WEBVTT - DHL Group CEO Tobias Meyer Talks Trump Tariffs & Global Trade

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, our companies, how our banks?

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<v Speaker 1>How are consumers positioning ahead of what may be a

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<v Speaker 1>pretty volatile second term for Donald Trump. We've got the

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<v Speaker 1>perfect guest to talk about just that. Tobias, my DHL

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<v Speaker 1>Group's CEO, is in London just to see us, I'm told,

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<v Speaker 1>joins us around the table. Tobias, a pleasure to have

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<v Speaker 1>you on the program. Walk us through kind of this

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<v Speaker 1>positioning story around Donald Trump.

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<v Speaker 2>What are you hearing?

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<v Speaker 1>Are people worried? Are you seeing that show up in the.

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<v Speaker 3>Likes of some of the flows, Well, definitely, I mean

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<v Speaker 3>it's a big topic. I was in South America just

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<v Speaker 3>two weeks ago for an entire week in Mexico.

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<v Speaker 2>In Brazil, in Colombia as.

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<v Speaker 3>Well, and especially the Mexican economy being so closely tied

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<v Speaker 3>to the US, it's a big topic. What will happen

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<v Speaker 3>also amongst our customers. We have supply chains, they are

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<v Speaker 3>being closely integrated, a lot of parts coming from Mexico

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<v Speaker 3>into plants in the US as well, so there's concern

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<v Speaker 3>around that. But also on I think the Pacific, the

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<v Speaker 3>China US trade being quite a strong element of that

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<v Speaker 3>being b two c as well, So it's discussion about

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<v Speaker 3>deminimus again the Transatlantic being more about industrials like Eldermorti.

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<v Speaker 4>Is any evidence that people are front running the terraces?

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<v Speaker 4>Are you seeing any stock built coming through? Maybe in

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<v Speaker 4>the States.

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<v Speaker 3>Hard to say, but there's a good volume in the

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<v Speaker 3>last weeks. We see that in ocean freight, We see

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<v Speaker 3>that in their freight. The year has been quite volatile.

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<v Speaker 3>We had very strong exports out of China for many

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<v Speaker 3>weeks on the ocean freight side especially, so strong growth there,

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<v Speaker 3>but it has been volatile, so it's hard to call

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<v Speaker 3>out whether there's really a strong element of that.

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<v Speaker 1>Now you mentioned the South American aspect as well. Part

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<v Speaker 1>of the Trump trade has been an expectation or a

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<v Speaker 1>ramp up of this frond shoring dynamic. Is there evidence

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<v Speaker 1>of that? I felt like in the first Trump administration

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<v Speaker 1>that was kind of put on pause. Could you see

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<v Speaker 1>that restart?

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<v Speaker 2>Well? Definitely.

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<v Speaker 3>As it relates to Mexico, I do think we see,

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<v Speaker 3>for a variety of reasons that this diversification of the

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<v Speaker 3>supply chain that has been taught about, which for Mexico

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<v Speaker 3>and the US, means also some near shoring.

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<v Speaker 2>I think for the rest of the world, this is

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<v Speaker 2>quite different.

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<v Speaker 3>We see more things shifting to Southeast Asia, but we've

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<v Speaker 3>also seen customers putting production back into China, recognizing that

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<v Speaker 3>this is the market where the supply chain is the deepest,

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<v Speaker 3>the capacity is the largest, and many people still think

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<v Speaker 3>that the next thing after China is China when it

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<v Speaker 3>comes to manufacturing.

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<v Speaker 5>I mean, you're based in Europe. When we're talking about

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<v Speaker 5>trade under Donald Trump, how do you think that Europe's

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<v Speaker 5>going to retaliate? I was going to say, negotiate. What

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<v Speaker 5>are you planning for?

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<v Speaker 2>Well, that's a good question.

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<v Speaker 3>I think twenty twenty five is a year where the

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<v Speaker 3>scenarios are unusually wide apart. You could definitely see a

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<v Speaker 3>good scenario where indications out of the US continued investments

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<v Speaker 3>along with IRA for instance, some tax relief elections in

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<v Speaker 3>Europe that lead to stable goments that could influence confidence

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<v Speaker 3>quite positively. But on the other hand, there is the

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<v Speaker 3>scenario where support to Ukraine might not continue. That then

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<v Speaker 3>weighing on confidence in Europe and tariffs coming into play.

