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DHL Rides Southeast Asian Growth on 2-wheels
PEOPLE Thailand

DHL Rides Southeast Asian Growth on 2-wheels

DHL is making headway in Southeast Asia's highly competitive ground shipping market largely by adopting a so-called microdelivery model employing motorcycles.

In the two years since entering Thailand's door-to-door-delivery sector, DHL has built up a network of 200 service locations and will raise the tally to at least 1,000 this year. It has also amassed a fleet of motorcycle couriers, recognizable by the yellow shipping containers on their bikes.

"I feel at ease whenever I see the DHL logo," said a 43-year-old man who frequently purchases clothing and electronics online.

Retailers have similarly warm sentiment. "Delivery satisfaction is directly linked to an online store's ratings," said a representative of a womenswear seller that does business with DHL.

DHL has already established a strong track record in Thailand through its international air transport and corporate-client logistics businesses. Its regular local staffers number more than 500.

DHL has quickly built up its presence in Thailand. | Nikkei Asian Review
DHL has quickly built up its presence in Thailand. | Nikkei Asian Review

The package volume DHL handles for e-commerce clients has climbed to 15 million units a year. DHL can pick up and pack an item for a seller when needed, and deliver the item to the recipient in one or two days. Customers can pay with cash upon receiving the item.

This type of home delivery service has yet to fully take root throughout Southeast Asia. DHL has sought to get a head start by setting up shop in Malaysia and Vietnam last year. It now has 1,000-plus service locations in three countries, with short-term plans to expand the network to thousands of locations.

Online shopping is on the verge of igniting the home delivery business in Southeast Asia. The home delivery market in six key nations of the region will grow to $7.5 billion in 2020, or more than double 2015 levels, according to Nomura International (Hong Kong). Online retailing's share is expected to rise to 38% from 15%.

"There is currently no single global player in e-commerce logistics that is able to offer an end-to-end solution from fulfillment, cross-border to last-mile delivery" besides DHL, said Charles Brewer, CEO of DHL eCommerce.

The DHL group also has the Chinese market, where it established a footprint before heading to Southeast Asia. "China has massive growth potential for outbound cross-border e-commerce," Brewer said. Southeast Asia, with its population of 600 million, is key to realizing its promise.

The Asia-Pacific region accounts for 17% of DHL's sales. The company will raise Asia's share to 30% by 2020, said Frank Appel, CEO of DHL parent Deutsche Post DHL.

U.S. compatriot FedEx is also expanding the profile of its microdelivery operation, with a sharp focus on internet retailing. But FedEx is first concentrating on Europe, a strategy highlighted in 2016 by its 4.4 billion euro ($5.42 billion at current rates) purchase of TNT Express, a Dutch outfit strong in microdeliveries.  

FedEx and fellow American competitor UPS are strengthening operations in China. But in that overall landscape, which includes microdeliveries in Southeast Asia, DHL appears to have a leg up.

Also large-scale deliveries

Southeast Asian economies are moving toward free flows of people, goods and money, creating opportunity in business-to-business and plant-to-plant logistics.

DHL seized the moment last August when it finished constructing a large distribution center in Thailand's Chachoengsao. The Eastern Gateway Service Center, as it is called, is a hub for the surrounding region and for neighboring countries.

The facility is strategically located in the heart of Thailand's Eastern Economic Corridor, an industrial zone under development. It not only processes e-commerce deliveries, but also handles small and midsize manufacturers' parts shipments.

Eastern Gateway is roughly 20 minutes by car from Fujilloy (Thailand), a carbide tool maker owned by Japan's Fuji Die. "We can easily fulfill same-day deliveries thanks to this place," said Nobuhisa Watake, managing director.

Source : Nikkei Asian Review

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