Deutsche Post DHL Group generated a double-digit revenue in Q2. The world’s leading logistics group saw sales increase by 23% YoY to nearly $24.2 billion.
The company says while inflation caused customers to be more cautious with spending, logistics has gained strategic importance for customers in an ever more complex environment. Greg Hewitt, CEO of DHL Express U.S., talks about how the company hit record sales and the struggles facing the logistics industries.

Opening Bell

DHL Group Posts a Revenue Increase of 23.4% in Q2

here to discuss is Greg, Hewitt Ceo of DHL Express at us, Greg, what were some of the main drivers of growth for DHL group and what trends did you notice last quarter? I think in the quarter Alicia and thank you for having me. We saw that the supply chain and stability maintained despite economic uncertainty. I think what we were seeing across the divisions was continued growth um particularly in Air Ocean Express and even E commerce shipping, which helped build those, those results up. And that would be despite things like some of the challenges we saw in china with covid shutdowns in markets like shanghai and around the Shenzhen bridge, despite those challenges overall, we still saw volume growth. We did see a little bit more on the weight side. So it was weight and I guess yield increasing of prices to go along with uh inflationary measures that helped deliver that revenue result and are a bit goals despite moderately lower volumes for international shipments in the quarter, DHL's B to B division actually saw a 15% profit. I think it bolsters the question or lead to the question, can the company sustained the growth um you know, or companies sustain this growth? If we're seeing a global slowdown in shipping, we think so because what we saw was different industries and different businesses have benefited or helped our business over the past few years. If you remember back at the start of Covid e commerce really boomed. Well now with inflationary pressure, that's down, but still we see that growing, you know, things like chip shortages may have impacted businesses like the automotive sector and high tech, but some of those are recovering and then you've got this new world of businesses taking their business online and generating what I call e commerce growth, not in the business to consumer market, but in a business to business platform. We didn't go overall, that's that's building, build stability and the other would be diversification. You're seeing businesses diversify and look for more markets around the globe to bring supplies in or send orders to that diversification plays well in our global logistics network. I think when you think global logistics, you think of of main cost drivers, right. I think of energy costs and transport. How has the group been able to navigate? What we have seen as increasing kind of transport and energy costs? Well, certainly that does impact most. I'm in the express business. And so the biggest driver of cost increase with energy highs would be our aviation fleet. But for many, many years now, our industry and our business has been able to build a fuel surcharge index into our pricing that allows us to float up And our customers have been willing to pay that because they understand the importance of us keeping those planes flying and, and fueled and and understand that that uh, that index is tied to that increase and it's really only about worth about 3% of the group's overall cost structure. So, again, it's not one that completely dominates our, our cost structure. You think about transport and logistics and the reality of the climate that we're in right now where sustainability is a major focus and, and the footprint that companies has a major focus, what is DHL group doing to be more sustainable? Well, I think we've been one of the leaders from the beginning Dr. Frank Apples, put aggressive sustainability targets in front of us, um, and we've got seven billion that we are currently investing between now and 2030 and sustainability measures the biggest being €5.5 billion 1.2 billion for the electrification of our fleet. And then uh, 400 €1000 around sustainable real estate were also doing things like we're piloting, we announced the procurement of 12 all electric aircraft here in the United States, something we call Alice that we'll see come into the market sometime in 2024. Um, and then it gets down to local level. For me, it's how in the Americas can we take 300 electric vehicles to 600 by the end of the year? And for me, how do I take a fleet that's sitting around 15% electrified, up to 25% by 2025 and 60% by 2030 to me. That just means we're committing the capital every year to make sure my facilities are upgraded and ready with the D chargers and that all of our fleet borders every year include a higher percentage of electrical electric vehicles. I'm curious about opportunities to boost efficiency. Obviously that's something that investors, especially right now amid this, this climate that we're in are very interested in, you know, there's concern about a potential, you know, global slowdown one that's already potentially even happening at the moment. So what is D. H. L. Doing to to explore opportunities to boost efficiency? Do you have tech in mind when it when it comes to that? Certainly if you look at our supply chain business, they've been leaders in our group around applying robotics in many of their warehouses. For me on the express side here in the U. S. As an example, we're leveraging technology uh, in our handheld scanners around route optimization, which allows us to run more effectively fewer miles. Um, most efficient routing for our our vehicles and provide better visibility to our customers. It's really a win win. The other area for me that we're just getting started at is looking at the area of customs clearance. It's become more complex as governments around the world have looked at compliance. A lot of that lead out of europe with changes that came out of Brexit and chain. In fact, 22, we're now looking at how we can strategically apply technology to streamline and improve the efficiency around getting customer data and getting that into the customs authorities to allow us to clear more effectively and efficiently before I let you go. In terms of challenges or headwinds for the overall logistics industry. What do you see? Well I think we're preparing although our results have been good and there has been growth I think most of us are bracing for a peak that isn't quite as steep as we're used to. In quarter four. Normally in my in my business you'll see a 50 to 60% lift from the summer months for that key peak season which is the U. S. Thanksgiving holiday to year end This year. We're thinking it's going to be more in the 10-15% range. So what we're doing is making sure that the capacity we've added in terms of aviation capability, our facilities and then that important human resource of making sure we have enough couriers, CS staff terminal handling employees that that is aligned with those volumes were feeling good about it. I think it's just a recognition that maybe with the high levels of inflation. Online shopping might not be as big this year and quarter four. So we'll see a more reasonable curve from that group of customers to year end for now. A pretty solid report. I mean sales increased 23% year over year and great insight in terms of what the company is doing to mitigate potential cost and potential headwinds. Greg really appreciate your time and insight. Greg Hewitt Ceo of DHL Express us