1 00:00:07,640 --> 00:00:11,200 Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast. 2 00:00:11,240 --> 00:00:14,960 Speaker 1: I'm your host, Lee Klasgaw, senior Freight, transportation and logistics 3 00:00:15,000 --> 00:00:19,080 Speaker 1: analysts at Bloomberg Intelligence. Bloomberg in house research of almost 4 00:00:19,160 --> 00:00:23,360 Speaker 1: five hundred analysts and strategists before diving in a little 5 00:00:23,400 --> 00:00:26,920 Speaker 1: public service announcement, and your support is instrumental to keep 6 00:00:26,960 --> 00:00:29,440 Speaker 1: bringing great guests onto the podcast like the one we 7 00:00:29,520 --> 00:00:32,159 Speaker 1: have today. If you haven't already, please do take a 8 00:00:32,200 --> 00:00:36,160 Speaker 1: moment to follow, rate and share the Talking Transports Podcast. 9 00:00:36,240 --> 00:00:40,879 Speaker 1: We appreciate your support. I'm very excited to have Pablo Siano, 10 00:00:40,920 --> 00:00:44,640 Speaker 1: a member of DHL Group's board and CEO of DHL 11 00:00:44,720 --> 00:00:49,680 Speaker 1: e Commerce, roles he's held since twenty twenty two. Pablo 12 00:00:49,800 --> 00:00:52,920 Speaker 1: joined DHL in two thousand and five after several management 13 00:00:53,040 --> 00:00:56,640 Speaker 1: roles within DHL Express in the US until moving to 14 00:00:56,720 --> 00:00:59,880 Speaker 1: the group's headquarters in Bond, Germany, where he supported the 15 00:01:00,080 --> 00:01:04,480 Speaker 1: corporate board and top management and shaping the strategic agenda 16 00:01:04,640 --> 00:01:08,240 Speaker 1: of the company. He holds a Masters of Business Administration 17 00:01:08,400 --> 00:01:11,800 Speaker 1: from Darden Business School at the University of Virginia. So 18 00:01:11,840 --> 00:01:15,880 Speaker 1: I guess go Cavaliers. So welcome to the podcast. Pablo, 19 00:01:15,880 --> 00:01:16,680 Speaker 1: how are you doing today. 20 00:01:16,800 --> 00:01:18,959 Speaker 2: Hi, Lee, how are you doing? Great? And thank you 21 00:01:19,080 --> 00:01:20,200 Speaker 2: very much for having me. 22 00:01:20,200 --> 00:01:23,840 Speaker 1: Here, very welcome. Actually saw your Cavaliers loss to the 23 00:01:23,959 --> 00:01:28,200 Speaker 1: University of Maryland a couple of months ago. I was 24 00:01:28,440 --> 00:01:30,840 Speaker 1: I went to the I guess the final four of 25 00:01:30,880 --> 00:01:36,360 Speaker 1: the Lacrosse Championship NCAA Cross Lacrosse Championship was a pretty 26 00:01:36,360 --> 00:01:38,039 Speaker 1: exciting game to be part of. 27 00:01:38,480 --> 00:01:40,839 Speaker 2: Yeah, yah, big school. I don't follow it, to be honest, 28 00:01:40,880 --> 00:01:41,720 Speaker 2: we do that closely. 29 00:01:41,720 --> 00:01:43,440 Speaker 3: I have been more I have been bs here with 30 00:01:43,560 --> 00:01:48,040 Speaker 3: following Argentina, my home country, at the Copa America and 31 00:01:48,120 --> 00:01:52,880 Speaker 3: other sports. But yeah, UVA and Darden always very. 32 00:01:52,720 --> 00:01:53,559 Speaker 2: Close to my heart. 33 00:01:54,160 --> 00:01:56,960 Speaker 1: All right, great, and I'm sure you've also been a 34 00:01:56,960 --> 00:02:00,320 Speaker 1: little busy this morning because d DHL came out with 35 00:02:00,360 --> 00:02:04,200 Speaker 1: their earnings. Can you talk about how you know your 36 00:02:04,240 --> 00:02:06,840 Speaker 1: division did e commerce? And I guess before we even 37 00:02:06,840 --> 00:02:09,920 Speaker 1: get into that, can you talk to a little about 38 00:02:10,280 --> 00:02:13,040 Speaker 1: what actually does DHL e Commerce do? 39 00:02:13,440 --> 00:02:14,440 Speaker 2: Absolutely so. 40 00:02:15,440 --> 00:02:20,359 Speaker 3: DHL e Commerce is one of the five DHL Group divisions. 41 00:02:21,200 --> 00:02:25,359 Speaker 3: We are the newest. We were forming twenty nineteen by 42 00:02:25,360 --> 00:02:30,280 Speaker 3: putting together all the domestic parcel delivery assets that we 43 00:02:30,400 --> 00:02:36,200 Speaker 3: had in the company. So today we are fifteen countries, 44 00:02:36,840 --> 00:02:41,760 Speaker 3: mainly Europe, India and the US. We deliver one point 45 00:02:41,800 --> 00:02:45,200 Speaker 3: six billion shipments per year last year to give you 46 00:02:46,120 --> 00:02:50,240 Speaker 3: rough numbers, high level numbers, six point five billion in revenue, 47 00:02:50,880 --> 00:02:56,720 Speaker 3: forty five thousand employees direct employed and another forty thousand subcontracted. 48 00:02:57,480 --> 00:02:59,240 Speaker 2: And we specialize in. 49 00:02:59,360 --> 00:03:04,200 Speaker 3: Parts of the livery across those regions, mainly focusing on 50 00:03:04,240 --> 00:03:07,640 Speaker 3: e commerce. Seventy five percent of our volume is B 51 00:03:07,760 --> 00:03:11,440 Speaker 3: two CE e commerce related and ninety percent of our 52 00:03:11,480 --> 00:03:14,000 Speaker 3: growth is driven by e commerce. 53 00:03:14,560 --> 00:03:15,080 Speaker 2: Very important. 54 00:03:15,120 --> 00:03:18,639 Speaker 3: If I may here to clarify that e commerce logistics 55 00:03:19,160 --> 00:03:22,240 Speaker 3: is a core part of all our business units. So 56 00:03:22,720 --> 00:03:25,359 Speaker 3: a little bit of our name the HLD e Commerce 57 00:03:25,440 --> 00:03:29,040 Speaker 3: could be a little bit confusing, but we do e 58 00:03:29,080 --> 00:03:34,320 Speaker 3: commerce logistics across all our divisions. We happen to specialize 59 00:03:34,400 --> 00:03:38,440 Speaker 3: exclusively mainly in e commerce and the majority of our 60 00:03:38,480 --> 00:03:43,120 Speaker 3: growth is coming from logistics and parcel delivery for e commerce. 61 00:03:43,680 --> 00:03:46,480 Speaker 1: And so the regions that you're operating in, is it 62 00:03:47,000 --> 00:03:49,240 Speaker 1: just a ground network or do you operate the ground 63 00:03:49,320 --> 00:03:50,640 Speaker 1: and air network as well? 64 00:03:50,960 --> 00:03:55,560 Speaker 3: The majority is ground, although in India in particular, we 65 00:03:55,640 --> 00:03:59,720 Speaker 3: do have a ground and air in India we have 66 00:03:59,800 --> 00:04:04,160 Speaker 3: a in air network domestic air networks with eight seven 67 00:04:04,280 --> 00:04:08,080 Speaker 3: three sevens and we have a very leading position in 68 00:04:08,120 --> 00:04:11,760 Speaker 3: anything that is air cargo domestic. The rest is mainly 69 00:04:11,840 --> 00:04:15,520 Speaker 3: ground and is mainly domestic services. We do some cross 70 00:04:15,520 --> 00:04:18,600 Speaker 3: border but it's still also ground within Europe. 71 00:04:19,480 --> 00:04:23,479 Speaker 1: And then do you guys participate in just a delivery 72 00:04:23,480 --> 00:04:28,440 Speaker 1: aspector do you do for filment services as well delivery aspects? 73 00:04:28,480 --> 00:04:32,680 Speaker 3: Only one of our the other business units, DHL Supply Chain, 74 00:04:33,120 --> 00:04:38,360 Speaker 3: specializes in fulfillment, so we only do parcel delivery for 75 00:04:38,600 --> 00:04:42,680 Speaker 3: businesses and consumers and is mainly ground networks in the 76 00:04:42,680 --> 00:04:45,880 Speaker 3: countries where we have these type of assets. 77 00:04:46,279 --> 00:04:49,480 Speaker 1: And then one of the three largest geographic markets that 78 00:04:50,080 --> 00:04:53,200 Speaker 1: DHL e Commerce is currently in, it's. 79 00:04:53,160 --> 00:04:58,400 Speaker 3: Mainly in Europe, India and the US. Within Europe, main 80 00:04:58,640 --> 00:05:03,760 Speaker 3: markets are Benelux, Netherlands in particular, Poland and the UK. 81 00:05:04,440 --> 00:05:07,880 Speaker 1: Gotcha all right? So would the US market be the 82 00:05:07,960 --> 00:05:11,000 Speaker 1: biggest country market or would it be India? 