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<v Speaker 3>The European automotive industry is already in quite a weak position,

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<v Speaker 3>so seeing tariffs on top of that would make people

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<v Speaker 3>quite nervous. So the range of scenarios quite wide.

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<v Speaker 5>There's a hard question I want to ask you. I mean,

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<v Speaker 5>it's about the sad news of that plane crash, the

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<v Speaker 5>DHL cargo plane crash near the Lithuanian capital. I know

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<v Speaker 5>that a crew member died, three others were injured. I

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<v Speaker 5>really wonder whether it's responsible to be using planes that

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<v Speaker 5>first entered service in nineteen ninety three.

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<v Speaker 3>That's that's older than critic Well, honestly, I don't think

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<v Speaker 3>that is a problem. Our thoughts are with a family

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<v Speaker 3>of the deceased, Parlod and the crew members that are

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<v Speaker 3>still in hospital. But operating such aircraft safely is something

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<v Speaker 3>that the industry has learned over many years. I'm an

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<v Speaker 3>aviation engineer myself, and I find it close to a

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<v Speaker 3>miracle the safety standards that.

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<v Speaker 2>We have achieved in aviation.

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<v Speaker 3>If you compare this, particularly what we see in terms

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<v Speaker 3>of road transport, if you look at markets like India

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<v Speaker 3>where we now have a six digit number of dead

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<v Speaker 3>people on the road. So it is a very tragic event,

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<v Speaker 3>and you're.

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<v Speaker 5>Not worried about the safety of the fleet.

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<v Speaker 3>No, I'm not worried about the safety of the fleet.

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<v Speaker 3>The aviation industry has over many decades continued to lift

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<v Speaker 3>the standards address new challenges of different kinds, taking the

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<v Speaker 3>right conclusion also from technical failures that we've.

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<v Speaker 2>Seen in the past.

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<v Speaker 3>So I think this industry really has a very good

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<v Speaker 3>track record as it relates to safety.

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<v Speaker 4>You get the aircraft he wants out of Seattle. I

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<v Speaker 4>think if you use an airline in a way, and

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<v Speaker 4>when I talk to the airline bosses that I often

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<v Speaker 4>talk to, they tell me they're not getting the airplanes

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<v Speaker 4>they need out of Seattle.

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<v Speaker 2>Is that a for you as well?

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<v Speaker 3>So, yes, we still have some trouble seven aircraft freighters.

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<v Speaker 3>We use new from the line aircraft, particularly on the

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<v Speaker 3>intercontinental lanes. Also because of sustainability reasons, we want to

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<v Speaker 3>have the most efficient asset to burn as little fuel

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<v Speaker 3>as possible for the cargo that we transport.

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<v Speaker 2>So that's very important to us.

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<v Speaker 3>And we have initiated a new build program several years

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<v Speaker 3>ago and we're still waiting for some aircraft. And we

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<v Speaker 3>do see that the lack of deliveries is causing issues.

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<v Speaker 4>So one of the issues that Bensmith and that France

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<v Speaker 4>is flagging that his maintenance costs are significantly high. Are

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<v Speaker 4>you having that same issue?

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<v Speaker 3>Well, we all need to still fly all that aircraft

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<v Speaker 3>also on intercontinental roots. That's not good for fuel burn

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<v Speaker 3>and that's not good for maintenance as well.

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<v Speaker 2>So in terms of the margin that is that is

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<v Speaker 2>that a margin impact?

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<v Speaker 3>I think for us it's Look, we operate a fleet

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<v Speaker 3>of roughly three hundred units, so we're lacking a single

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<v Speaker 3>digit number, so I can't.

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<v Speaker 2>See that as a huge driver.

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<v Speaker 3>But it's definitely more than an annoyance, more than an annoyance.

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<v Speaker 1>Okay, well, purely that's the perfect segue almost to maybe

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<v Speaker 1>something a little bit closer to home, and that is

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<v Speaker 1>the German election coming up in February. Tobias, I'm not

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<v Speaker 1>going to ask you what you think of the politics,

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<v Speaker 1>but I am curious how it affects your business, and

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<v Speaker 1>especially when things like corporate taxation are something that could

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<v Speaker 1>very fundamentally change the bottom line of your company.

