German Logistics Provider Deutsche Post DHL Gives Favorable Outlook on eCommerce

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Key Points:

  • Deutsche Post, DHL, has shown strong growth in the post-COVID-19 period, attributed to expanding e-commerce business.
  • The company wants to focus on prioritizing digitization and sustainability in its operations to increase its business prospects and plans to reduce CO2 emissions drastically next year.
  • The company’s most successful business was Express Shipping which grew 26.7% to EUR 24.2 billion.

Deutsche Post DHL, one of the world’s largest logistics providers, has predicted a positive outlook on its potential earnings due to a post-COVID-19 e-commerce boom. The German firm recently shared its earnings call and announced an operating profit of EUR 8 billion in 2021 (an improvement of over 65%), which was a lot more than its earlier forecast for the same year. The company’s 2021 earnings have been the highest ever recorded in its history.

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Earlier, Deutsche Post DHL CEO, Frank Appel, commented that the company was in the “sweet spot” for e-commerce, which was starting to recover from the recent pandemic outbreak. Appel continued that lockdowns in 2021 meant that there was reduced demand for commercial air travel, which immensely benefited the company. Business-to-consumer activity remained strong, and sales from business-to-business sales were picking up.

The company’s fleet of over 250 wide-body freight planes was a competitive advantage. Appel, at that time, expected the sales to normalize sometime around 2022. Since the 2021 earnings call, Appel thinks that the company will remain profitable, but it is difficult to predict whether there will be an increase in global logistics activity due to the military conflict in Eastern Europe.

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For business, the CEO recommends digitization and sustainability as important avenues for investing. The company plans to save 1 million metric tons of CO2 emissions in 2022, and efforts to achieve this ambitious target are underway. E-commerce businesses can take note of this development as they would be able to synchronize workflows with the logistics giant.

The company has also mentioned some of its top-performing services that are reflective of the latest e-commerce trends around the globe. Express shipping revenues grew by 26.7% to EUR 24.2 billion, along with the average weight of shipments. This means that more customers have been requesting faster deliveries.

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Market access to its air and water freight services allowed the company to double the EBIT for its global freight-forwarding business. This division saw a sharp increase in revenue of EUR 22.8 billion (a jump of EUR 7 billion over 2020). Deutsche Post DHL also doubled its EBIT from its e-commerce division to EUR 417 million, with every reach showing double-digit growth. This growth is attributed to a high volume of cross-border shipments. These developments are a positive indication for the e-commerce sector, which has endured despite the turbulent nature of the year, 2022.