83 00:05:11,120 --> 00:05:12,520 Speaker 2: The US is the biggest one. 84 00:05:12,560 --> 00:05:15,320 Speaker 3: In the US, we have a very interesting value proposition 85 00:05:15,440 --> 00:05:18,120 Speaker 3: which is that all our last mile is done through 86 00:05:18,160 --> 00:05:23,240 Speaker 3: the USPS, so we do the first mile, we do 87 00:05:23,360 --> 00:05:28,920 Speaker 3: the middle miles, so we sort across our nineteen sorting 88 00:05:29,000 --> 00:05:33,680 Speaker 3: centers within the US, and we inject downstream into the USPS. 89 00:05:33,720 --> 00:05:37,520 Speaker 3: We're doing roughly five hundred millionshipments per year in the US. 90 00:05:37,560 --> 00:05:40,400 Speaker 3: We are one of the largest partners of the USPS 91 00:05:40,440 --> 00:05:45,200 Speaker 3: in terms of injection into the delivery network, and we 92 00:05:45,279 --> 00:05:46,960 Speaker 3: have a great partnership with them, But we don't do 93 00:05:47,040 --> 00:05:50,040 Speaker 3: our last mile. Delivery in the US mainly is only 94 00:05:50,080 --> 00:05:51,640 Speaker 3: done through the USPS. 95 00:05:52,160 --> 00:05:55,760 Speaker 1: And is that a model that's different than other regions 96 00:05:55,760 --> 00:05:56,520 Speaker 1: that you're operating. 97 00:05:57,080 --> 00:06:00,280 Speaker 3: Yes, in Europe in the eight countries where we have 98 00:06:00,640 --> 00:06:03,800 Speaker 3: our own part of delivery networks domestic in Europe we 99 00:06:03,880 --> 00:06:07,720 Speaker 3: do it all end to end, including of course verst mile, 100 00:06:07,760 --> 00:06:09,080 Speaker 3: middle mile and last mile. 101 00:06:09,960 --> 00:06:11,279 Speaker 2: In India we do the same. 102 00:06:12,000 --> 00:06:15,039 Speaker 3: We have some partnerships in some other countries where we 103 00:06:15,120 --> 00:06:18,360 Speaker 3: replicate the same model as the USPS, so for example 104 00:06:18,960 --> 00:06:23,640 Speaker 3: in Italy and in France and in Eastern Europe we 105 00:06:23,720 --> 00:06:27,200 Speaker 3: also rely on last mile the livery partners such as 106 00:06:27,240 --> 00:06:30,719 Speaker 3: for example we rely in the US with the USPS. 107 00:06:31,520 --> 00:06:34,640 Speaker 1: A right, great, And I guess you know because you 108 00:06:34,720 --> 00:06:39,880 Speaker 1: mentioned DHL Group does e commerce services across all divisions, 109 00:06:40,440 --> 00:06:44,320 Speaker 1: so what's the I guess the is there what's the 110 00:06:44,360 --> 00:06:49,200 Speaker 1: main difference between e commerce segment and the express segment, 111 00:06:49,279 --> 00:06:52,720 Speaker 1: which is one of the largest segments in the DHL portfolio. 112 00:06:52,960 --> 00:06:55,039 Speaker 3: Excellent, and I love this question because it allows me 113 00:06:55,080 --> 00:06:57,880 Speaker 3: to explain a little bit the similarities of the two 114 00:06:58,920 --> 00:07:02,640 Speaker 3: focus segments afford the two business units. So Express is 115 00:07:02,680 --> 00:07:06,200 Speaker 3: mainly what we call TDI, so time definite International. They 116 00:07:06,240 --> 00:07:09,240 Speaker 3: operate in two hundred and twenty countries, They move end 117 00:07:09,279 --> 00:07:13,560 Speaker 3: to end within their closed network, they move shipments and 118 00:07:13,600 --> 00:07:17,640 Speaker 3: parts around the world. Put things in perspective, this segment, 119 00:07:18,160 --> 00:07:21,400 Speaker 3: with the three main integrators, which is of course the 120 00:07:21,600 --> 00:07:25,600 Speaker 3: HL Group, FedEx and UPS, they manage one percent of 121 00:07:25,680 --> 00:07:28,200 Speaker 3: the total cross border volume in the world. 122 00:07:28,280 --> 00:07:29,760 Speaker 2: So it's a very very niche. 123 00:07:30,240 --> 00:07:33,080 Speaker 3: If you think about this as a pyramid, or the 124 00:07:33,120 --> 00:07:37,920 Speaker 3: top of the pyramid is the one percent overall market 125 00:07:38,400 --> 00:07:42,640 Speaker 3: volume and is time definite International. The rest is all 126 00:07:42,680 --> 00:07:47,960 Speaker 3: done through a combination of postal operators or air freight 127 00:07:48,000 --> 00:07:51,760 Speaker 3: cargo that is injected into last mile delivery providers, and 128 00:07:51,800 --> 00:07:55,000 Speaker 3: that's where we operate. We operate in the remaining ninety 129 00:07:55,080 --> 00:07:59,720 Speaker 3: nine percent of the global cross border segment where we 130 00:08:00,680 --> 00:08:04,320 Speaker 3: use what we call a very hybrid and flexible network 131 00:08:04,360 --> 00:08:08,240 Speaker 3: where we utilize our own assets when we have those 132 00:08:08,320 --> 00:08:11,960 Speaker 3: assets to deliver last mile, or we rely on partners. 133 00:08:12,720 --> 00:08:17,000 Speaker 3: And for example, in Europe we have eight countries where 134 00:08:17,040 --> 00:08:20,440 Speaker 3: we do las might delivery with our own assets. All 135 00:08:20,480 --> 00:08:24,200 Speaker 3: the remaining fifteen countries in the European Union we rely 136 00:08:24,520 --> 00:08:29,520 Speaker 3: on third party partners like Post Italiana in Italy in Italy, 137 00:08:30,000 --> 00:08:35,360 Speaker 3: or Chronopoles and some other partners in France, or Austrian 138 00:08:35,400 --> 00:08:39,040 Speaker 3: Post in Eastern Europe. So that's the main difference. Express 139 00:08:39,160 --> 00:08:43,000 Speaker 3: is mainly a close network, time definite, super fast efficient. 140 00:08:43,520 --> 00:08:47,640 Speaker 3: Price point there is much higher and is driven also 141 00:08:47,679 --> 00:08:50,120 Speaker 3: by a lot of B two be heavier shipments. We 142 00:08:50,200 --> 00:08:54,040 Speaker 3: specialize in more of a hybrid network, lighter volumes, and 143 00:08:54,080 --> 00:08:58,360 Speaker 3: it's more it's not as fast from a delivery perspective 144 00:08:58,400 --> 00:09:01,640 Speaker 3: compared to Express at the price is much The price 145 00:09:01,679 --> 00:09:04,640 Speaker 3: point is much lower than that of Express. 146 00:09:05,160 --> 00:09:07,120 Speaker 1: Are you able to talk about who some of your 147 00:09:07,160 --> 00:09:08,840 Speaker 1: major customers are around the world. 148 00:09:09,360 --> 00:09:14,560 Speaker 3: Sure. We operate with all major multinationals, mainly in the 149 00:09:15,400 --> 00:09:18,920 Speaker 3: online e commerce segments. So we do business with of 150 00:09:18,960 --> 00:09:25,200 Speaker 3: course Amazon, Chiniao, Ali, Baba, Temu Shin to name some 151 00:09:25,240 --> 00:09:30,120 Speaker 3: of the most well known names, Bad trendy Old in 152 00:09:30,240 --> 00:09:34,559 Speaker 3: Turkey and Aleeboro in Poland. So all the major marketplaces 153 00:09:35,320 --> 00:09:38,080 Speaker 3: that you can think about sealando and also all the 154 00:09:38,160 --> 00:09:44,000 Speaker 3: direct to consumer brands right so from Nike, Adidas, Victoria's Secret. 155 00:09:43,720 --> 00:09:46,400 Speaker 2: Here in the US and many other customers. 156 00:09:46,480 --> 00:09:51,800 Speaker 3: So we have a pretty broad portfolio of multinational companies, 157 00:09:52,000 --> 00:09:55,040 Speaker 3: marketplaces and direct to consumer brands. 158 00:09:55,840 --> 00:09:58,960 Speaker 1: And your major competitors are the other integrated logistic providers 159 00:09:58,960 --> 00:10:01,839 Speaker 1: like a FedEx or UP, yes, or Emato or I 160 00:10:01,880 --> 00:10:04,120 Speaker 1: guess the local post office, is that correct? 161 00:10:04,400 --> 00:10:04,720 Speaker 2: Yes? 162 00:10:05,320 --> 00:10:09,880 Speaker 3: I think that the competition varies geographically a little bit. 163 00:10:10,000 --> 00:10:14,520 Speaker 3: So in Europe we compete a lot against geopost and GLS. 164 00:10:15,559 --> 00:10:19,040 Speaker 3: We compete also there are many local players for less 165 00:10:19,040 --> 00:10:23,680 Speaker 3: man delivery, so Inland in Poland we compete with against Impost, 166 00:10:23,840 --> 00:10:27,080 Speaker 3: in Netherlands against Post and L and of course FedEx 167 00:10:27,080 --> 00:10:29,760 Speaker 3: and UPS are in general press and in most of 168 00:10:29,760 --> 00:10:32,560 Speaker 3: the markets, although they specialize as you know, more on 169 00:10:32,600 --> 00:10:37,000 Speaker 3: the domestic US and also competes more with GTEL Express. 