Business is not bad, to put it mildly: With group sales of EUR 81.7 billion escalated by an almost daring 22.5 percent to top speed, Deutsche Post DHL recently set a new record and easily extended its lead over Fedex as the world's largest logistics group out. The rigors of the corona crisis could not harm the Bonn power plant, on the contrary. And the Ukraine war, according to the bookmakers' predictions, will at best leave traces in the next set of figures that you would have to look for with a magnifying glass.
The profit was eight billion euros, almost oversized, and the investments also reached icy heights: almost four billion euros, more than ever, put the yellow and red into their future business last year, and you can do it yourself think, especially in digitization and sustainability.
Matthias Heutger is entrusted with direction and future research in the company. The 47-year-old executive holds the time-wasting title of “Senior Vice President, Global Head of Innovation
Heutger is a man to whom the big picture means a lot. Green, sustainable logistics is one of the goals he is trying to achieve. In doing so, he feels obliged to think beyond the boundaries of the guild: "We have a responsibility, and it doesn't end when I've delivered a product."
WORLD: Mr. Heutger, you are in charge of global innovation development at DHL and research the logistics of the future in your “Innovation Centers” together with customers, technology partners and scientists. Before we talk about that future, when did these centers come into existence and what was the motivation for setting them up?
Heutger: The first was set up around 15 years ago. But back then it was more the stage for, let's say, a "Logistic Technology Show". When I took over the area seven years ago, I changed the concept in order to really look for new logistics solutions in the centers, in an open, primarily customer-oriented innovation process. We don't want to develop any ideas behind closed doors, we want to be a platform where customers, DHL experts and scientists meet to find solutions for the logistics of the future together. The first center in Troisdorf was so successful that we opened an Innovation Center in Singapore shortly afterwards, in Chicago in 2019 and then in Dubai last year.
WORLD: Are these innovation centers something like the group’s think tanks?
Heutger: Innovations are not only created there. We have many employees in the organization who all think about how we can improve our service on a daily basis. But when it comes to driving bigger issues, these Innovation Centers are indeed our think tanks as well. But that's not all. Because we don't want to develop any gadgets, we don't do l'art pour l'art, we deal with solutions that can also be implemented. What is nice and, I believe, also unique about us, is that innovation development is not located in the technical engineering area, but in the customer area, very closely interlinked with market strategy and marketing. We are pursuing thousands of ideas at the same time in the Innovation Centers and have successfully put three to four hundred into practice over the past few years.
WORLD: Which ones, for example?
Heutger: We look at the defining global trends in robotics, automation and artificial intelligence. In addition, we are currently working on topics such as the "future of work", which is about how digitization and automation will change the world of work in logistics. A very important point for me is data analysis, which is about extracting information from collected data in order to improve operational processes and, above all, customer experiences. We set up data science teams in a wide variety of areas.
WORLD: Data analysis plays a special role in the Internet of Things.
Heutger: Yes, the Internet of Things (IoT), i.e. the digital networking of products, machines and devices, has been very strongly driven by sensors in the past two years. I'll give you an example: When the first Covid-19 vaccines were to be delivered at the end of 2020, there was a need to transport them safely at minus 70 degrees, which required special cooling devices and transport containers. Only, at that time there was no sensor that would have been able to monitor continuous cooling. Thank God, even before the corona crisis, we were in talks with a start-up that had developed exactly the kind of sensor we need now. That's why we were able to offer our customers a solution relatively quickly and transport these vaccines.
WORLD: You described the DHL "Logistics Trend Radar", a kind of hit list of the most important logistics developments, as "our seismograph for the future". What can we expect from this future: When will people be supplied with drones and self-driving e-cars and rockets used for urgent transport from Europe to New Zealand?
Heutger: We believe that the future of logistics will be more networked - we can already see that with the IoT: Machines and things are becoming increasingly smart, whether it's forklifts and packages or processes as such. On the other hand, automation - as in robotics - and sustainability are playing an increasingly important role, both for us and for our customers. In addition, we believe that the business will be even more consumer-driven in the future. Even with our business customers, we find that they expect the same experience from us that they are used to from their personal e-commerce experiences. As for drones, they open up opportunities in the last mile, but more in niche markets. They can be useful when supplying oil platforms, transporting spare parts to remote regions or urgent medicines. But in the cities they will not be able to replace the parcel service.
WORLD: In a recent investigation, DHL branded the production processes and consumption patterns in the consumer goods industry, especially in fashion and consumer electronics, and called for a circular economy, i.e. a closed supply chain. Now your customers could justifiably ask Zalando, Amazon or Apple: what do our manufacturing processes and our customers have to do with the world's largest logistics group?
Heutger: Branding is certainly not the right expression. But I believe that such topics have to be addressed. That's our responsibility, and it doesn't end when I've delivered a product. It's also about how products that are broken and beyond repair, like textiles or electronics, get back into the cycle, and how the limited resources available to us can be used longer and more sensibly. We all share the responsibility that logistics must be more sustainable. Our sustainability goal is to reduce our greenhouse gas emissions to net zero by 2050. Other companies have similar goals and I believe that they can only be achieved together. That's why you have to take a critical look at everything: from the manufacturing processes to the transport routes to the vehicles I use.
WORLD: Sustainable, green logistics will possibly be slower and more expensive logistics: if letters are transported by train instead of by plane and by bicycle instead of by car. What chance do you see of becoming CO₂-neutral and still even faster?
Heutger: In Germany, we deliver letters the next day in over 90 percent of all cases. It doesn't get much faster than that. We have already heavily converted our fleet in Germany to electric propulsion and this adaptation has not had a negative impact on the speed or reliability of deliveries. In Germany, for example, we currently have more than 18,500 electric vehicles. Where things get exciting, of course, is in international logistics, especially when you think of air freight, where we will not be able to avoid using airplanes in the long term. But even here we see great opportunities to do business more sustainably. Last year, for example, we ordered twelve Alice electric aircraft to be used as feeder aircraft in the USA. In addition, sustainably produced aviation fuel, so-called Sustainable Aviation Fuel (SAF), can be a real alternative to fossil kerosene in order to strive for CO₂-neutral air traffic. In general, you always have to look for smart solutions. Route planning is also an important topic for us, as is the use of artificial intelligence, which can, for example, significantly improve the forecasting of transport volumes and thus increase planning security and reliability.
WORLD: Green logistics, climate-neutral transport - that costs more money. Right?
Heutger: I don't assume that improving sustainability will entail higher costs in the long term. We have seen it with electromobility and with our warehouses: Everywhere the reduced energy consumption has also reduced costs. Of course, the current aviation fuels are still considerably cheaper than SAF. But that will change as more Sustainable Aviation Fuel is used. This year alone, DHL has already signed agreements for more than 830 million liters of sustainable aviation fuel to be delivered over the next five years. We will invest seven billion euros in climate-neutral logistics solutions by the end of 2030. We want to make a leap with this amount and not wait until we can refinance everything directly. Of course, air freight is more expensive than sea freight. What is faster costs more money. But it's not just a question of cost and speed. Anyone who is not able to offer green logistics in a few years will simply not be able to buy their services anymore. There is absolutely no alternative to this.
WORLD: If you look at your fiercest competitors, the US corporations UPS and Fedex: who can claim leadership in innovation?
Heutger: Over the past few years, we have proven that we are very successful with our customer-centric approach to innovation. Sure, the whole industry is working on data analysis or automation. But nobody else has an ecosystem that is even remotely comparable to ours with our DHL Innovation Centers. They are an absolute unique selling proposition. No, we don't need to hide from our international competitors.
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