, most recently, vaccines to vaccination centres and healthcare workers across the world. We’ve kept businesses up and running throughout, and supported customer supply chains for supermarkets, pharmacies and trade,” de Bok said. “Our company’s purpose has never been clearer.”
Charlee C. Delavin