170 00:10:36,679 --> 00:10:39,120 Speaker 2: On the time definite international type of segment. 171 00:10:40,360 --> 00:10:43,439 Speaker 1: So we answer me that, so I order a suit online, 172 00:10:43,600 --> 00:10:47,120 Speaker 1: it comes from China, it's it's delivered by DHL I 173 00:10:47,120 --> 00:10:49,240 Speaker 1: won't name the retailer I buy my suits from, but 174 00:10:49,400 --> 00:10:52,439 Speaker 1: like this is a true story. And so the soup 175 00:10:52,559 --> 00:10:55,680 Speaker 1: gets to the United States once against the United States, 176 00:10:55,760 --> 00:10:58,400 Speaker 1: does e Commerce then take it from Express? Or is 177 00:10:58,480 --> 00:11:03,160 Speaker 1: Express doing the final delivery? How is there a handoff? 178 00:11:03,280 --> 00:11:04,199 Speaker 1: Is that how it works? 179 00:11:05,000 --> 00:11:08,319 Speaker 3: Not really in that case that you are describing, very likely, 180 00:11:08,400 --> 00:11:14,200 Speaker 3: because you might have ordered with an expected delivery day 181 00:11:14,240 --> 00:11:17,120 Speaker 3: that is fast, so you might want to have it fast. 182 00:11:17,679 --> 00:11:20,679 Speaker 3: And the purchase price of your suits, assuming that you 183 00:11:20,720 --> 00:11:23,679 Speaker 3: are paying a reasonable amount of money for a good 184 00:11:23,760 --> 00:11:26,560 Speaker 3: quality of suit, that might be more suitable for the 185 00:11:26,559 --> 00:11:29,040 Speaker 3: typic that Express delivery and will be delivered end to 186 00:11:29,200 --> 00:11:31,560 Speaker 3: end by Express. It will be picked up and I 187 00:11:31,559 --> 00:11:34,640 Speaker 3: don't know if you bought it in London or in 188 00:11:34,640 --> 00:11:36,640 Speaker 3: Hong Kong or somewhere, but it will be picked up 189 00:11:36,960 --> 00:11:41,200 Speaker 3: at origin fly with d HL planes, cleared in the 190 00:11:41,280 --> 00:11:45,120 Speaker 3: DHL Express in the US, and delivered with a DHL 191 00:11:45,240 --> 00:11:49,880 Speaker 3: courier to your door. In the case of the HD Commerce, 192 00:11:50,000 --> 00:11:54,440 Speaker 3: usually we operate in a more deferred type of cross 193 00:11:54,520 --> 00:11:58,800 Speaker 3: border delivery and is a smaller type of parcels with 194 00:11:58,880 --> 00:12:00,439 Speaker 3: a lower tick price. 195 00:12:01,480 --> 00:12:04,199 Speaker 1: Right in, my suits are slightly more than ten dollars. 196 00:12:04,000 --> 00:12:06,480 Speaker 2: A piece exactly. That's what I assume. 197 00:12:08,280 --> 00:12:11,520 Speaker 1: So, you know, when we kicked off the conversation, I 198 00:12:11,559 --> 00:12:14,840 Speaker 1: mentioned that you guys just reported or DHL just reported earnings. 199 00:12:15,200 --> 00:12:19,240 Speaker 1: Could you talk specifically about, you know, how e commerce 200 00:12:19,240 --> 00:12:21,880 Speaker 1: segment did quarter? 201 00:12:22,160 --> 00:12:26,600 Speaker 3: Yeah, absolutely, so our numbers were in line with expectations. 202 00:12:28,000 --> 00:12:31,480 Speaker 3: We had a pretty good growth on the top line 203 00:12:32,440 --> 00:12:36,319 Speaker 3: ten percent plus. That is mainly driven by a little 204 00:12:36,320 --> 00:12:40,040 Speaker 3: bit of inorganic a recent acquisition in December last year 205 00:12:40,160 --> 00:12:43,400 Speaker 3: of MMG Cargo in Turkey, so there is some inorganic 206 00:12:44,360 --> 00:12:48,720 Speaker 3: upside there, including the own numbers. But then the remaining 207 00:12:48,720 --> 00:12:51,800 Speaker 3: portfolios is still growing from a top line perspective pretty well. 208 00:12:52,520 --> 00:12:57,440 Speaker 3: On bottom line, we are continuously seeing the current trend 209 00:12:57,520 --> 00:12:59,120 Speaker 3: on margins that. 210 00:12:59,160 --> 00:13:04,280 Speaker 2: Are around the four percent. This is in line with expectations. 211 00:13:04,320 --> 00:13:09,520 Speaker 2: We are going through an ongoing phase of investment and 212 00:13:09,559 --> 00:13:13,320 Speaker 2: which is impacting our y bit overall. 213 00:13:13,520 --> 00:13:17,320 Speaker 3: But also we are seeing a readjustment of demand and 214 00:13:17,400 --> 00:13:21,680 Speaker 3: supply after you know, the incredible times of COVID and 215 00:13:21,880 --> 00:13:26,440 Speaker 3: a little bit of investment across the entire industry. We 216 00:13:26,520 --> 00:13:28,960 Speaker 3: are not seeing yet a complete balance between the man 217 00:13:29,080 --> 00:13:31,000 Speaker 3: and supply. We see more supply than the man, and 218 00:13:31,040 --> 00:13:34,800 Speaker 3: that's why that is putting pressure into eels and margins. 219 00:13:35,080 --> 00:13:37,040 Speaker 3: But it was in line with expectations. We have always 220 00:13:37,080 --> 00:13:39,080 Speaker 3: said that that that was going to be our number. 221 00:13:39,480 --> 00:13:42,840 Speaker 3: We see twenty twenty four five still in this more 222 00:13:42,920 --> 00:13:51,480 Speaker 3: or less range of still margin pressure, moving towards margin 223 00:13:51,559 --> 00:13:55,160 Speaker 3: expansion twenty six onwards. 224 00:13:55,880 --> 00:13:57,920 Speaker 1: And do you guys have out there, like a long 225 00:13:58,000 --> 00:14:01,440 Speaker 1: term margin kind of target or a range we'd like 226 00:14:01,480 --> 00:14:03,640 Speaker 1: to be because as you mentioned, you're around four percent. 227 00:14:04,080 --> 00:14:08,760 Speaker 1: That was one hundred and twenty basis point declined from 228 00:14:08,800 --> 00:14:12,760 Speaker 1: from the previous year, So obviously I'm assuming you're not 229 00:14:12,800 --> 00:14:15,320 Speaker 1: happy with where margins are. Do you guys have a 230 00:14:15,360 --> 00:14:16,080 Speaker 1: target out there? 231 00:14:16,559 --> 00:14:19,520 Speaker 3: We do have a target, and it's in the in 232 00:14:19,560 --> 00:14:24,560 Speaker 3: the range of five to seven percent. We have been 233 00:14:24,600 --> 00:14:29,840 Speaker 3: there before during the pandemic times. Those were very extraordinary times. 234 00:14:30,120 --> 00:14:33,040 Speaker 3: We have half of our countries already performing at that level, 235 00:14:33,600 --> 00:14:37,160 Speaker 3: so the entire focus is on optimizing the other half 236 00:14:37,960 --> 00:14:40,840 Speaker 3: that is not there yet and it's a matter of 237 00:14:40,880 --> 00:14:46,080 Speaker 3: time in terms of just optimizing the operations networks. As 238 00:14:46,080 --> 00:14:48,960 Speaker 3: I was saying, we have been investing heavily in most 239 00:14:49,000 --> 00:14:51,880 Speaker 3: of the countries, so we have not seen yet the 240 00:14:52,040 --> 00:14:57,240 Speaker 3: benefits of those network expansions and optimizations. So we do 241 00:14:57,440 --> 00:15:00,320 Speaker 3: see that in twenty six onwards we're going to be 242 00:15:00,400 --> 00:15:03,600 Speaker 3: going back to the levels that we are talking about 243 00:15:03,640 --> 00:15:07,960 Speaker 3: around you know, five to seven in general, like growthen 244 00:15:08,000 --> 00:15:09,160 Speaker 3: type portfolio. 245 00:15:09,560 --> 00:15:13,920 Speaker 1: As a segment. The scale matter because you're obviously you're 246 00:15:13,960 --> 00:15:16,400 Speaker 1: operating in all these different countries, and I'm assuming each 247 00:15:16,480 --> 00:15:21,160 Speaker 1: country has its own kind of insular network, so I'm 248 00:15:21,200 --> 00:15:24,680 Speaker 1: assuming it's very easy for DHL to decide, oh, we 249 00:15:24,680 --> 00:15:26,360 Speaker 1: don't want to be in this region, we're going to 250 00:15:26,720 --> 00:15:28,600 Speaker 1: maybe sell it off, or oh we want to be 251 00:15:28,680 --> 00:15:30,920 Speaker 1: in this region, we're going to go grow through acquisition. 