Proving the Business Case for the Internet of Things

DHL Express $185m Americas investment includes technology upgrades

Steve Rogerson
November 24, 2016



DHL Express says it is continuing its investment plan for the USA and the Americas as growth in the region meets expectations. The $185m earmarked for 2016 and 2017 is focused on technology, infrastructure and people, creating some 900 new jobs in 2016 alone.
 
Besides investing in its operations in the US, the company has also committed another $105m to support its growth plan in key countries in the region including Mexico, Canada, Brazil, Chile and Peru, totalling $290m over the two-year period.
 
"DHL Express is continuing its strong progress in the USA," said Ken Allen, member of the board of management of Deutsche Post, and CEO of DHL Express. "As part of our focus on international express shipping and our commitment to continually improving customer service, we are directing our investments towards upgrading our facilities, expanding our staff and providing them with the technology they need to enhance productivity and to be more efficient."
 
For instance, DHL Express has rolled out new smart scanners for its couriers, which are faster, lighter and equipped with voice and GPS capabilities and allow for the addition of features such as stop-by-stop sequencing as well as turn-by-turn navigation so they can improve their efficiency while on the road.
 
DHL has already completed a portion of the $108m investment project at its Americas hub at the Cincinnati Northern Kentucky Airport, which was announced last year. The North Ramp expansion, which opened just two weeks ago, is built on 45 acres of land and provides parking space for 16 additional planes each night and adds storage and warehouse space for ramp equipment and shipping containers.
 
Coming next year will be additional automated sorting capability and 40 new reload positions that will enhance the hub's efficiency to handle the growing e-commerce volume seen in the USA and the Americas.
 
DHL Express is spending $20m in these two years to upgrade and expand its ground fleet, adding more fuel-efficient vehicles including fully electric vans and electric forklifts at its JFK facility. Next year, the company will focus on replacing trucks and tractor-trailer combinations with more efficient models as part of the company's overall GoGreen strategy to reduce carbon emissions and its impact on the environment.
 
To deal with growing shipping volumes, the company is applying an additional amount of nearly $60m to expand and add facilities as well as provide technology and security upgrades and new equipment such as the courier scanners. It has added three service centres in New York, Chicago and Seattle as well as expanded another three this year. It upgraded its Los Angeles gateway in 2016 and plans to add a gateway in Chicago and refurbish its JFK gateway in 2017, adding an improved automated sort system that will facilitate earlier morning deliveries in the New York market.
 
The logistics firm has added 655 new jobs in the USA so far this year. To better handle growing e-commerce volume, the new positions include full- and part-time couriers for more evening delivery routes, and more back-office customer service representatives to coordinate deliveries and customs agents to facilitate clearance. Currently, the company also is working to fill 250 full-time jobs at its Cincinnati hub to handle increased volume.
 
"Going forward, we will continue to keep our focus on the last mile, leveraging technologies that provide added convenience for customers," said Mike Parra, CEO of DHL Express in the Americas. "This approach focuses on convenient pick-up and drop-off options, proactive notification and flexible delivery. We are also reconfiguring delivery routes to handle more afternoon deliveries due to an increasing number of shipments going to residential customers, in part due to increased e-commerce volume."
 
DHL is expecting to see an overall 12 per cent volume increase year over year during the 2016 holiday season. The continued strong US dollar means consumers can shop abroad for holiday gifts, so a bigger gain in import volume is expected. However, smaller gains in outbound shipments are likely because the higher dollar makes US goods more expensive to foreign buyers.
 
DHL expects its busiest shipment pick-up day will be on Cyber Monday, November 28, while couriers are gearing up for their biggest delivery day on December 19, just six days before Christmas, where delivery volume could be as much as 89 per cent higher than the average day.
 
The volume gains DHL is seeing go beyond the seasonal gains around major holidays such as Christmas and Mother's Day. DHL Express has seen steady international time-definite volume growth in the past three years, with daily TDI volume increasing by 6.8 per cent in the third quarter 2016 compared with the prior-year period. The proportion of global e-commerce volume in the overall volumes of DHL Express is now more than 20 per cent of total volume, up from about ten per cent in 2013.
 
The group's objective is to leverage the global B2C e-commerce market for cross-border shipments, which is expected to grow in absolute terms from $400bn today to a total global volume of $1tn in 2020.
 
With a network that spans more than 220 countries and territories, DHL Express says it is uniquely positioned to handle growing cross-border e-commerce. It offers a suite of online shipping tools for e-tailers and provides local customs expertise and fast clearance services, which it believes makes it an attractive shipping partner for premium international online vendors.
 
DHL Express is also investing an additional $105m in the Americas region. Key investments include:

  • $12m in Canada, adding new service centres in Calgary and Ottawa this year as well as one in Quebec next year and a gateway in Vancouver; 250 jobs added this year.
  • $38m in Mexico in 2016 and 2017, in addition to its existing $160m five-year capital investment plan already announced. The additional funds will, in part, provide 38 outlets for a total of 500 retail service points, two new service centres this year and two more in 2017, a ground fleet upgrade and an aircraft upgrade for the domestic hub; 1200 jobs created between 2015 and 2016.
  • $7.5m in Brazil to cover a major upgrade to the Sao Paulo domestic hub and service centre including a head office relocation.
  • Smaller investments in Peru, Chile and several central American countries.
"These investments are a clear sign of our expectations for strong growth and of our commitment to the USA and the Americas," said Allen. "We will continue to invest in this region and in our people to meet the growing demands of our customers and deliver superior service to them across the region."