FREE BRIEF: DP-DHL invest heavily to keep up with digitalisation transformation

The emergence of digital technology has begun to change the fundamentals of the logistics sector. As one of the three largest logistics service providers Deutsche Post-DHL (DP-DHL) is wrestling with this change. The company has just outlined its strategy to deal with this. Called “Strategy 2025”, DP-DHL says that it is the “Group’s answer to key future trends – Globalisation, Digitalisation, Sustainability and E-Commerce”.

DP-DHL’s CEO Frank Appel, speaking at an investors event in Frankfurt yesterday (2/10), explained that “digitalisation will change our industry massively. The technology has not been affordable for a long time but that is drastically changing now and that is fantastic news as we can use this technology to scale our business and grow faster.” His intention is to utilise new IT capabilities, to “digitise” the various parts of DP-DHL’s “backbones…making the enterprise architecture more accessible.” As an example, he cited the power of data analytics to improve areas such as aircraft utilisation at DHL Express.

In order to achieve this, DP-DHL has already created a number of teams of technologists, the cost of which will be a capital investment of €2bn. The focus is on creating new software architectures and seeing how technologies such as Artificial Intelligence can be integrated within the company.

DP-DHL does not have a flawless record in delivering IT projects, as the recent experience of its freight forwarding operation illustrates. Nonetheless, Frank Appel does appear to be committed to driving his company forward and he is certainly spending a lot of money on it.

Yet the ideas around the specific application seem at present to be largely concerned with operational efficiencies of existing business models rather than rethinking the assumptions underlying the Group’s strategy. That said, Frank Appel did make the remarkable statement that “the company will be very different in five years. What it will look like I don’t know”. This suggests that the senior management at the group realise that the wider market changes will have a significant impact on the type of business that DP-DHL will be in the next few years.

Source: Transport Intelligence, October 3, 2019

Author: Thomas Cullen

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