International express service provider, DHL Express India, is anticipating a rebound in volumes over the “next two months” as unlocking happens and there is a subsequent pick-up in economic activity.
The company has seen demand come back to 50 per cent levels (compared to May and June of 2019) in the first couple of weeks of this month and is expecting further improvement in the coming days.
According to RS Subramanian, Senior Vice-President and Managing Director, DHL Express India, demand stood at around 10-15 per cent levels in April when economic activity was almost nil, because of a Covid-induced lockdown. However, it improved to 50 per cent levels in May and early June. By June-end, it is expected to reach 75 per cent.
Cargo operations incidentally had been ongoing despite the lockdown but at reduced volumes.
“By June-end, demand should be back to 75 per cent levels as compared to (same period) last year, and over the next two months there should be strong rebound with exports improving (and) there being more economic activity. I am hopeful that there will be significant growth in volumes,” he told BusinessLine.
Economic outlook continues to be volatile currently, while July to September is seen as a “better quarter”. However, October to December will be “far better” on a comparative basis.
“We are fully operational now. We are operating 19 flights a week and servicing 95 per cent of the pincodes already,” Subramanian pointed out, adding that sectors such as healthcare, pharma and life science are at 100 per cent levels. Other sectors too are at 50 per cent operational levels mostly.
Bets on e-comm
E-comm will get a big boost and international orders (from Indian SMEs) will be a major draw in the current scenario. DHL Express India is also pushing SMEs and coordinating for them to have a global base.
The company, a wholly-owned Indian-arm of DHL Express, currently has 53 service facilities and a direct presence in 32 cities. Further, 700-plus towns are covered for pick-up and delivery through sister company Blue Dart Express.
It provides cross-border solutions across industries, including some specialist solutions for the aviation sector, pharma and life sciences. Of its ‘express’ business, 20 per cent are documents, and the remaining 80 per cent are parcels.
DHL Express and Blue Dart are part of the Deutsche Post DHL, the largest mailing and logistics provider globally.
Capex plans
India accounts for 5 per cent of the group’s global logistics revenues, making India amongst the top 10 nations. Approximately ₹100 crore worth of capex has been made on an annual basis for some years now.
Asked if capex plans will continue “as usual” Subramanian said: “Investments are ongoing. And, do we stop investments now, then the answer is no.”
Investments will continue to be made as a “continuous upgrade” process, for deploying new tools and also for putting in new processes towards digitisation of billing processes and so on.
“Every year we have increased our investments in the country and it is a continuous process. India continues to be a growth market for us,” he added.
Incidentally, until 2025, DHL at a Group level will be spending roughly €2 billion on digitalisation – this sum is already included in the planned opex and capex spending. The digitalisation investment is expected to lead to yearly run rate benefits of at least €1.5 billion by 2025, the group has said about its ‘Strategy 2025’ in a communication last year.