252 00:15:31,680 --> 00:15:33,160 Speaker 1: Is that fair to sect? 253 00:15:33,680 --> 00:15:35,240 Speaker 2: Fair to say? Absolutely fair? 254 00:15:35,240 --> 00:15:38,200 Speaker 3: So, first of all, yes, a scale matters in the 255 00:15:38,280 --> 00:15:42,000 Speaker 3: markets where we operate, in particular e commerce and domestic 256 00:15:42,040 --> 00:15:46,880 Speaker 3: parcel delivery, sixty to seventy five percent of the cost 257 00:15:47,080 --> 00:15:50,640 Speaker 3: is the delivery cost itself. So just to compare with Express, 258 00:15:50,640 --> 00:15:53,240 Speaker 3: where the majority of the cost maybe is in the 259 00:15:53,280 --> 00:15:58,200 Speaker 3: global air networks, in lest my delivery part of delivery 260 00:15:58,240 --> 00:16:02,000 Speaker 3: domestic is more in the last my delivery itself. So 261 00:16:02,440 --> 00:16:07,680 Speaker 3: scale matters because of course higher density brings. 262 00:16:07,680 --> 00:16:09,080 Speaker 1: Lower cost per stop. 263 00:16:09,680 --> 00:16:12,920 Speaker 3: Because of course you have each of the delivery routes 264 00:16:12,960 --> 00:16:16,240 Speaker 3: delivering more packages and therefore the cost per piece has 265 00:16:16,280 --> 00:16:18,400 Speaker 3: a very nice improvement. 266 00:16:18,440 --> 00:16:21,400 Speaker 2: We are seeing that in many of the countries. 267 00:16:21,040 --> 00:16:24,000 Speaker 3: Where we are seeing this scale which is helping us 268 00:16:24,040 --> 00:16:25,640 Speaker 3: optimize what delivery costs. 269 00:16:26,000 --> 00:16:29,000 Speaker 2: So question number one, Yes, scale matters. 270 00:16:29,920 --> 00:16:33,360 Speaker 3: And because we are so heavily relying on e commerce 271 00:16:33,360 --> 00:16:35,680 Speaker 3: and so much focused on e commerce, we see that 272 00:16:35,720 --> 00:16:38,280 Speaker 3: the overall growth is going of the commerce market as 273 00:16:38,280 --> 00:16:40,880 Speaker 3: it is growing today, is going to help us achieve 274 00:16:40,960 --> 00:16:46,520 Speaker 3: those economs, economies of scale and unit economics. And then, 275 00:16:46,560 --> 00:16:49,400 Speaker 3: of course the strategy to your second part of the question. 276 00:16:49,960 --> 00:16:55,160 Speaker 3: The strategy varies by country. It varies in the combination 277 00:16:55,320 --> 00:16:59,680 Speaker 3: of what is the competitive landscape in the country, what 278 00:16:59,760 --> 00:17:04,600 Speaker 3: is our own position in the country, what is the complexities. 279 00:17:03,840 --> 00:17:05,000 Speaker 2: And the barriers to entry. 280 00:17:05,040 --> 00:17:10,000 Speaker 3: So, for example, Turkey, it's a very interesting country, eighty 281 00:17:10,040 --> 00:17:14,520 Speaker 3: five million people, high internet population. That is a complicated 282 00:17:14,520 --> 00:17:17,040 Speaker 3: country to serve because it is a large country if 283 00:17:17,040 --> 00:17:19,000 Speaker 3: you compare to Singapore or Hong Kong. 284 00:17:18,960 --> 00:17:20,360 Speaker 2: Or Costa Rica. 285 00:17:20,720 --> 00:17:24,880 Speaker 3: And therefore in that case, the strategy for Turkey would 286 00:17:24,920 --> 00:17:28,560 Speaker 3: be different to when we are making decisions in smaller 287 00:17:28,600 --> 00:17:30,360 Speaker 3: countries like Czech Republic for example. 288 00:17:31,760 --> 00:17:34,879 Speaker 1: Gotcha, So, you know, you talk about e commerce growth 289 00:17:35,920 --> 00:17:41,240 Speaker 1: as an industry. What are your expectations for e commerce growth? 290 00:17:42,080 --> 00:17:45,160 Speaker 1: Do you expect your division to grow with that growth? 291 00:17:45,600 --> 00:17:49,119 Speaker 1: Do you expect to outpace that growth? And we're talking 292 00:17:49,200 --> 00:17:52,520 Speaker 1: organically here, if you can just talk about that aspect 293 00:17:52,800 --> 00:17:55,720 Speaker 1: and then you know, just while I'm babbling here, can 294 00:17:55,760 --> 00:17:57,600 Speaker 1: you also talk about you know, your m and a 295 00:17:57,720 --> 00:18:01,120 Speaker 1: strategy for growth. 296 00:18:02,200 --> 00:18:07,159 Speaker 3: Absolutely, so, e commerce logistics in general is going to 297 00:18:07,200 --> 00:18:11,639 Speaker 3: continue being a significant source of growth for the entire industry. 298 00:18:11,760 --> 00:18:16,000 Speaker 3: We are seeing that the e commerce penetration as a 299 00:18:16,080 --> 00:18:19,560 Speaker 3: percentage of retail will continue to grow, and it will 300 00:18:19,560 --> 00:18:21,960 Speaker 3: be growing depending on the market and on the segment, 301 00:18:22,000 --> 00:18:25,600 Speaker 3: between five to ten percent, so above GDP and above 302 00:18:25,600 --> 00:18:29,440 Speaker 3: the overall logistics industry, and we are sitting at the 303 00:18:29,440 --> 00:18:33,320 Speaker 3: center of that type of trend. We are planning to 304 00:18:33,520 --> 00:18:36,000 Speaker 3: grow and we are aiming at growing faster than the 305 00:18:36,080 --> 00:18:40,240 Speaker 3: market between one to two points. And again that varies 306 00:18:40,960 --> 00:18:44,600 Speaker 3: by region, by country, and by segment. But in general, 307 00:18:45,119 --> 00:18:48,160 Speaker 3: we are seeing and to your question, this is organic. 308 00:18:49,280 --> 00:18:52,320 Speaker 3: I'm seeing that we are being able to grow in 309 00:18:52,359 --> 00:18:55,240 Speaker 3: those markets where we have a good competitive position faster 310 00:18:55,359 --> 00:18:59,119 Speaker 3: than the market. So we have that expectation and that 311 00:18:59,160 --> 00:19:03,960 Speaker 3: ambition and from an M and A perspective, yes, our 312 00:19:05,600 --> 00:19:11,040 Speaker 3: strategy is not only optimizing our organic performance, in particular 313 00:19:11,119 --> 00:19:13,119 Speaker 3: in those countries were not yet at the level that 314 00:19:13,160 --> 00:19:15,520 Speaker 3: we want to be from a margin and growth perspective, 315 00:19:15,600 --> 00:19:20,640 Speaker 3: but also relies on inorganic we have been We acquired 316 00:19:20,720 --> 00:19:24,800 Speaker 3: this company MG Cargo in Turkey in the summer last year, 317 00:19:25,600 --> 00:19:28,119 Speaker 3: which has been a great addition to our team. We 318 00:19:28,200 --> 00:19:31,119 Speaker 3: had a presence DHL Group had a presence in Turkey 319 00:19:31,119 --> 00:19:34,280 Speaker 3: for many many years, but we didn't have a domestic 320 00:19:34,400 --> 00:19:39,560 Speaker 3: delivery company delivery parcels within Turkey and this company that 321 00:19:39,600 --> 00:19:42,560 Speaker 3: we acquired allowed us to do so. I don't know 322 00:19:42,600 --> 00:19:44,480 Speaker 3: if you have maybe you have been written the news 323 00:19:44,480 --> 00:19:48,119 Speaker 3: in the UK. We were competing until very recently, actually 324 00:19:48,160 --> 00:19:51,919 Speaker 3: Thursday last week for the acquisition of every which is 325 00:19:52,040 --> 00:19:55,680 Speaker 3: one of the largest part of delivery companies in the UK. 326 00:19:55,920 --> 00:20:00,840 Speaker 3: Unfortunately we lost that want to apollow private equity, which 327 00:20:00,880 --> 00:20:03,200 Speaker 3: I'm still you know, that still hurts a little bit, 328 00:20:04,080 --> 00:20:06,959 Speaker 3: but it was a great journey, great journey and you know, 329 00:20:07,200 --> 00:20:12,600 Speaker 3: kudos to Apollo and of course we will continue monitoring 330 00:20:12,600 --> 00:20:16,000 Speaker 3: that market. Very closely, So yes to your question about AMNA, 331 00:20:16,680 --> 00:20:21,520 Speaker 3: whenever we see the strategic advantage of growing through. 332 00:20:21,400 --> 00:20:22,480 Speaker 1: Acquisition, we will do. 333 00:20:22,600 --> 00:20:22,679 Speaker 2: So. 334 00:20:23,880 --> 00:20:27,280 Speaker 3: We have a very clear target of countries and companies 335 00:20:27,320 --> 00:20:30,680 Speaker 3: that we are closely looking into, which, as you might imagine, 336 00:20:30,680 --> 00:20:32,359 Speaker 3: I cannot reveal the details. 