Deutsche Post DHL sees supply chains shifting due to virus

FILE PHOTO: Parcels are scanned at a distribution centre of German postal and logistics group Deutsche Post DHL in Rodgau near Frankfurt, Germany, December 19, 2019. REUTERS/Ralph Orlowski

DUESSELDORF (Reuters) – Deutsche Post DHL (DPWGn.DE), one of the world’s biggest logistics companies, has seen its customers push to diversify their supply chains during the coronavirus crisis, a senior executive told Reuters in an interview.

“There is an increased tendency to organise different sources of supply to reduce dependency on one country or one production site in a strategic way,” Oscar de Bok, Deutsche Post DHL management board member for the supply chain business, said.

“The desire for more flexibility in the supply chain has become more prominent, and that plays to our strength as a contract logistics provider.”

Deutsche Post describes itself as the global market leader for contract logistics – the business of managing the shipment of goods for customers such as retailers, pharma companies and automakers – ahead of XPO (XPO.N) and Kuehne+Nagel (KNIN.S).

The supply chain division is operating profitably, and de Bok wants to keep the operating profit margin at 5%, adjusted for the effects of the pandemic. “We have been moving in a positive direction since the first quarter,” de Bok said.

To support the need for flexibility, Deutsche Post will continue to invest in digitisation, including in 1,000 new robots that have been purchased to help reduce the need for manual labour.

Deutsche Post has seen shipments from the food and pharma industry stabilise at a high level, and the auto industry is starting to recover. The fashion sector is still suffering, with expectations for the winter season being very cautious, de Bok said.

By region, Asia is currently stable, northern Europe is recovering faster than expected, and North America has remained relatively stable, de Bok said.

The company is ready to distribute any coronavirus vaccine and has already seen its business with the pharma industry grow during the crisis as it helps with logistics for field hospitals and intensive care units.

Reporting by Matthias Inverardi, writing by Emma Thomasson, editing by Maria Sheahan

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