DHL GF sees continuing supply chain flux as sourcing shifts
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DHL GF sees continuing supply chain flux as sourcing shifts

Jun 04, 2023

DHL Global Forwarding’s North American staff are experiencing the global shift in sourcing first-hand.

The near-shoring trend has not only increased flows among USMCA countries, but also spawned new flows, like India to Mexico or Vietnam to Mexico, noted Tim Robertson, CEO for the Americas.

Near-shoring is not the only dynamic that is keeping supply chains in flux. The pandemic disruption and subsequent surge in traffic that overwhelmed logistics capacities have forced cargo owners to move from the just-in-time (JIT) model and embrace just-in-case approaches, but the ground keeps shifting after volumes declined and costs soared.

“We see this continue to change,” said Mr Robertson. “JIT became a problem because many supply bases were not diversified.”

He added: “And it’s not about the cheapest rate, but who can give me a rate the quickest and react quickest if there is an issue.”

While volatility has been baked into strategies with a greater emphasis on flexibility and the ability to recover from supply chain shocks, forecasting has become critical, noted Richard Patry, MD of DHL Global Forwarding (Canada).

This goes hand in hand with a significantly increased involvement with clients, which has shifted the focus beyond taking care of the cargo and offering a competitive price, said Mr Robertson, adding: “A lot comes from [clients’] boardrooms.”

With its clients in the aerospace sector, the forwarder now discusses the number of aircraft builds over a period and the associated engines as well as the components that feed into these targets. A key element in this has been digitalisation, which allows the logistics provider to get data earlier, right from the origin of a shipment.

“The moment data enters the system in Osaka, our operator in Toronto, where it will go, has it,” said Mr Robertson.

Typically, multinational clients leverage their own ERP system toward that end, while smaller customers are looking to the logistics provider to provide the architecture for faster data flow. Application interfaces have been a game-changer there, allowing immediate access to multiple systems and platforms, Mr Robertson noted.

Legacy systems remain an obstacle, he added. Not only are many customers still using legacy architecture, but this is often not global and can vary by geography or division of the client in question.

The pandemic has fuelled a debate about the need to abolish organisational wells that keep data and expertise confined in narrow areas and get in the way of broad supply chain visibility. For DHL GF, this has led to a stronger empowerment of its operators who work with customers on their supply chain requirements.

“We have the technology. However, we firmly believe that the role of the operator, the customer service representative who works with the customer, is the critical element,” Mr Robertson said. “The technology enables them, but it’s the power of the highly skilled operator that creates value for the customer.”

The combination of expertise and technology to create unique solutions will be critical for logistics providers, he explained. “If we continue to do that, we will have relevance and a strong position.”

This implies ongoing investment, such as a new temperature-controlled facility that recently opened in Raleigh and a push to double its capacity in San Juan, another vital centre for pharma logistics.

The rapid slowdown in the market has raised questions about the viability of using assets, such as freighter aircraft and Mr Robertson favours an asset-light approach, but he emphasised that there was a role for dedicated capacity.

“Being asset-light allows us flexibility to use commercial lift. We use our own aircraft to increase capacity on demand, mainly for tailor-made solutions,” he said. “We don’t have to rely on a fixed asset that needs to be filled.”

This should help DHL Global Forwarding to navigate through the months ahead. While inventory levels are coming down, Mr Robertson expects demand to be relatively soft. Consumer spending has kept sales going, but there are indications that inflation and other headwinds are beginning to impact their room for spending, he warned.