337 00:20:32,720 --> 00:20:35,880 Speaker 4: Come on, this just does it's a it's a big 338 00:20:35,920 --> 00:20:37,600 Speaker 4: part of our strategy as well. 339 00:20:37,920 --> 00:20:39,720 Speaker 1: All right, And I just want to make be clear 340 00:20:39,760 --> 00:20:42,080 Speaker 1: that I heard you. So you you guys are expecting 341 00:20:42,240 --> 00:20:45,240 Speaker 1: e commerce the market to grow five to ten percent 342 00:20:45,280 --> 00:20:50,800 Speaker 1: a year and DHL e commerce expected to grow one 343 00:20:50,880 --> 00:20:55,359 Speaker 1: hundred to two hundred basis points over that. Yeah, yeah, okay, great. 344 00:20:55,840 --> 00:20:59,760 Speaker 1: That's from a volume standpoint, not a sales or revenue standpoint. 345 00:21:00,760 --> 00:21:03,520 Speaker 3: Uh, that would be more from a from a volume 346 00:21:03,600 --> 00:21:06,280 Speaker 3: perspective yield Yeah yeah, yeah, yield. 347 00:21:06,400 --> 00:21:10,800 Speaker 2: Yield will be depending on the market conditions, competitive landscape 348 00:21:10,800 --> 00:21:11,439 Speaker 2: and each country. 349 00:21:11,440 --> 00:21:14,760 Speaker 3: But from a volume perspective, we're expecting to grow a 350 00:21:14,800 --> 00:21:16,000 Speaker 3: little bit faster than the market. 351 00:21:16,040 --> 00:21:18,960 Speaker 1: Yeah okay, I do want to touch upon your yield strategy, 352 00:21:18,960 --> 00:21:21,160 Speaker 1: but before we do that, you know, just to continue 353 00:21:21,200 --> 00:21:25,360 Speaker 1: on the conversation of M and A, are there certain 354 00:21:25,480 --> 00:21:29,960 Speaker 1: markets outside of the UK that are that are attractive 355 00:21:30,040 --> 00:21:33,560 Speaker 1: markets for d h L that you're currently not operating in. 356 00:21:35,440 --> 00:21:36,760 Speaker 2: That's a very good question. 357 00:21:38,160 --> 00:21:43,240 Speaker 3: Probably our shorter term MITERM focus will be and is 358 00:21:43,359 --> 00:21:48,520 Speaker 3: more on strengthening the position in the markets where we 359 00:21:48,560 --> 00:21:54,440 Speaker 3: are operating today, and that's why most of our short 360 00:21:54,520 --> 00:21:58,520 Speaker 3: term and M and A activity and exploration is in Europe, 361 00:21:58,880 --> 00:22:03,120 Speaker 3: in particular Eastream Europe and India, where we do have 362 00:22:03,240 --> 00:22:07,720 Speaker 3: a fantastic position there, but we want to even strengthen 363 00:22:07,760 --> 00:22:12,800 Speaker 3: it further additional countries to their portfolio. Maybe it will 364 00:22:12,880 --> 00:22:15,800 Speaker 3: probably be in the geography of Europe to begin with, 365 00:22:16,480 --> 00:22:21,440 Speaker 3: but we don't rule out potentially mid term, longer term 366 00:22:22,160 --> 00:22:25,240 Speaker 3: something around Middle East and Latin America. 367 00:22:26,200 --> 00:22:28,680 Speaker 1: Right, all right, let's let's talk about pricing because obviously 368 00:22:28,720 --> 00:22:32,440 Speaker 1: pricing is very important. We're in a high inflation environment, 369 00:22:32,520 --> 00:22:36,040 Speaker 1: so you guys need to increase those prices to you know, 370 00:22:37,200 --> 00:22:41,479 Speaker 1: support ROI so you can reinvest in the business. What 371 00:22:41,640 --> 00:22:44,360 Speaker 1: is your how do you guys go to market with pricing? 372 00:22:44,600 --> 00:22:47,479 Speaker 1: You know, do you do gris that you you know, 373 00:22:47,600 --> 00:22:52,560 Speaker 1: kind of discount? How does pricing work for DHL e commerce? 374 00:22:53,119 --> 00:22:56,439 Speaker 3: Yeah, so yes, we do a gri I of course 375 00:22:56,480 --> 00:23:00,000 Speaker 3: it depends market by market in terms of the intense 376 00:23:00,080 --> 00:23:03,360 Speaker 3: city of that gri I, But we do GRI as 377 00:23:03,400 --> 00:23:09,800 Speaker 3: a discipline process for adjusting our rates based based on inflation. 378 00:23:10,680 --> 00:23:14,760 Speaker 3: We also provide value added services to our customers. 379 00:23:14,800 --> 00:23:18,000 Speaker 1: Customers can have a multiple and a. 380 00:23:18,040 --> 00:23:21,320 Speaker 3: Variety of different services that they can buy from us 381 00:23:21,359 --> 00:23:26,640 Speaker 3: in terms of special pickups or oversize shipments, or certain 382 00:23:26,720 --> 00:23:29,600 Speaker 3: features and functionalities, so that we include that into of 383 00:23:29,640 --> 00:23:35,200 Speaker 3: course ongoing pricing and yield management, and then it varies 384 00:23:35,240 --> 00:23:38,080 Speaker 3: a little bit market by market to some extent, Right, 385 00:23:38,359 --> 00:23:44,080 Speaker 3: how how do we approach the yield discipline? In some 386 00:23:44,240 --> 00:23:48,399 Speaker 3: markets where we are growing and gaining market share, we 387 00:23:48,480 --> 00:23:51,480 Speaker 3: are a little bit more aggressive on our pricing. Clear 388 00:23:51,520 --> 00:23:55,879 Speaker 3: example to name one is our for example Czech Republic, 389 00:23:55,960 --> 00:24:00,120 Speaker 3: where we do have a very high market share on 390 00:24:00,640 --> 00:24:04,000 Speaker 3: doorstep delivery, but we want to grow faster on what 391 00:24:04,040 --> 00:24:07,960 Speaker 3: we call the out of home locker delivery into lockers 392 00:24:08,040 --> 00:24:11,400 Speaker 3: or deliver into parser shops, and that's where we are 393 00:24:11,560 --> 00:24:15,199 Speaker 3: a little bit more aggressive on a pricing perspective. But 394 00:24:15,720 --> 00:24:19,160 Speaker 3: pricing is you know, managing one point six billionships per year. 395 00:24:20,160 --> 00:24:22,920 Speaker 3: Anything that we can find tune in that sense from 396 00:24:22,920 --> 00:24:26,639 Speaker 3: a pricing perspective is absolutely. 397 00:24:26,119 --> 00:24:28,200 Speaker 2: Critical and that's why we have elevated in the last 398 00:24:28,200 --> 00:24:30,919 Speaker 2: two years. I I've taken a lot of focus on 399 00:24:31,080 --> 00:24:35,959 Speaker 2: elevating the pricing function within each country. In the past, 400 00:24:36,040 --> 00:24:38,200 Speaker 2: it was something that we were not putting too much 401 00:24:38,200 --> 00:24:42,000 Speaker 2: focus and it was, you know, the pricing function hidden too. 402 00:24:41,800 --> 00:24:45,240 Speaker 3: Many layers below the country manager. Today, in every single country, 403 00:24:45,240 --> 00:24:49,240 Speaker 3: we have the pricing head reporting directly to the country 404 00:24:49,240 --> 00:24:52,359 Speaker 3: manager and that's why, you know, we are elevating and 405 00:24:52,560 --> 00:24:54,639 Speaker 3: improving the way that we are dealing with pricing. 406 00:24:55,960 --> 00:24:58,679 Speaker 1: Okay, so on the call, the earning is called the 407 00:24:58,800 --> 00:25:03,320 Speaker 1: hl's earnings called today, they mentioned, you know, a search charge, 408 00:25:03,320 --> 00:25:07,560 Speaker 1: a demand search charge that they're implementing in September. Is 409 00:25:07,560 --> 00:25:10,639 Speaker 1: that just for express or is that for DHL e 410 00:25:10,680 --> 00:25:11,520 Speaker 1: commerce as well? 411 00:25:12,040 --> 00:25:12,959 Speaker 2: And it is? 412 00:25:12,960 --> 00:25:15,040 Speaker 1: Can you just talk about what that search charge is? 413 00:25:15,440 --> 00:25:18,600 Speaker 3: Sure it will also be for DHL e commerce as well. 414 00:25:18,760 --> 00:25:21,480 Speaker 3: It will be selective by countries. Some countries we might 415 00:25:21,680 --> 00:25:23,240 Speaker 3: do it in some others we might not. 416 00:25:23,960 --> 00:25:27,320 Speaker 2: But in general, yes, anywhere we can. We are looking 417 00:25:27,359 --> 00:25:27,719 Speaker 2: into that. 418 00:25:28,000 --> 00:25:30,159 Speaker 3: And I think what is important is to understand the 419 00:25:30,200 --> 00:25:34,120 Speaker 3: background of that because in particular in e commerce, in 420 00:25:34,440 --> 00:25:39,480 Speaker 3: deliveries to consumers. We are seen that the fluctuation between 421 00:25:39,600 --> 00:25:44,199 Speaker 3: the average volume and the peak weeks or even months 422 00:25:44,280 --> 00:25:48,439 Speaker 3: of a peak volume varies by one hundred percent. So 423 00:25:48,480 --> 00:25:53,120 Speaker 3: for example, we are seen in Netherlands that we are 424 00:25:53,160 --> 00:25:56,240 Speaker 3: delivering seven hundred and fifty thousand simbas. 