DHL lauds Australian B2C experience

By: Rob McKay


DHL1 Sean Wall, DHL Express' senior vice president of network operations and aviation for Asia Pacific. DHL1
DHL2 An automated flyer sorter at the South Asia Hub in Singapore. Advanced equipment and motivated staff at every location boost efficiency. DHL2
DHL3 DHL’s new Canberra operation. DHL3

How Australian developments have helped DHL prepare for B2C in Asia

 

Business to consumer (B2C) direct sales has grown exponentially in recent years but for international parcels firm DHL Express, the shape of things to come was fist realised in its Australian market.

The lessons were hugely valuable in the pace of growth and the diminutive size of the players.

Where big traditional customers have usually grown sales in single digits annually, Australia’s nimble and savvy new class of online traders and retailers, armed with new technology and a global marketplace, plus advanced parcel delivery services, have been able to grow at double digits.

With that come increased reliance for personal deliveries anywhere in the world.

To have that happen, both for the relatively small number of big customers as much as the multitude of SMEs, DHL has invested in upgrading handling facilities globally, and that can have challenges.

The premises and equipment, both in sorting and personal, must be cutting-edge, the IT has to be common globally and staff must be motivated.

Sean Wall, DHL Express executive vice president network operations and aviation, Asia Pacific, is in charge of making the company mantra – ‘Best day every day’ – work in the region including staff.

"The company that can do it the best wins," Wall says.

"I’m the operations guy, so I’ll focus on making sure we’ve got the best facilities that are the most efficient and productive and are nice places to work.

"In all of our master plans now, when we go to the board and talk about signing off the capex for a new facility, [DHL Express executive vice president] Charlie Dobbie will say, ‘Where’s the gym? Where’s the locker room? Show me the toilets.’ We are that far ahead of where we were 20 years ago.

"It’s all standard now. I went to Indonesia recently and you’d think you’re in Sydney or London. First World stuff, beautiful facilities, nice place to work."

Speed up

How does this efficiency and staff investment in Australia and internationally affect Australian customers?

"Thirty minutes is quite a long time in the sales world when you’ve got online shoppers," Wall says.

"If I’m online today at 8 o’clock that sales time expands to 9 o’clock.

"It means to the small and medium enterprises they can get their product there faster.

"You see these people like Netaporter, selling dresses, I’ve been in their warehouses and their online operations, and they are looking at TVs with ‘Mrs Jones just bought a dress and Mrs Smith another one’.

"If they can get extend that time by half an hour for a faster service for Australia, in or out, they can beat the competition."

It also means a lot to the delivery operation as well.

"If I’m a courier, and extra 15 minutes is a long time," Wall says.

"To get back to meet the cut-off for the airline, that’s quite a long time and I can do more with that time.

"If you’re in Sydney or Melbourne, someone who is a reseller or a shop, get it on the shelf much earlier.

"If you are a simple B2C, I suppose, you can be flexible.  We have ODD [on demand delivery] that tells you when it’s going to be delivered."

"If you get the container to the airline earlier, maybe you can use the cargo mode instead of the express mode, which, again, is a cheaper cost of operation.

"But the most important thing is capacity for the future.

Facility factor

DHL sorting facilities have a 9-10-year design life.

Wall, who was involved in building more than 200 facilities in China, believes that time span is rarely enough.

"Every single one of them didn’t make it to the 10 years," he says.

"You look at our north Asia hub at Shanghai, which is one of the biggest markets into Australia for B2C, we opened up four years ago and we have just now approved an extension to that building.

"What we do is we make sure we have enough capacity in the area to extend the building, or the building is flexible enough to add some chutes and add some slides."

In Shanghai, DHL gained a 20-year lease on extra land, while in Changi, the new South Asia Hub building has the flexibility mentioned.

Shanghai is now 50 per cent utilised but, as DHL Express Asia Pacific CEO Ken Lee likes to say, it’s a good problem to have.

And it’s was not just a Chinese phenomenon.

In Auckland, the facility expanded into the staff car park, so another carpark was bought for the purpose.

In Australian, DHL has spent $55 million in the past five years and the ability to expand is common to all new premises.

Operational in August, Melbourne’s courier space was outgrown in a matter of months and another building was purchase to handle that. The fact that this was closer to the city was a bonus.

In Europe, it has taken to growing what it calls "fingers", where extensions to the basic structure hold additions to belts and chutes.

The Melbourne-style solution is not always easily replicated in some other countries, where DHL’s need to be close to customers, given most airports are far from them, runs into sometimes less flexible thinking from authorities.

Wizards of Oz

"I love the Australian model because it taught us so much in the last four or five years in terms of how to build business in terms of how to deal with business to consumer, not only inbound but outbound," Wall says.

"We are growing double digits inbound and outbound in Australia, which is sort of remarkable. It’s so balanced now [at about 75 per cent of customers doing both]."

Australia’s low cost to import low-value goods aids this, and a knock-on effect is observed that the new US President might do well to note.

"It really helps to drive the economy."

"In Australia, five years ago, 6-7 per cent of our inbound shipments was B2C. Now 70 per cent of out shipments as B2C or B2Shop."

"In Australia, we get 40 per cent of our overall weekly volume on a Monday."

The lessons here are being put to good use in East and Southeast Asia as the "B2C revolution", as Wall and others at DHL acknowledge it, expands in the western Pacific, not least ensuring single trip fulfilment flexibility to reduce missed deliveries.

The DHL experience in this country is an antidote to the conception that, bar food and resources, Australia is an import-only economy, as value-add and marketing treatment for re-export is burgeoning.

"The small and medium businesses selling to the world online out of Australia is huge," says.

"Seafolly and these guys, their business has trebled to the rest of the world."

He dubs the phenomenon, marked by a great deal of sales to small retail enterprises, individual shops and small resellers as "entrepreneurism at its best".

Read the full feature in this month's ATN.

 

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