India is right up there, almost number one in terms of investment and capability, and DHL remains much focussed on India, as it continues to make big investments. The company is continuously working on rolling out new services to offer its Indian customers a state-of-the-art experience — all in line with Deutsche Post DHL Group’s Strategy 2025 goal of ‘Delivering Excellence in a Digital World’. Niki Frank, CEO, DHL Global Forwarding India briefs Upamanyu Borah, on how they have continued to invest to enhance their infrastructure and technological capabilities to stay relevant to India’s needs.
How would you evaluate the current state of the logistics sector in India? What are your top 3 concerns?
Prior to the COVID-19 outbreak, the logistics sector in India was clearly on the right path. There were a lot of good initiatives that addressed the major needs and bottlenecks of the industry. While the pandemic has interrupted a lot of these crucial approaches, it has on the other hand led to an acceleration of digitalisation efforts across the sector.
My top three concerns right now are the availability of labour (e.g. at seaports, airports as well as within Customs), the heterogeneity of rules and regulations across different states, and the availability of capacity and equipment, (e.g. trucks, trailers and airline capacity).
What has been the most difficult challenge for DHL in India since the outbreak of the pandemic?
Our teams of dedicated employees have been working very hard from day one of the lockdown, overcoming several challenges, to ensure our customers’ businesses keep rolling. This we made possible with putting into place strict guidelines and operating procedures. Though this was practically challenging, we succeeded in implementing the working pattern.
Another difficult challenge that posed was the sheer lack of availability of labour on the ground, (e.g. in the air cargo complexes, at the seaports, CFSs and within Customs).
After the outbreak fades, what do you expect would emerge as the key issues affecting the freight forwarding and logistics business, going forward?
One of the key issues already affecting the industry and which we will continue to face in the coming months is a reduction in air cargo capacity. Many passenger airlines are re-starting operations as certain countries – especially in Europe and Asia – are easing their travel restrictions, but the general market situation still remains volatile. Air freight capacity, in particular belly capacity, is still very tight.
Besides, air freight rates on some lanes though are starting to decrease vs their earlier peak, but are still significantly above the 2019 average.
Ocean freight capacities are also very tight at the moment; this is driven by intentional blank sailings from the carriers, which will stop as soon as demand picks up. Here we expect a normalisation of demand and supply and hence, the shipping rates, much sooner.
What strategies do you use to foster innovation internally during times of a crisis? How do you structure those kinds of teams internally to get the most out of your people?
The current crisis has in a way been a catalyst for innovation in the industry. Due to the fact that most companies and people are working from home and given the restrictions on physical movement, a lot of changes and innovations were required. All these primarily focussed on digitalisation of physical documents or manual processes.
Digitalisation and innovation are core pillars of DPDHL Group’s Strategy 2025 and we have used this opportunity to further drive projects and initiatives, and working on them with cross-functional teams.
What do you identify as the emerging trends in the local life sciences logistics segment? How is demand evolving over time?
The Indian pharma industry has been a world leader in generic drugs, catering to a large share of the demand. Made-in-India drugs supplied to the developed economies such as the US, EU and Japan as well as to developing markets like Africa or Latin America are known for their safety and quality.
India’s large import dependence for intermediates and APIs on China (nearly 70% by value) has become a bottleneck to India’s healthcare manufacturing and global supply chain during the current crisis. We foresee Indian pharma players will steadily decrease their dependence on imports from China over a period of time and migrate up the value chain, focussing on value-added formulations with higher margins.
In the mid to long-term, I believe that India has a huge potential to step up and play an even larger role in global trade and supply chains.
Given India’s leading position in the global vaccine supply chain, we also expect the local life sciences sector to play an essential role once a COVID-19 vaccine is discovered.
What is the scope of your capabilities with regard to your dedicated facilities in India?
Our focus in India is always to simplify the complexities and challenges for our customers, and deliver the best solutions to them.
For example, in the life sciences and food sector, we have invested significantly in getting our key stations certified and trained for the handling of temperature controlled cargo. We are also investing in our own cold chain storage facilities in key pharma hubs like Hyderabad.
Furthermore, we have set up three dedicated facilities in special economic zones (SEZs) – two in the South and one in the West, where we continuously endeavour to provide innovative solutions to our customers. These facilities enable ease of business for them, and with our strong expertise in the field, we ensure on-time performance, smooth distribution and meticulous inventory management, allowing customers to focus on achieving their goals.
Any examples of best-in-class solutions that you have brought to the Indian market via your strong internal DHL network?
We are continuously working on new services to offer our customers state-of-the-art experience. To this end, we have recently created a one-stop customer portal ‘myDHLi’ that is tailored to the needs of our customers. The industry leading portal combines services like online quotation and booking with shipment tracking, document accessibility, and data analyses. By doing so, we have not only created 360-degree visibility, but also laid the foundation for customers to manage their logistics– anytime and anywhere.
Where do you believe lies the biggest potential for growth in India now and beyond?
The entrepreneurial spirit in India and the prospects created in the EXIM markets give us plenty of opportunities to grow. In the coming years, India will see substantial growth in the manufacturing segment, which will mean opportunities for us. There are two reasons to this. Firstly, the size of the domestic market itself is getting larger. Secondly, India will increasingly serve as a major sourcing and supply hub.
What are DHL’s immediate priorities in the post-COVID-19 scenario?
Our priority will always be to support our customers in their logistics needs by being insanely customer centric. We will continue to provide flexible and innovative logistics solutions, simplifying our customers’ business, increasing productivity and driving efficiency across the entire supply chain.
As the CEO of an organisation, what is the biggest threat you face living in a fragile global economic system and disrupted times?
I am not worried at all about the future of my organisation and if I had a wish for the global economic system, I would say the need of the hour is more connectedness. More collaboration is what we need now, and hopefully we will see more openness across borders in the future.
Organisations will need to re-think their sourcing strategies for raw materials along with their supply chains, and we, at DHL will play a key role in supporting this.