425 00:25:55,920 --> 00:25:58,480 Speaker 2: Per day on average on a normal week. 426 00:25:58,800 --> 00:26:04,280 Speaker 3: But then when retailers marketplaces do promotions, we can see 427 00:26:04,280 --> 00:26:06,959 Speaker 3: that number going up to one point five million, two million. 428 00:26:07,680 --> 00:26:11,240 Speaker 3: So it's a trade off between providing good service quality, 429 00:26:11,400 --> 00:26:15,200 Speaker 3: satisfying the needs of the merchants, allowing them to have 430 00:26:15,280 --> 00:26:18,400 Speaker 3: these promotions, but doing it in a cost effective way. 431 00:26:18,440 --> 00:26:21,720 Speaker 3: We cannot have of course, as everyone might understand, we 432 00:26:21,760 --> 00:26:28,399 Speaker 3: cannot have delivery couriers and employees in our certain centers 433 00:26:28,440 --> 00:26:31,399 Speaker 3: just seeting there waiting for a few weeks of peak, 434 00:26:31,520 --> 00:26:35,119 Speaker 3: and that recruiting all of those that capacity requires of 435 00:26:35,160 --> 00:26:37,720 Speaker 3: course extra costs, and that's why we believe that it's 436 00:26:37,760 --> 00:26:41,640 Speaker 3: fair to have some type of searchers that will allow 437 00:26:41,720 --> 00:26:44,520 Speaker 3: us to satisfy the need of the merchants, provide good 438 00:26:44,560 --> 00:26:47,479 Speaker 3: service quality to the consumers, but also do that in 439 00:26:47,520 --> 00:26:51,040 Speaker 3: a customer in an investor friendly way. 440 00:26:51,520 --> 00:26:53,359 Speaker 2: So long answer to your question, but I thought it 441 00:26:53,400 --> 00:26:53,960 Speaker 2: was a good. 442 00:26:53,920 --> 00:26:57,399 Speaker 3: Good to share that in particular ecommerce, we see massive 443 00:26:57,400 --> 00:27:01,120 Speaker 3: fluctuations and the reason for the peak church is because 444 00:27:01,160 --> 00:27:04,679 Speaker 3: of the valsing cost and service quality. And yes, we 445 00:27:04,720 --> 00:27:08,080 Speaker 3: will do in most of our countries e commerce. We 446 00:27:08,119 --> 00:27:11,560 Speaker 3: will do a big search charge, gotcha. 447 00:27:12,240 --> 00:27:16,000 Speaker 1: And you know so, I'm sure a lot of people 448 00:27:16,240 --> 00:27:19,840 Speaker 1: turn to Pablo and they want to know what's the 449 00:27:20,359 --> 00:27:23,440 Speaker 1: temperature of the consumer right now? So you know, from 450 00:27:23,440 --> 00:27:26,600 Speaker 1: your advantage point, where do you see the global consumer. 451 00:27:27,800 --> 00:27:29,600 Speaker 1: I'm a little biased that I'd like to know what 452 00:27:29,960 --> 00:27:32,280 Speaker 1: your thoughts are in the US market, but you know, 453 00:27:32,600 --> 00:27:34,879 Speaker 1: what are your thoughts on the global consumer from your 454 00:27:34,960 --> 00:27:35,520 Speaker 1: vantage point? 455 00:27:36,680 --> 00:27:41,840 Speaker 3: Yeah, I would say that that is cautiously optimistic. 456 00:27:43,600 --> 00:27:44,200 Speaker 2: For now. 457 00:27:45,160 --> 00:27:50,480 Speaker 3: We have seen a stubilization after the pandemic days COVID, 458 00:27:50,560 --> 00:27:54,359 Speaker 3: and which is what wasn't too far away back in history, right, 459 00:27:54,400 --> 00:27:56,440 Speaker 3: this was only eighteen months ago that we were still 460 00:27:56,480 --> 00:27:59,520 Speaker 3: talking about COVID and online purchases. 461 00:27:59,560 --> 00:28:01,439 Speaker 2: And we have seen the. 462 00:28:01,480 --> 00:28:05,800 Speaker 3: Last few few months that a lot of the online 463 00:28:05,880 --> 00:28:09,920 Speaker 3: e commerce has moved more to consumption of services which 464 00:28:09,920 --> 00:28:13,040 Speaker 3: have been postponed for a while. And that's why we 465 00:28:13,080 --> 00:28:19,080 Speaker 3: saw a significant lowdan of growth after COVID and stabilizing 466 00:28:19,200 --> 00:28:23,040 Speaker 3: in the levels that we are experiencing right now. To 467 00:28:23,080 --> 00:28:27,560 Speaker 3: be honest with you, we we see a pretty stable 468 00:28:27,760 --> 00:28:33,119 Speaker 3: overall consumption. We we are aiming for a pig that 469 00:28:33,520 --> 00:28:35,919 Speaker 3: will be as usual, a little bit higher than the 470 00:28:36,000 --> 00:28:40,280 Speaker 3: previous months. But we are not seeing an exuberant type 471 00:28:40,400 --> 00:28:46,320 Speaker 3: of demand coming yet and we are That's why we 472 00:28:46,360 --> 00:28:49,200 Speaker 3: are caustiously optimistic. I would say that the temperature of 473 00:28:49,240 --> 00:28:53,920 Speaker 3: the consumer I would put it into a stable mode 474 00:28:54,560 --> 00:28:58,280 Speaker 3: similar to what we have been experiencing in the last 475 00:28:58,560 --> 00:29:01,840 Speaker 3: few months, and expecting a pig season that is going 476 00:29:01,880 --> 00:29:05,480 Speaker 3: to be similar growth compared to previous previous year. 477 00:29:06,360 --> 00:29:08,160 Speaker 1: I know in the US the peak season a little 478 00:29:08,200 --> 00:29:13,400 Speaker 1: condensed this year, just given the days between Christmas and Thanksgiving. 479 00:29:13,840 --> 00:29:17,480 Speaker 1: Is it condensed in other parts of the world as well, 480 00:29:17,720 --> 00:29:19,560 Speaker 1: So yeah. 481 00:29:19,520 --> 00:29:21,320 Speaker 2: It is condensed in general. 482 00:29:21,520 --> 00:29:25,120 Speaker 3: In the Turkey, some countries in Southeast Asia, they do 483 00:29:25,200 --> 00:29:27,760 Speaker 3: have a little bit of a different type of facing 484 00:29:27,840 --> 00:29:30,120 Speaker 3: throughout the years. Of course, Chinese New Year is a 485 00:29:30,160 --> 00:29:33,720 Speaker 3: big one for China particular, so there is a little 486 00:29:33,760 --> 00:29:36,640 Speaker 3: bit of variances, but in general years it is condensed. 487 00:29:36,960 --> 00:29:41,120 Speaker 3: What we are seeing is that retailers and merchants are 488 00:29:41,480 --> 00:29:45,280 Speaker 3: preparing for that pig season this time a little bit 489 00:29:45,320 --> 00:29:50,320 Speaker 3: more in advance. They're all very aware of what's going 490 00:29:50,360 --> 00:29:56,080 Speaker 3: on with the ocean freight and the air freight capacity 491 00:29:56,080 --> 00:29:59,760 Speaker 3: out of China and the red sea issues. From an 492 00:29:59,800 --> 00:30:03,560 Speaker 3: oce A perspective, I would be very cautious in reading 493 00:30:03,600 --> 00:30:08,400 Speaker 3: that as expectations of a significant peak. I would say 494 00:30:08,440 --> 00:30:11,960 Speaker 3: that it's more preparation in advance to reduce risk, and. 495 00:30:11,960 --> 00:30:12,920 Speaker 2: It's too early to say. 496 00:30:13,040 --> 00:30:16,720 Speaker 3: It's very early to say if this year we're going 497 00:30:16,760 --> 00:30:19,600 Speaker 3: to see a higher growth compared to previous years or 498 00:30:19,640 --> 00:30:21,880 Speaker 3: it's going to be similar. What we see for sure 499 00:30:21,920 --> 00:30:25,880 Speaker 3: is that we are receiving more requests to prepare more 500 00:30:25,960 --> 00:30:29,200 Speaker 3: in advance, but too early to say if that is 501 00:30:29,200 --> 00:30:33,760 Speaker 3: an indication of optimism or is more just hedging for 502 00:30:33,920 --> 00:30:36,560 Speaker 3: any type of supply chain disruptions. 503 00:30:37,480 --> 00:30:40,400 Speaker 1: So you can't talk about like an old world industry 504 00:30:40,520 --> 00:30:45,600 Speaker 1: like transportation without talking about technology and improving you know, 505 00:30:45,640 --> 00:30:48,480 Speaker 1: the overall efficiency of it. And also if I mentioned 506 00:30:49,840 --> 00:30:54,000 Speaker 1: artificial intelligence in my podcast, I usually get double the viewership. 