Tim Scharwarth

DHL Global Forwarding & Freight CEO Tim Scharwath writes on LinkedIn:

The year 2021 is drawing to a close. Like many of you, I would like to take this opportunity to reflect once again: What was exceptional this year from a logistical perspective? What have I learned? What will I take with me?

We are almost two years into the Corona pandemic. The logistics industry has proven how essential it is for our global economy and stability in supply with commodities and goods. Further, it has confirmed its important role in fighting the pandemic itself. In one of my last blog posts, I highlighted the role logistics companies play in transporting medical equipment, PPEs, medicines, and of course, vaccines. At DHL alone, we transported 1.6bn doses of vaccines to 174 countries globally as of today. And many competitors who also transported similar quantities themselves. 

We usually operate behind the scenes, but the Corona pandemic pulled us into the spotlight. Suddenly, it became visible how vital and critical our work can be, especially for the many unsung heroes working days and nights, weekends, and holidays to ensure that the shelves are not empty; this was a justified recognition. And, of course, it is a great success story. But the truth is, there is always room for improvement. That is why we, as managers and leaders in the logistics industry, need to reflect on issues. This is how we can learn and get better – delivering excellence. 

My first observation is that customer satisfaction across the industry has deteriorated. Customer satisfaction is our license to operate. And many factors have to be suitable for it to work. Besides the actual delivery, it’s also about the service alongside it. We are currently observing that the price is disconnected from the service available. Capacity is tight both in air and ocean freight. In ocean freight, we saw up to 90 vessels and more queuing at the port of Long Beach and Los Angeles. Capacity and equipment were stuck, which was urgently needed in other parts of the world. This is partially driven by disruptions caused by the Corona pandemic, such as temporary, regional lockdowns. Although, schedule reliability at ocean freight slightly improved in the last two months, with approx. 34 percent is still far below the limit that we usually anticipate. The same applies to air freight. As passenger airlines still haven’t returned to their pre-corona flight schedules, essential belly capacity is still missing. 

There are many reasons for this, and we must not simply hold the pandemic responsible for it. For instance, we have experienced a rebounding economy, and infrastructural issues that have also had a significant impact on the situation. While COVID-19 may have acted as an accelerant, it became clear that both public and private sector have failed to invest enough in global infrastructure and the right skilled people in the past. Let’s take the US and Europe as an example where we now clearly feel and experience the shortage of truck drivers or ground handling personnel at airports at first hand. Although, prices for logistical services are rising, the demand for such services is not decreasing. The gap between supply and demand is too big. The market no longer regulates it. We have to find other ways and solutions to relieve the system.

First of all, it needs further investments from the private and public sectors in the long term. Many big ocean carriers have already announced that they have ordered new vessels. We at DHL are also investing in new airplanes, trucks, and gateways. Our colleagues from DHL Supply Chain, i.e., launched a funded driver training program in the UK. But at the same time, it also needs more investments in the infrastructure, for example in the air- and seaports, railways or roads. It requires a modern and future-proven infrastructure which includes a focus on sustainability. That is why we also invest in SAF and other alternative fuels and are working on the electrification of our last-mile delivery. However, it’s not just the physical infrastructure that needs to be improved. We must also continue to drive forward the digitalization of the industry. Solutions like our digital customer platform myDHLi make it easier for customers to book and manage their shipments in a transparent and convenient way incl. analytics providing insights into transit times and cost per unit. However, we also need to improve the data availability and quality across the industry. Uniform standards should be implemented globally for certain data, e.g. bill of lading or customs data. This would not only result in increased transparency but also higher efficiency for all parties involved. We are currently working on a predictive ETA solution based on machine learning, which will be able to estimate the date of arrival more precisely than the ETA provided by the Carriers. These are of course only a few examples, others still need time especially when it comes to physical infrastructure, which customers will only benefit from in the long term. But when, if not now, is the right time to tackle these issues? 

Second, we need to address customer satisfaction in the short- and mid-term. And as already mentioned, the critical element here is customer service. From my point of view, freight forwarders are ideally positioned. I am not saying this because I am working for a freight forwarder, but because of why I am working for this freight forwarder. Freight forwarders such as DHL Global Forwarding, Freight have the flexibility, agility, and network to address such volatile and challenging market conditions as the ones we are currently facing. We have the right portfolio of solutions to mitigate capacity crunches by, for instance, offering multimodal transport solutions, where we combine ocean, air, and road as well as rail services. With our experts across the globe and extensive network, we know the specific market conditions in the countries and regions our customers are operating in. We can offer stable capacity supply and reasonable conditions through long-term partnerships with carriers. Second, with the help of digital services on our digital customer platform, myDHLi, we can offer a level of unmatched transparency. Our customers know where their shipments are and can share the status with colleagues or partners at every point in the transport chain. This allows immediate action if needed and eases planning, e.g., for production. We have proven that we can keep supply chains up and running in times of crisis, and we are working hard on keeping this excellence high in the future.

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