Getting I.T. Right: What forwarders can learn from DHL’s struggle

Turning the corner

As the calendar turned to 2016 and DHL bid farewell to the troubles of last year, the fortunes of Deutsche PostDHL and the Global Forwarding, Freight, division appear to be making an about-face. In early March, while addressing the Trans-Pacific Maritime Conference, held in Long Beach, Calif., CEO Frank Appel vigorously defended DHL-GF to quash rumors that it was being sold for a fire-sale price to Japan Post. “There were no discussions with anybody – there will be no discussions,” about getting rid of DHL-GF, he said, adding that the rumors were “completely nonsense.”

Appel admitted that the company “made some mistakes,” but said that DHL was correcting them. “We have found a better approach to our IT change,” he said. “If you want to be innovative, you make mistakes once in a while, and sometimes it’s unfortunately costly as well. But then you should forgive yourself and go on, and we are doing that.”

Then, to the surprise of many in the industry, DHLGF’s Q1 figures rallied – seemingly in response to Appel’s enthusiasm. Though airfreight volumes fell for the fourth straight quarter to 476,000 tonnes, operating earnings for the forwarding division rose sharply, from €17 million in the previous Q1 to €51 million in Q1 2016.

While DHL may be emanating positive vibes today, the shockwaves from the NFE program may have a significant chilling effect on the industry. “I think it’s going to definitely generate a lot of fear from senior management,’” Petersen said. “I think it’s a wake-up call, but I don’t know that it fundamentally changes the decisions that have to be made, except maybe to be more cautious.”

At the same time, he added, there’s a lot of pressure from stakeholders to modernize. “The CEO of a public forwarder told me that if you don’t already have tens-of-millions-of-dollars budget for IT renovation of your infrastructure, then you’re going to die. That’s the way that forwarders can differentiate their service.”

Today, there is still no word from DHL-GF or its parent company about which direction it will go next. Hard decisions must be made soon. But DHL should be used to that by now.

“It took some visionary leadership to spend that much money” on the New Forwarding Environment, Petersen said. “I also think it took very rational, smart people to say ‘I know we spent a billion dollars on this, but it’s still the right thing to do to stop it.’ Those are both incredibly hard decisions. I don’t know which one’s harder.”

Back to top