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<v Speaker 3>Well, I mean we are now predominated in the national company.

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<v Speaker 3>The great majority of our revenue is outside Germany.

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<v Speaker 2>It still affects us.

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<v Speaker 3>We are the universal service provide US that relates to

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<v Speaker 3>the postal system, so we'll help with the ballots with

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<v Speaker 3>the male elections.

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<v Speaker 2>That's a big topic.

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<v Speaker 3>For us, that we're well set up to do that

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<v Speaker 3>in February when voters hit for the polls in Germany.

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<v Speaker 3>I think what is very important for Europe is to

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<v Speaker 3>see a stable government that we get out of this situation.

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<v Speaker 3>That is not only now the case in Germany, but

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<v Speaker 3>we see this in France with theis in the Netherlands,

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<v Speaker 3>for instance, in Belgium, that we get into a setting

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<v Speaker 3>again where we have solid governments with strong majorities or

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<v Speaker 3>good majorities in their parliaments, and that we see politics

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<v Speaker 3>moving forward.

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<v Speaker 4>Are you suffering from just in terms of one of

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<v Speaker 4>the fact is that the politics is interacting with at

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<v Speaker 4>the moment is immigration and labor shortages? And is that

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<v Speaker 4>something that you're experiencing right now? What kind of wage

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<v Speaker 4>growth are you seeing? Are you seeing shortages of available labor?

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<v Speaker 4>We're coming up to the holiday seasons. Is that a season?

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<v Speaker 2>Is that an issue now?

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<v Speaker 3>It has been much less of an issue this year

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<v Speaker 3>and that's a good sign for us, but not a good.

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<v Speaker 2>Sign for the economy.

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<v Speaker 3>So I do think there is some weakening and we

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<v Speaker 3>find it easier than in previous years to get labor

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<v Speaker 3>for the peak season, be that in Germany, be that

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<v Speaker 3>across Europe. I think structurally Germany has changed some things

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<v Speaker 3>in terms of legislation to enable more regular immigration, immigration

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<v Speaker 3>based on merits. So we think that this is a

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<v Speaker 3>good thing, but it still needs to filter through. There's

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<v Speaker 3>a lot of bureaucracy around that as well. Be a

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<v Speaker 3>big topic in Germany and Europe anyway, there's.

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<v Speaker 4>Too much bureaucracy in Germany. I'm sure you've got to say.

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<v Speaker 4>The answer is yes, But how big a problem is

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<v Speaker 4>it just to put you deal.

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<v Speaker 2>With it at the co face every day?

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<v Speaker 3>Yeah, and you know every piece of it is bearable,

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<v Speaker 3>There's no doubt of it. If you take a single

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<v Speaker 3>law and say why can a large company not do that,

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<v Speaker 3>that's a good argument. But if you look at the

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<v Speaker 3>breath that what we have built up over the last

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<v Speaker 3>twenty years, you know, it's like a little stone put

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<v Speaker 3>in your backpack every day and if you do that

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<v Speaker 3>for a long time, it just gets very.

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<v Speaker 2>Heavy, Tobi.

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<v Speaker 1>So I'm going to put you on the spot twenty

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<v Speaker 1>seconds if you can. DHL prides itself on being the

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<v Speaker 1>first in a certain conflict zone and perhaps the last

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<v Speaker 1>to leave. Are you positioning around the resolutions in the

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<v Speaker 1>Middle East.

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<v Speaker 3>Well, we operate in different countries around the world. We

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<v Speaker 3>operate across also geopolitical borders.

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<v Speaker 2>And will continue to do that.

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<v Speaker 3>We need to work with local governments to enable that,

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<v Speaker 3>so that's what we continue to do. We're going to

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<v Speaker 3>be present in those markets. We stick by the policy

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<v Speaker 3>that you mentioned. We want to be the first in

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<v Speaker 3>last out to support our customers, to support these economies,

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<v Speaker 3>to participate in the benefits of global trade.

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<v Speaker 2>So that's what we've tried to do.

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<v Speaker 1>All right, you heard it here DHL Group CEO Tobisemeyer

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<v Speaker 1>joining us around the table. This is Bloomberg