507 00:30:54,080 --> 00:30:59,120 Speaker 1: So ai AI AI. So I'm just curious from your 508 00:30:59,120 --> 00:31:02,760 Speaker 1: advantage point and what investments are you making in technology. 509 00:31:03,520 --> 00:31:07,720 Speaker 1: Is it AI? Is it machine learning? And what is 510 00:31:07,760 --> 00:31:09,880 Speaker 1: that doing for your operations? 511 00:31:10,320 --> 00:31:12,400 Speaker 3: Yeah, we'll try to help you there. We'll mention AI 512 00:31:12,480 --> 00:31:17,080 Speaker 3: as much as possible. But yeah, of course, I like 513 00:31:17,160 --> 00:31:20,240 Speaker 3: to say that we are still a very analog company 514 00:31:20,320 --> 00:31:24,600 Speaker 3: operating on a heavily digitalized world because we move packages 515 00:31:24,600 --> 00:31:25,640 Speaker 3: from point A to point B. 516 00:31:26,160 --> 00:31:28,640 Speaker 2: There's nothing that for now, we'll replace. 517 00:31:28,320 --> 00:31:32,200 Speaker 3: That until we invent telet transportation or something like that. 518 00:31:32,720 --> 00:31:37,040 Speaker 3: But we cannot move anything without technology, and we have 519 00:31:37,120 --> 00:31:39,440 Speaker 3: been relying on technology and we will continue relying on 520 00:31:39,480 --> 00:31:44,320 Speaker 3: technology for a long time. AI and generative AI is 521 00:31:45,080 --> 00:31:47,880 Speaker 3: helping us in many ways. We're doing more and more 522 00:31:47,920 --> 00:31:52,880 Speaker 3: in terms of customer interaction, customer service, and any type 523 00:31:52,920 --> 00:31:57,240 Speaker 3: of proactive notification to customers. We have been working on 524 00:31:58,000 --> 00:32:02,000 Speaker 3: previous versions of AI than my generative AI, but advanced 525 00:32:02,120 --> 00:32:05,240 Speaker 3: analytics and machine learning, which again you can call them 526 00:32:05,280 --> 00:32:09,200 Speaker 3: also you know the early stages of AI, and we 527 00:32:09,280 --> 00:32:12,800 Speaker 3: have been using machine learning heavily on anything that has 528 00:32:12,840 --> 00:32:16,240 Speaker 3: to do with route planning. All our routes around the 529 00:32:16,280 --> 00:32:21,600 Speaker 3: world today are relying on complicated algorithms that every single 530 00:32:21,720 --> 00:32:25,600 Speaker 3: day look into what shipments are coming in, what is 531 00:32:25,680 --> 00:32:30,280 Speaker 3: the density and how to optimize routes on an ongoing 532 00:32:30,280 --> 00:32:33,880 Speaker 3: basis so that is well embedded into our day to 533 00:32:33,920 --> 00:32:38,479 Speaker 3: day operations. We see more and more technology, not AI driven, 534 00:32:38,600 --> 00:32:42,600 Speaker 3: but technology anyway in terms of automation in our hubs. 535 00:32:43,160 --> 00:32:45,360 Speaker 3: A lot of the investment that was referring to before, 536 00:32:45,400 --> 00:32:47,880 Speaker 3: which is impacting a little bit of our P and 537 00:32:48,000 --> 00:32:51,680 Speaker 3: L these days, from an investment phased perspective, is all 538 00:32:51,720 --> 00:32:56,880 Speaker 3: about automation in the hubs and that is allowing us 539 00:32:56,880 --> 00:33:00,440 Speaker 3: to process much more efficiently the meanings of packages that 540 00:33:00,520 --> 00:33:03,680 Speaker 3: we move every single day. An area that I am 541 00:33:03,840 --> 00:33:11,800 Speaker 3: very optimistic about the additional impact of AI is customs clearance, 542 00:33:12,680 --> 00:33:14,880 Speaker 3: and in particular I don't want to complicate, you know, 543 00:33:14,960 --> 00:33:19,200 Speaker 3: the technology question, but in particular, given what might happen 544 00:33:19,360 --> 00:33:23,480 Speaker 3: in Europe and in the US with the minimums reducing 545 00:33:23,600 --> 00:33:27,160 Speaker 3: and they need to clear more shipments formally and high 546 00:33:27,280 --> 00:33:30,440 Speaker 3: volumes of e commerce shipments, AI will have a big 547 00:33:30,520 --> 00:33:33,800 Speaker 3: role to play there to optimize customs clearance and do 548 00:33:33,920 --> 00:33:37,720 Speaker 3: that in an efficient way instead of having thousands of 549 00:33:38,520 --> 00:33:43,560 Speaker 3: agents typing on keyboards to clear shipments when they arrive 550 00:33:43,600 --> 00:33:44,240 Speaker 3: to the country. 551 00:33:44,800 --> 00:33:46,720 Speaker 2: So absolutely critical. 552 00:33:47,120 --> 00:33:50,080 Speaker 3: We are investing heavily and will continue to be a 553 00:33:50,120 --> 00:33:53,240 Speaker 3: big source of optimization for our operations. 554 00:33:54,040 --> 00:33:57,480 Speaker 1: And are you using technology or AI and pricing or 555 00:33:58,000 --> 00:34:06,800 Speaker 1: pricing more vanilla where maybe it's not as important we are. 556 00:34:06,840 --> 00:34:11,640 Speaker 3: We're not We're not using We're not using AI on 557 00:34:11,360 --> 00:34:14,239 Speaker 3: a on a daily basis for pricing. What we do 558 00:34:14,440 --> 00:34:19,000 Speaker 3: usually is the analysis, which is more a propensity to 559 00:34:19,040 --> 00:34:22,920 Speaker 3: pay type of analysis, which combines elements of AI. But 560 00:34:22,960 --> 00:34:26,719 Speaker 3: it's not a regular daily transaction. It's more of the 561 00:34:26,800 --> 00:34:31,040 Speaker 3: typical technology that we use for the annual gri I 562 00:34:31,400 --> 00:34:33,719 Speaker 3: or the quarterly customer profit ability. 563 00:34:34,120 --> 00:34:34,839 Speaker 2: So it's not that much. 564 00:34:35,080 --> 00:34:38,040 Speaker 3: It's not that much transactional like for example, rap planning 565 00:34:38,080 --> 00:34:39,760 Speaker 3: rap planning, you have AI embedded every. 566 00:34:39,640 --> 00:34:41,960 Speaker 2: Single day everywhere around the world. 567 00:34:42,920 --> 00:34:46,919 Speaker 3: Pricing is more it's not that much transactional, is more analytical. 568 00:34:47,640 --> 00:34:50,560 Speaker 1: So I know you've been with DHL since two thousand 569 00:34:50,560 --> 00:34:53,840 Speaker 1: and five, I'm not mistaken. How did you get into 570 00:34:54,160 --> 00:34:56,719 Speaker 1: free transportation logistics? 571 00:34:57,560 --> 00:34:58,760 Speaker 2: I was by chance. 572 00:34:58,800 --> 00:35:03,160 Speaker 3: I was a consultant after I graduated from from Darden 573 00:35:03,360 --> 00:35:06,759 Speaker 3: n b A. I went to it was year two 574 00:35:06,800 --> 00:35:09,680 Speaker 3: thousand and I went to everyone at that point in 575 00:35:09,719 --> 00:35:13,839 Speaker 3: time going into internet. But the bubble burst a little bit, 576 00:35:13,920 --> 00:35:15,520 Speaker 3: so I like to say that I went to B 577 00:35:15,640 --> 00:35:17,279 Speaker 3: two C, so back to consulting. 578 00:35:17,800 --> 00:35:18,600 Speaker 2: So I went in to C. 579 00:35:18,719 --> 00:35:20,160 Speaker 3: At the point in time, I did four years of 580 00:35:20,200 --> 00:35:24,160 Speaker 3: consulting and then I was tired of traveling. 581 00:35:23,760 --> 00:35:28,040 Speaker 2: Every single week. Uh, and I decided to look for options. 582 00:35:28,040 --> 00:35:36,080 Speaker 4: And alumni from Darden was the CEO for DHL Initia 583 00:35:36,120 --> 00:35:38,600 Speaker 4: Pacific who introduced me to DHL. 584 00:35:38,960 --> 00:35:42,480 Speaker 3: And honestly, to be honest with you, I was not 585 00:35:43,080 --> 00:35:45,480 Speaker 3: I was not sure what I was getting into. It 586 00:35:45,600 --> 00:35:49,400 Speaker 3: sounded a opportunity. It has been an amazing, amazing journey. 587 00:35:49,400 --> 00:35:52,879 Speaker 3: I cannot be more thankful and grateful. Has been a discovery. 588 00:35:53,000 --> 00:35:57,359 Speaker 3: Every new job. I have had seven different jobs in 589 00:35:57,400 --> 00:36:01,120 Speaker 3: this in this in this company, and every single joke 590 00:36:01,160 --> 00:36:03,440 Speaker 3: has been a new discovery and has been an amazing, 591 00:36:03,480 --> 00:36:04,440 Speaker 3: amazing journey so far. 592 00:36:05,360 --> 00:36:09,960 Speaker 1: Gotcha, that's pretty cool. And so you know you manage 593 00:36:10,040 --> 00:36:13,800 Speaker 1: so how many people? How big is dhle e commerce? 594 00:36:13,800 --> 00:36:13,880 Speaker 3: Like? 595 00:36:13,880 --> 00:36:15,880 Speaker 1: How many people do you manage? Roughly? 596 00:36:17,040 --> 00:36:21,680 Speaker 3: Directly forty five thousand and subcontracted another forty thousand, so 597 00:36:21,719 --> 00:36:23,080 Speaker 3: eighty five thousand total. 598 00:36:23,520 --> 00:36:25,000 Speaker 1: Okay, do you have a favorite region? 599 00:36:27,360 --> 00:36:32,960 Speaker 3: That's the time a teathing exactly, depending depending where your 600 00:36:33,239 --> 00:36:38,399 Speaker 3: your listeners are coming from No I have again I love. 601 00:36:38,560 --> 00:36:41,280 Speaker 3: I have to say, I really enjoy visiting the countries 602 00:36:41,960 --> 00:36:44,879 Speaker 3: when I have in a company like ours. I worked 603 00:36:44,920 --> 00:36:47,600 Speaker 3: fifteen years for the Express, so I traveled the world 604 00:36:47,680 --> 00:36:52,360 Speaker 3: with Express, and honestly, it's fascinating to see the diversity 605 00:36:52,640 --> 00:36:55,840 Speaker 3: but also the commonalities across the countries and the cultures 606 00:36:55,880 --> 00:36:59,000 Speaker 3: and what you know, people like So I really enjoy 607 00:36:59,160 --> 00:37:01,120 Speaker 3: every single goal contributed. 608 00:37:01,680 --> 00:37:06,680 Speaker 1: Yeah. Great, And so you know, obviously you're you manage 609 00:37:06,719 --> 00:37:09,439 Speaker 1: a very large business, a global business, a business where 610 00:37:09,440 --> 00:37:13,799 Speaker 1: there's moving parts and things can go wrong. What keeps 611 00:37:13,840 --> 00:37:14,440 Speaker 1: you up at night? 612 00:37:15,120 --> 00:37:15,480 Speaker 2: That's it? 613 00:37:15,560 --> 00:37:18,440 Speaker 3: You know, I sleep very well. I have to say, 614 00:37:19,120 --> 00:37:22,680 Speaker 3: I don't lose sleep that often. Not that many things 615 00:37:22,719 --> 00:37:26,759 Speaker 3: I have. You know, we have an extra extraordinary, amazing 616 00:37:26,960 --> 00:37:31,000 Speaker 3: team across all the all the group across the AHL 617 00:37:31,000 --> 00:37:37,840 Speaker 3: e Commerce group functions, I Compliance security. Of course, the 618 00:37:37,960 --> 00:37:42,200 Speaker 3: typical things that could really do harm to us is 619 00:37:42,239 --> 00:37:45,520 Speaker 3: anything that has to do with cybersecurity. But even you know, 620 00:37:45,600 --> 00:37:50,320 Speaker 3: the the recent you know situation with the crowdsource software 621 00:37:50,400 --> 00:37:55,520 Speaker 3: that collapsed a lot of companies two weeks ago. In 622 00:37:55,560 --> 00:38:00,759 Speaker 3: that case, we diverted all our its systems to our 623 00:38:01,120 --> 00:38:07,120 Speaker 3: dr backups. This has a recovery backups. We turned and 624 00:38:07,400 --> 00:38:12,200 Speaker 3: migrated technology and systems, and I'm talking about thousands of 625 00:38:12,280 --> 00:38:15,240 Speaker 3: systems across two hundred and twenty countries around the world, 626 00:38:15,640 --> 00:38:19,320 Speaker 3: and we did that DIDA overnight to preserve the network 627 00:38:19,360 --> 00:38:23,440 Speaker 3: from any type of impact. And we had two incidents. 628 00:38:23,719 --> 00:38:27,600 Speaker 3: Courier scanners in UK for two hours we're not able 629 00:38:27,680 --> 00:38:31,000 Speaker 3: to log in, and a customer facing tool in Thailand 630 00:38:31,239 --> 00:38:32,400 Speaker 3: was not performing well. 631 00:38:32,640 --> 00:38:33,880 Speaker 2: So when you see. 632 00:38:33,680 --> 00:38:38,440 Speaker 3: That, I don't want to be, of course overconfident, but 633 00:38:38,719 --> 00:38:40,480 Speaker 3: when you see that we had the ability to do 634 00:38:40,560 --> 00:38:44,360 Speaker 3: something like that at that scale to preserve the company 635 00:38:44,400 --> 00:38:49,520 Speaker 3: to continue operating despite this massive situation that was going on, 636 00:38:50,280 --> 00:38:52,440 Speaker 3: it gives me a lot of comfort. So we're not 637 00:38:52,600 --> 00:38:57,000 Speaker 3: immune to any of those issues. We are keeping our 638 00:38:57,160 --> 00:38:59,560 Speaker 3: eyes on everything that is going on from a cyber 639 00:38:59,640 --> 00:39:02,240 Speaker 3: secure perspective. But at the same time, to your question, 640 00:39:02,760 --> 00:39:06,000 Speaker 3: does that keep me awake at night, not really. 641 00:39:06,800 --> 00:39:09,640 Speaker 2: We you know, we have a great team, we have great. 642 00:39:09,800 --> 00:39:14,200 Speaker 3: Processes and all the needed alerts to detect detect any 643 00:39:14,239 --> 00:39:15,480 Speaker 3: type of deviation. 644 00:39:15,200 --> 00:39:17,799 Speaker 1: Early on, right And so you know, as a as 645 00:39:17,800 --> 00:39:20,799 Speaker 1: a global business leader and someone that kind of fell 646 00:39:20,800 --> 00:39:25,879 Speaker 1: into transportation. Is there a book about transportation or leadership 647 00:39:26,000 --> 00:39:29,479 Speaker 1: that you know you kind of always think back upon 648 00:39:29,600 --> 00:39:34,480 Speaker 1: that was really instrumental in your own evolution. 649 00:39:35,760 --> 00:39:38,040 Speaker 2: Yeah, that's a good question. There are not that many 650 00:39:38,080 --> 00:39:41,720 Speaker 2: books about logistics, unfortunately, maybe we should be writing more. 651 00:39:42,280 --> 00:39:44,959 Speaker 3: But there was one book that I read long time ago, 652 00:39:45,239 --> 00:39:49,520 Speaker 3: which is moving. It's called Moving Mountains and it's about 653 00:39:49,520 --> 00:39:54,600 Speaker 3: General Palonis. General Palonis was the general in charge of 654 00:39:54,640 --> 00:39:57,680 Speaker 3: the logistics for the Gulf War. That was very close 655 00:39:57,719 --> 00:39:59,600 Speaker 3: to my heart because I remember a long time ago 656 00:39:59,640 --> 00:40:04,879 Speaker 3: I vis CD our main hub in Bahrain, which will 657 00:40:04,840 --> 00:40:08,719 Speaker 3: also the logistics have for the golf movement of things in. 658 00:40:08,719 --> 00:40:10,279 Speaker 1: And out from that area. 659 00:40:10,360 --> 00:40:14,880 Speaker 3: And his book is fascinating, Moving Mountains, highly recommended is 660 00:40:14,920 --> 00:40:18,200 Speaker 3: both leadership and logistics. So that is a book that 661 00:40:18,200 --> 00:40:21,200 Speaker 3: from a logistics perspective resonated with me a lot. 662 00:40:21,360 --> 00:40:23,560 Speaker 1: All right, I'll hope to take a take a look 663 00:40:23,600 --> 00:40:26,640 Speaker 1: at that. Well, Pablo, I really want to thank you 664 00:40:26,640 --> 00:40:27,240 Speaker 1: for your time. 665 00:40:28,120 --> 00:40:30,520 Speaker 2: Thank you, Thank you, Lee a pleasure to talk to you. 666 00:40:31,080 --> 00:40:36,600 Speaker 3: Hopefully this will be interesting for your listeners, and yeah, 667 00:40:36,680 --> 00:40:38,080 Speaker 3: looking forward to keeping in touch. 668 00:40:38,200 --> 00:40:41,759 Speaker 1: Yeah, absolutely, and really appreciate your insights. And I also 669 00:40:41,800 --> 00:40:43,799 Speaker 1: want to thank you for tuning in. If you liked 670 00:40:43,800 --> 00:40:47,240 Speaker 1: the episode, please subscribe and leave a review. We've lined 671 00:40:47,280 --> 00:40:50,359 Speaker 1: up a number of great guests for the podcast. Check 672 00:40:50,400 --> 00:40:55,120 Speaker 1: back to hear conversations with C suite executives, shippers, regulators, 673 00:40:55,239 --> 00:40:58,440 Speaker 1: and decision makers within the freight markets. Also, if you 674 00:40:58,480 --> 00:41:01,359 Speaker 1: have an idea for a future empersent, or just want 675 00:41:01,400 --> 00:41:04,840 Speaker 1: to talk transports, please hit me up on the Bloomberg 676 00:41:04,920 --> 00:41:08,600 Speaker 1: terminal or on LinkedIn or on Twitter at logistics Lee. 677 00:41:08,719 --> 00:41:10,080 Speaker 1: Thanks everyone, and take care.